Fed Secrecy Claims Bogus, Redacted AIG Bailout Details Already Public

By Thomas Adams, an attorney and former monoline executive, and Yves Smith

In September 2008, the Federal Reserve bailed out AIG, and ever since then, controversy has swirled around the motivation and terms of the bailout. A major part of the bailout funds went directly to three banks: Goldman Sachs, Merrill Lynch, and the French bank Société Générale (SocGen). These banks were holding CDS insurance from AIG on toxic assets, and the bailout saved them from the damage they would have suffered if AIG had gone bankrupt and that insurance had become worthless. The assets in question were then stuffed into a financial vehicle called Maiden Lane III, where they remain to this day, administered by BlackRock on behalf of the government.

The bailout has raised enduring questions about the propriety of US financial system governance. A recent article in the online version of France’s leading newspaper Le Monde highlighted the two main theories currently circulating on why the bailout was so generous to a small group of banks. One idea holds that the political connections of Goldman Sachs were a key reason for the bailout. At the same time, it appears that the French regulatory authorities intervened on behalf of the French banks SocGen and Calyon by claiming (speciously) to the Fed that those bank directors would face prison time if they accepted anything less than a 100% bailout.

Attempts to investigate have slammed into a wall of secrecy. The Fed is still fighting Freedom of Information Act requests to disclose the beneficiaries of its various emergency rescue programs The central bank has refused to release details about how the banks benefited from the AIG bailout, even taking the impressively circuitous route of getting AIG itself to beg the SEC for permission to strike key information about Maiden Lane III from its regulatory filings.

The SEC agreed to let AIG keep Maiden Lane III information secret until 2018, since it “qualifies as confidential commercial or financial information.” The Fed argued earlier this week that “If such information were to become available to traders in such securities, traders would be able to use such information to their advantage, and undercut the ability of Maiden Lane III to sell those assets for the maximum total return, to the detriment of taxpayers and AIG.”

We now show that this argument is worthless. Nearly all of the deleted information can be reassembled from sources that are publicly available. The traders whom the Fed professes to find worrisome have access to far more information.

In June 2009, CBS News publicized a memo by AIG Financial Products Vice President Andrew Forster dated November 27, 2007. It listed various assets (to be specific, collateralized debt obligations – CDOs), almost entirely residential real-estate related, on which AIG had received collateral calls and was negotiating with counterparties (http://www.cbsnews.com/stories/2009/06/23/cbsnews_investigates/main5106672.shtml). Most, perhaps all, of those deals, presumably the weaker ones, wound up in Maiden Lane III, along with a comparatively small amount of commercial real estate CDOs.

Between this memo and information provided on the Fed’s website about individual commercial real estate CDOs in Maiden Lane III (http://www.newyorkfed.org/aboutthefed/annual/annual08/MaidenLaneIIIfinstmt20
09.pdf), the very same transaction details that the Fed pushed AIG to omit are already in the public domain: the names and par amounts of virtually all of assets sold to Maiden Lane. And from that information, someone who understands these sorts of deals can fill in even more details, still using only publicly available sources.

We have done this work. A professional at valuing CDOs reviewed the methodology and results. We discuss the construction of the model in greater detail today at Naked Capitalism and provide a link to sections of the most recent model run.

The ease with which we were able to carry out this analysis shows that keeping information away from predatory traders cannot have anything to do with the Fed’s anxiety to keep the Maiden Lane III data hidden. There must be other reasons for secrecy.

An examination of our data raises troubling questions about how the Fed is valuing the Maiden Lane III assets. The Fed claims that in the second and third quarters of 2009, the CDOs in Maiden Lane III rose in value. But our data shows that most of the portfolio is rated junk, and some of the part that is not junk has been downgraded significantly during this period. Moreover, the Fed’s disclosures show that paydowns on these assets accelerated sharply in Q2 and Q3. As discussed at greater length earlier this week at Naked Capitalism, all likely explanations for increasing paydowns imply further reductions for the value of the Maiden Lane III assets. With a weak and worsening portfolio, little to no improvement in the prices of severely distressed mortgage assets, and paydown figures implying additional decreases in asset values, how can Maiden Lane III possibly be reporting rising asset values?

Our analysis raises further questions about the bailout. The data shows that many of the CDOs were packaged by one bank and then the insured portion ended up with another bank. For instance, Goldman had insurance not only on deals it created, but also CDOs from seven other banks.

Many commentators have commended Goldman on the cleverness with which the bank successfully shorted the mortgage market. But why, then, does it seem from the data as if Goldman was systematically trying to increase its exposure to AIG?

And why is there such a pronounced connection between Goldman and the French bank SocGen, the two biggest AIG counterparties and two institutions which have in the past been associated (separately) to the decision to bail out AIG?

Probably the only way to resolve these questions and, incidentally, restore some measure of credibility to US financial governance is to press for additional information.

When the Swiss bank UBS was bailed out by its government, it was forced by its regulators to release a detailed report on how it had blown itself up. What great service for the country have our banks performed that justifies letting them to shroud their actions in obscurity?

After the Great Crash of 1929, the Senate created a commission to investigate the causes of the meltdown. The commission was completely ineffective at first, and was widely viewed as a whitewash. It was only after the commission had run through three chief counsels and had been energized by the contributions of Ferdinand Pecora that it started to make waves. The discoveries of the Pecora Commission led to a financial regulatory system that was admired around the world for the next forty years.

The Financial Crisis Inquiry Commission needs to use its subpoena powers to compel the banks in question to dump emails and documents into the public domain. At that point, it will be possible for independent observers to work with that information and come to their own conclusions about how the global economy went into cardiac arrest. If there are bodies buried, exhume them. Having a functional financial system is more important than helping powerfully placed, undeserving parties avoid embarrassment.

Andrew Dittmer and Richard Smith contributed to this article.

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  1. Bruce Krasting

    How many people have the information that ‘might prove harmful to the taxpayers”? Hundreds is the answer. It is not just Tim G and the folks at the Fed. It is everyone of the counterparties that is involved with Maiden Lane II. It is all of the lawyers who represented the banks in this deal.

    So who has this info? The Foxes do.The names are listed in this piece. All of the fat cat bankers know this info.

    When you have secret info like this you are not supposed to talk about it. But the very fact that some folks have these secrets insures that it is not a secret. There is/was big money at stake here. To the extent that there was/is critical non public material information out there that could hurt the taxpayers the Foxes have already done that. Does anyone think that the Goldman’s of the world does not use this info? Don’t be silly. Of course they do.

    If the Foxes have the information that they can use to make money there is no excuse why the Chickens in the hen house can’t have it too. Who is the Fed protecting? Not the tax payers, they could care less about that. They are protecting themselves. And that is no excuse for secrecy.

  2. Tancredi


    One caveat: the link in paragraph 2 in to a blog hosted on Le Monde’s website, not to a newspaper.

    1. Yves Smith Post author

      Good catch. Technically, you are correct, but the difference between print and online is blurring….for instance, the BBC’s Roger Peston’s blog has huge influence, but I see your point. Will see if I can tweak.

      1. Kevin de Bruxelles

        Another minor problem is that you site Le Monde Diplomatique, which is now totally independent from Le Monde and a different publication altogether. The proper citation should just be just Le Monde (or a blog from Le Monde), which is indeed France’s leading newpaper. Just to clarify, Le Monde is basically the French equivilant of the New York Times. Le Monde Diplomatique is the French version of The Nation (only better, because I’m a subscriber!).

        Here is the wiki entry for Le Monde Diplomatique:


        and for Le Monde:


        1. jjohannson

          Kevin, I went to Diplomatique’s about page to determine ownership, and here’s what they say —


          “Le Monde owns 51%; and the Friends of Le Monde diplomatique and Gunter Holzmann Association, comprising the paper’s staff, together own 49%.”

          So, independent in spirit, but less so when and if the rubber meets the road.

  3. i on the ball patriot

    Two years to get an inquiry and you really think it will be other than a scam?

    Anyway …

    Here is a list of the foxes on the FCIC, and the congressional fox who appointed each. So lets forget about anything substantive coming from this bogus white wash and move right on to the election boycotts which have been given a great boost in appeal via the recent scotus scam ‘rule of law’ decision to allow the wealthy ruling elite, through their corporations, to more directly purchase and control their puppet politicians …

    1. (Chairman) Phil Angelides (Pelosi, chosen as Chair by Pelosi and Reid
    2. (Vice Chairman) Former Rep. Bill Thomas (Boehner, chosen as Vice-Chair by Boehner and McConnell)
    3. Brooksley Born (Pelosi)
    4. Byron Georgiou (Reid)
    5. Former Senator Bob Graham (D-FL) (Reid)
    6. me: Keith Hennessey (McConnell)
    7. Doug Holtz-Eakin (McConnell)
    8. Heather Murren (Reid)
    9. John Thompson (Pelosi)
    10. Peter Wallison (Boehner)

    Deception is the strongest political force on the planet.

    1. i on the ball patriot

      If you are really retarded and want to dissipate a lot of your valuable time and energy playing the silly ass, ‘I believe in responsive government game’, here is a link to the Hennessey web site where the above info came from …


      Deception is the strongest political force on the planet.

  4. Angry French taxpayer

    Another good post,

    Any argument will do. Included this stupid one. The Fed plain WANTED to rescue their banks.

    Les français ont bon dos ! Évidemment ils ne sont qu’un faire-valoir! Mind the French? What a joke and a good one. US has never cared less about France. Just regarded us as some kind of parochial bread-makers.

    I just hate those laggard Calyon and SocGen so-gennante blokes who wanted to be investment bankers à la Wall Street. Can remember one of them telling mid-2007 that CDS were an insurance scheme. And he believed it!

  5. Jim in MN


    Congratulations and thank you for this important work. This post shows why we need independent investigative actors in our society; in fact such actors supply much of the faint hopes citizens such as myself retain for our dear Republic.

    The principals in this sordid affair should do the honorable thing and resign. This scandal has every earmark of a Watergate or Iran-Contra scale wipeout. Greed, hubris, arrogance, condescension. I can only pray that some of the President’s handlers figure out that the culpability runs straight to the White House (you know, if you’re covering up something your boss is responsinle? Hello? Even if it “happened last year” but the cover-up is now?) and takes immediate and forceful action to avoid potentially crippling investigations, hearings, trials, and related political fallout.

    There. Someone had to spell it out. Seems like the folks in NY/DC are to overwhelmed or medicated to do it.

    Thanks again Yves. Maybe we need to found the Party of Angry Sanity or something.

    –Jim in MN

  6. LeeAnne

    “The ease with which we were able to carry out this analysis shows that keeping information away from predatory traders cannot have anything to do with the Fed’s anxiety to keep the Maiden Lane III data hidden. There must be other reasons for secrecy.”

    The pattern throughout the economy has been the stripping of the American public of their rights and the protection of corporate power. The purpose of this so-called secrecy which as Adams and Smith have pointed out is no secret to the Wall Street professionals and counterparties who keep themselves very well informed, is to continue fleecing the public.

    The volume of JP Morgan Chase Bank new branch office spaces proliferating on the streets of New York City indicate that they have known about this game change to something like Glass-Steagall separation of the banking system into private and public, far in advance with some certainty.

    1. Richard Kline

      So Yves and Tom, thanks for the detailed pursuit you present. For muckracking to take, it takes a couple of sharpies and four inch iron teeth; you’re both well equipped, methinks, and the public the wiser.

      “There must be other reasons for secrecy . . . ” Yes; hmm. Now, surely a significant factor in the Fed’s seemingly pointless secrecy is just haute bureaucratism, the reflexive response of all powers that be to never let the peons see the facts (because being in proprietary possession of said facts is highly empowering, natch). And then too, surely there is basic venality in play—see Geithner, Tim; curriculum vitae—whereby material participants to the AIG bailout transcactions were materially helping friends of theirs protect their wealth. But I’m going to propose a parallel hypothesis, from a ‘mental parallel universe.’

      I suspect that much of the reasoning for the Fed’s past and continued push to conceal the ‘Midden Lane’ details, from _the public_ if not from the insider oligarchs who of course are in FULL possession of the facts, is exactly as expressed: a) the deciders in these fictions believe that both the transactions and the asset marks ARE proprietary information, and that b) disclosing the relevant details hurts the Fed’s ability to recover near par of the ‘assets’ it has taken on. It is my working hypothesis that the misfeasers of great wealth, that is the government authorities who through the last two and a half years have failed to take control of the financial system in the public’s interest, believe that the assets in question _are_ worth near par because they do not believe that we had a crash. Think it through as I explain, but this is the weltbilder, ‘big picture,’ which I think all of the principal actors on the government side share; Paulson, Geithner, Bernanke, Summers, Rubin, and necessarily because they depend on the views of the preceding Dubya and Obama both.

      To my observation, the consensus surreality amongst these deciders is that we had a panic; more accurately a series of panics. We did not have a crash in July 07; or in March 08; or in September 08. Big participants in abstruste security markets got caught up in a panic, largely produced by loose lips and a few key defaults, and with that liquidity vanished as ample Big Money in the shadow banking system leapt to the sidelines and individual markets for some asset classes froze while other markets, equities specifically, plummeted. These declines, however, weren’t ‘real’ if you follow the actions which such thinking implies; they were panic prices as individuals rushed to get out. Hence the price drops aren’t ‘real,’ they are situationally induced. Hence the assets in fact SHOULD _NOT_ be marked ‘to market’ because it is the market prices offered in late 07 and 08 which are distorted, false. Hence the first job of the powers that be was to restore liquidity, while the second job was to step in and support valuations by any means necessary until the markets ‘came to their senses.’ The Guvmint/Fed taking in orphaned assets was necessary, and complete secrecy, obtuseness, and out and out mendacity—see Tests, Stress—were part and parcel of that program. I seriously do not think that most of the decision makers I mention above even believe that we had a bubble. Well OK, maybe a small one in ‘redline mortgages’ or whatever they call it amongst themselves. But I don’t believe that, say, Summers or Bernanke accept in anyway that we had a bubble in ASBs or in equities, no sir. Why? Because if the prices of those intstruments were fundamentally fake, unjustified, then everything the Rubin crew have argued for and achieved in their entire careers is plague-ridden bullshit, and misfeasers of colossal ego handmaiden to great private wealth aren’t about to accept that they have been deluded intellectual frauds, no sir, not for a second. Ergo, the marks of those assets as of July 07 must _in fact_ be real to within a few percentage points. The problem is ‘the Phoney Panic,’ which must be fought by any means necessary, including plunge protection toiletry, government assumption of private liablity, unconditional and unlimited goverment price guarantees (necessarily concealed from the public in their full details), and blanket secrecy. This program is to be maintained ‘until the markets come to their senses,’ and what _that_ will take is a resumption of profit flows. Which is why, by gum, those banks are trumpeting ‘profit flows,’ with every possible connivance of the government misfeasers.

      I’m not much of a believer in conspiracies. Delusion is a far more powerful and pervasive explanatory rationle in human history; far, far more so. So yes, I do think there is a conspiracy, but not, strictly speakin, one of frauds and embezzlers. It is a conspiracy of exposed fools, busily pretending that they are still clothed. In a better world, they’d be in an asylum. In this world, the have full control of the government’s financial and regulatory authority, quasi (Fed) and actual (Treasury and White House). Hank and Timmy and Larry and Georgie and Bo Prez were and are all holding their breaths until the securities turn gold again. This has much more to do, to me, with the unwillingness for 30 months to mark crap to reality, close failed banks, and re-regulate like adults, because the decision makers are in a position to use the full faith and credit of the sovereign populace to deny reality like dim children caught in a stupid lie. The behavior of the powers to be makes sense from this perspective, whereas from the perspective of a conspiracy of embezzling frauds it doesn’t. So make of it what you will.

  7. LeeAnne

    It also indicates that the powers that be have no intention of really separating casinos from personal banking but are very likely to come up with ‘new’ rules for something like a ‘Chinese Wall’ between them. And we know how that turned out.

  8. Siggy

    Thanks for this.

    The AIG bailout is a case of the usurpation of monetary and judicial authority.

    The Fed does not under any circumstance need to be secret about anything. Unless, of course, its Chairman and Governors believe they can manipulate the financial markets.

    In that regard, Ron Paul has been the boy who cried wolf. Yet, his cry should be heeded.

    The very hard reality of life and society is that NO INSTITUTION IS TOO BIG TO FAIL. That includes our Republic.

    It’s clearly time to clean out our political outhouse.

  9. LeeAnne

    Watch for Obama betrayal and double talking Volker and Donaldson or better yet, a piece of advice to Volcker and Donaldson:

    Privately hire your own linguistic specialists to keep a very close eye on Obama signals and head them off at the pass via blogs since mainstream media are in the pockets of the current self-appointed elite with a very loud megaphone. The master political language specialists have been in the employ of Republicans for more than 30 years.

    I’m done. Thank you Yves for your unflagging principled approach to fighting back and helping others like me participate.

  10. DownSouth

    What can I say?

    This and your other post today are absolutely outstanding.

    Please accept my heartfelt gratitude for all the heavy lifting you and your team did to flush this stuff out.

  11. JohnC


    Good stuff!

    I seem to remember a “summit”, I think in 2006. The Euros (Sarkozy and Merkel in the lead) were up in arms about what was going on in the financial system. Bush came over, and after that meeting it all went very quiet.

    Until the Collapse.

    Then we hear that Soc Gen and DB were paid what, about $20 billion? Out of this government slush fund?

    So what promises did Bush make?

  12. Blurtman

    Another two great stories. Could you possibly review the immediate post-Lehman meltdown environment? The rationale for the Fed and USG interventions was, I believe, that a panic would result in a financial sector meltdown and another Great Depression.

    A lot of bad things can happen when one claims to be saving the public from disaster. Could you possibly outline a plausible post-Lehman meltdown scenario, if there was to be a meltdown, and what a better response by the Fed and USG might have been, but perhaps without the benfit of hindsight?

  13. psychohistorian

    Why are some of these folks not in jail awaiting trail? Oh, thats right, rule-of-law does not apply to the rich. They purchase politicians and their version of justice to further their control and anti-social lives.

    Bring on the evolution. It is time for some structural adjustment.

  14. fresno dan

    “The Fed argued earlier this week that “If such information were to become available to traders in such securities, traders would be able to use such information to their advantage, and undercut the ability of Maiden Lane III to sell those assets for the maximum total return, to the detriment of taxpayers and AIG.”

    Well, I sure am glad the Fed is looking out for us, otherwise there might be 10% unemployment, bankers might have to switch to a cheaper brand of polo pony feed, and I might not be able to get a credit card at 29% interest.

  15. bobh

    I too want to add my thanks for the good work that gets done here at Naked Capitalism. Putting these truths out there may not change anything, but it keeps me sane to hear them. Take care of yourself, Yves.

  16. Doc Holiday

    “The SEC agreed to let AIG keep Maiden Lane III information secret until 2018, since it “qualifies as confidential commercial or financial information.”

    I was going to just write, ROTFLMAO …. but is this funny? It simply cements in place the cornerstone foundation block of corruption and permanent and highly secure fascism for America. If Obama does not rise above this treason, our nation will collapse! Not funny!

      1. Doc Holiday

        I know I’m late and useless and have zero time for this but FYI:

        It looks like the rules are set up to screen material/information and to not allow the public to have access, which is the point obviously, i.e., to not have electronic breadcrumbs and thus not disclose information to the public and or shareholders … so, kinda sets up the condition of fraud, backed by SEC, DOJ, FTC, Congress, FCIC, O’Bama ….

        Excluded Electronic Submissions

        As described in more detail below, the rules do not permit the electronic submission of: (1) confidential treatment applications; (2) preliminary proxy or information statements relating to Item 14 of Schedule 14A (Mergers, consolidations, acquisitions and similar matters), if confidential treatment is desired;

        (3) supplemental information, if the submitter requests that the information be returned after staff review, and/or the submitter requests that the information be protected from public disclosure under FOIA pursuant to a request for confidential treatment; 117

        (4) shareholder proposal submissions; (5) no-action and interpretive requests; (6) Forms SR; 118 (7) Trust Indenture Act applications for exemptive relief; (8) Forms 3, 4, and 5; (9) Regional Office filings; (10) filings related to offerings exempt from Securities Act registration; 119 (11) sales literature; (12) foreign language documents and symbols; (13) Exchange Act filings submitted to the Division of Market Regulation; and (14) documents submitted pursuant to the Rules of Practice that relate primarily to investigations and litigation.

        a. Confidential Treatment Applications

        Confidential treatment applications will continue to be submitted in paper rather than via EDGAR, so that filers will have an opportunity to become familiar with electronic filing procedures. 120 When a confidential treatment application is filed, the electronic filer will be required to file in electronic format the redacted document that is the subject of the confidential treatment application. For example, if an electronic filer desires confidential treatment of the pricing information in a material contract 121 required to be filed with its Form 10-K, then the electronic filer will submit the Form 10-K in electronic format, redacting the pricing information from the contract that is filed as an exhibit and submit the confidential treatment application including the redacted information, in paper. 122 Care should be taken to redact the confidential information properly, because if an electronic filer inadvertently includes material for which confidential treatment was requested in its electronic submission, the material will be disseminated publicly and thus no longer will be entitled to confidential treatment.

        If the confidential treatment application is denied and all appeal rights are exhausted, 123 the material for which confidential treatment had been requested (i.e., the previously redacted material), must be filed electronically as an amendment. If the filer fails to do so, the Commission will make the information publicly available in paper.

  17. enjointhis

    Thank you for a thoughtful review of this particular aspect of the debacle. Yours has turned into a “must read” blog, and I appreciate it greatly.

  18. Hugh

    Great Maiden Lane III coverage. The Fed is engaged in stonewalling. This is not only to hide dodgy, embarrassing and possibly criminal stuff that went on with ML III but also to prevent disclosure on this to be used as a reason for shining light on other and potentially dicier actions.

    The oddity here is the declaration of the mythical profits. Did Blackrock get more fees for increased valuations? And finally there is the SEC. Is there any agency more inherently worthless?

  19. Colted

    I am still trying to translate this from “smart personese” into my own language, but I think this article is answering what I have been asking myself, but have not had the IQ points to do so articulately. If you are saying what I think you are saying, then my next question is–what is it that the banks own? If these derivatives have already blown up–do the banks still own the collateral (i.e. the mortgage notes) that were originally attached to these derivatives? If so, why?

    This is a horrible analogy–and I apologize for it–but there used to be a famous comedian (cannot remember which one) who did a schtick about drinking grape juice, relieving himself thereafter, and then asking, what happened to the purple?

    I know that mortgages were sliced, diced, blended, tranched, passed through (etc.)–and that what seems to have been the end product of this process was a lot of worthless paper. But how did the Fed end up with the worthless paper, and the banks seem to have ended up with the houses? Did the banks keep the purple?

    Furthermore, am I misunderstanding something (which is very possible), or is it the case that one mortgage on one house was in all likelihood paid off many times over by investor pools, and then often, one final time by TARP? So, the Fed went in and liquidated the assets–but the banks gave them the shelves and display cases and kept all the inventory. The Fed got worthless paper, and the banks kept the mortgage notes? Is that what happened?

  20. M

    Thank You Yves Smith, Andrew Dittmer and Richard Smith, for this awewsome, ground-breaking research. I am so proud of you.

    This is very hard work, and I don’t mean that in a Bush sense.

    This finding is at the very least on par (or better) with the US Attorney’s Office scandal that broke out a couple of years back. Talking Point Memo, Josh Marshall was the ground-breaking investigative blogger behind this development if I can remember.

    I hope you find value in re-cycling this information in every which way so that eventually some of it becomes irresistible to the MSN as fodder for their brand of feigned outrage.

    You know the kind. No need to mention any names.

    Awesome, ground-breaking work that shows the MSN how it’s done, and how they themselves will never rise to aspire to.

  21. Keenan


    Well done.

    I hope that you have copied Rep Alan Grayson on your article, since I’ve seen him post here on at least one occasion.

    1. DownSouth

      Yea, and look what Dodd’s response is:

      Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Banking Committee, warned on Friday that a no vote would send the “worst signal to the market right now,” and could lead to an economic “tailspin.”

      I know Dodd’s got lots of competition in this regard, but has Wall Street ever had a better friend than Dodd?

      1. alex

        Schumer gives him a run for the money (literally), but at least the financial capital is part of Schumer’s constituency.

      2. Hugh

        Don’t be too hard on Dodd. He’s just channeling his inner whore. Apparently his goal is to be a bigger disgrace to Connecticut than Lieberman before leaving office.

      3. i on the ball patriot

        “I know Dodd’s got lots of competition in this regard, but has Wall Street ever had a better friend than Dodd?”

        Yes, the scamerican public that dutifully goes to the polls each election cycle and validates the corrupt electoral process and all of the sell out scum bags like Dodd that it produces. Sheesh! Talk about giving up your power and legitimizing the parasitic gangsters that rape you.

        One can only conclude that scamericans are either outrageously stupid or very happy with the status quo.

        Maybe they do it for the little stick on badges they get at the polls that say, “I Voted! I Made Freedom Count!”

        Deception is the strongest political force on the planet.

      1. bobh

        It is interesting to imagine what Obama might do with the Fed Chair appointment if Bernanke becomes non-viable. The obvious expectation is for Larry Summers to give him the name of someone else who would be acceptable to Goldman Sachs, but Obama is clearly very shaken right now by the health care fiasco, the Massachusetts fiasco, the economic projections coming in for 2010, and the perception on all sides that he is way over his head as President. He has to be desperate to change the subject and get back some momentum, and he may be beginning to suspect that those incredibly bright guys from the B-school with the nice suits don’t care about him or getting him re-elected.

        It has become clear that Obama doesn’t have strong personal beliefs about political issues, and that this helped him in the campaign, where strong beliefs might have gotten in the way. But having no ideology has hurt him as president because it led him to uncritically take the advice of Rubin, Summers, and others who, it turns out, had their own agendas. He has to be starting to suspect that those guys took advantage of him and that maybe he should listen to someone else about economics.

        So far, Obama’s flirtation with Paul Volcker and with anti-banker tough talk few days isn’t going anywhere, but he may be thinking about doubling down on the rhetoric, working up his inner angry populist, becoming a defender of the little man, and throwing the money changers out of the temple. He could try out the new act at the State of the Union speech next week by nominating Sheila Bair for Fed Chair. But first he would have to fire Larry Summers. That’ll be hard.

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