So Why is the FCIC Protecting Bernanke & Co?

Yes, the question in the headline is rhetorical. We know that great efforts have been made and are continuing to be made not to reveal certain aspects of the financial crisis, and the only rationale that makes an iota of sense is the information would embarrass certain people in power.

The latest object lesson is the failure of the FCIC to post the full recording of its 2009 interview with Bernanke. The rationale is that the interviews contain “legal or proprietary information”, so it is being withheld for five years. Are these people unable to use a calendar? The critical phase of the crisis was pretty much over as of end of 2008. Any sensitive customer or transaction position information from that period is now stale. And if it really was sensitive (say it somehow fell in trade secret category), that means it would not be kosher to release it five years hence.

From Bloomberg (hat tip reader Steve A):

The Financial Crisis Inquiry Commission, created by Congress to investigate and report on the causes of the market meltdown late last decade, won’t publicly release its full 2009 interview with Federal Reserve Chairman Ben S. Bernanke, a commission spokesman said.

The FCIC is withholding records when there is “legal or proprietary information in those interviews that meant they could not be made public,” or no audio, transcript or summary exists, Tucker Warren, the FCIC’s spokesman, said after the panel yesterday released more than 300 witness interviews. He declined to elaborate on Bernanke. The interview is among records being transferred to the National Archives that will be made public in five years, Warren said.

“There’s absolutely no reason to hold it,” unless it contains proprietary details about banks or international trading, said University of Texas Professor Robert Auerbach in Austin, a former congressional economist and author of the 2008 book “Deception and Abuse at the Fed.” “Bernanke will be long gone when it comes out, and that’s not a way to establish responsibility,” Auerbach said…

The FCIC’s meeting with Bernanke lasted 90 minutes and was held at the commission’s eighth-floor office near the White House, according to Bernanke’s daybook from the Fed.

“There are others that are at a Bernanke level that won’t be made public as well,” Warren said. “Bernanke is not being singled out in that regard.”

And notice we don’t even know how many additional interviews are being withheld. The only reason we know about the Bernanke chit chat is that it is referenced in FCIC footnotes, and it apparently the only “closed door” session referred to in the report.

So much for the promise of greater transparency at the Fed.

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  1. Cedric Regula

    We just recently got Ben’s a priori assertion that Fed policy was responsible for saving or creating 3 million jobs post crisis, so what else do we need to know?

  2. Pixy Dust

    ““There are others that are at a Bernanke level…”

    Say what?!

    How many heads of the Federal Reserve are there?
    And were they also appointed by the president?
    Curiouser and curiouser.

  3. KnotRP

    > So Why is the FCIC Protecting Bernanke & Co?

    Because that’s what it was designed to do. Duh.
    Too bad astroturfing isn’t going to hide the damage
    for much longer…

  4. Tao Jonesing

    “[T]he only rationale that makes an iota of sense is the information would embarrass certain people in power.”

    Actually, there’s another rationale that makes a lot more sense: the information would lead to the criminal indictment of certain people in power, if we actually lived in a nation that abided by the Rule of Law.

    To feel embarassment, one must have a sense of shame, something which Mr. Bernanke and his brethren at the Fed have not displayed.

  5. Mat Albert 5416

    So Why is the FCIC Protecting Bernanke & Co?

    The following transcript explains why:

    Did you hear about the bailouts?
    no. what about the bailouts?
    the governments have announced the taxpayers will make money on the bailouts.
    should I believe them?
    Depends. Do you believe the politicians are honest?
    do you believe the bankers are fair?
    do you believe that the 2 plus 2 equals pink?
    no. I definitely do not believe that the 2 plus 2 equals pink.
    than you should not believe we’ll make money on the bailouts.
    but how could the governments claim such a thing?
    by conveniently ignoring the backdoor bailouts.
    what is a backdoor bailout?
    a backdoor bailout is like any other bailout, except the governments lie and say it wasn’t a bailout.
    but what was the main bailout?
    the main bailout was the tar-pee program.
    what is the tar-pee program?
    a program where the governments used the taxpayer dollars to buy the shares in the banks.
    why did they buy the shares?
    because they said the banks were too big to fail, and if they failed, there would be too many foreclosures and no new mortgages.
    so after the governments bought the shares, did the banks stop the foreclosures?
    did they give the mortgages?
    so what did they do with the money?
    they used it to buy other banks.
    but werent they already too big to fail?
    so now they are too biggerer to fail?
    which banks are too biggerer to fail?
    the biggest are the JP Morgan Chase Bear Sterns Washington Mutual, and the Bank of America Countrywide Merill Lynch.
    what about the goldman sachs. did they buy another bank?
    why not?
    because when you already own the US government, you don’t need to buy any more banks.
    after the other banks became too biggerer to fail, did they stop the foreclosures?
    did they give the mortgages?
    did they do anything at all?
    one executive at the bank of america countrywide merill lynch paid the bill on his 70 thousand dollar desk.
    my god. is this a corrupt third world country?
    definitely not.
    how could you be so sure?
    because nobody in a third world country would be stupid enough to spend 70 thousand dollars on a desk.
    is this executive still at the bank of america countrywide merill lynch?
    no. he is now the CEO of the C I T.
    what is the C I T ?
    the C I T is a failed lending company.
    how could a failed company hire a new CEO?
    because they also got billions in the bailouts.
    do these people have no shame?
    when you constantly get the bailouts, you don’t care about the shame.
    what was the main backdoor bailout?
    the biggest was the bailout of the AIGs.
    why did they bailout the AIGs?
    because the AIGs owed billions to the banks, and if they went under the banks would lose too much money.
    and after the bailout, how much did the banks lose?
    how is that possible?
    because the governments decided the taxpayers should pay for all the banks mistakes
    which bank did the AIGs owe the most money to?
    the goldman sachs.
    so despite its poor decision to do too much business with a failed company, the goldman sachs did not lose a penny?
    actually, the goldman sachs probably profited from the failiure of the AIGs.
    how could someone profit from the downfall of one of their biggest business partners?
    because while the goldman sachs was working with the AIGs, it was also making a secret bet that they would go under.
    my god, is this some kind of science fiction movie, like the star wars?
    how do you know?
    because the evil empire in the star wars was fiction. but the evil empire that is the goldman sachs is very real.
    but weren’t the American people outraged by this manipulation of a bailout?
    at the time, the American people did not know about the structure of this bailout.
    how come?
    because the governments ordered the AIGs to lie to the people.
    who in the governments gave such an order?
    The New York Fed.
    and who at the time was in charge of the New York Fed?
    the timothy geethner.
    and who put the timothy geethner in charge?
    the timothy geethner was appointed by the president bush.
    what about the president obama, and the change. Did the president obama bring the change to the timothy geethner?
    so he fired him?
    no. he promoted him to treasury secretary.
    that does not sound like the change we can believe in.
    definitely not.
    were there any other bailouts?
    yes. during the financial crisis, the ben bernank loaned trillons of dollars to companies like the barclays.
    what is the barclays?
    the barclays is a european bank.
    why would the ben bernank lend money to a European bank?
    so they could buy the lehman after it went bankrupt.
    and why did the lehman go bankrupt?
    because the ben bernank refused to lend them any money.
    but why would the fed refuse to lend the american peoples money to an american bank, but then lend the money to a european bank?
    I dont know, maybe because the europeans have funny accents.
    but me and you also have funny accents. will the ben bernanke lend us money?
    why not?
    because we are not bankers, and to the ben bernank if you are not a banker, then you simply don’t exist.
    so after all these bailouts, did the banks stop the foreclosures?
    did they give the mortgages?
    did they do anything at all?
    they paid themselves big bonuses.
    that does not sound like a prudent use of the american peoples money.
    when you constantly get the bailouts, you don’t care about the prudence.
    are any of the bailouts going on today?
    yes. the ben bernanke keeps the short term interest rates at zero.
    how is that a bailout?
    low rates mean the banks have to pay the american people very little interest in their savings accounts.
    that is a very nice gift from the american people to the banks.
    and to show their gratitute, did the banks stop the foreclosures?
    did they give the mortgages?
    did they do anything at all?
    yes. they increased the monthly fees on all bank accounts.
    that does not sound like the gratitude. that sounds like the screwing of the american people.
    but isn’t it normally a bad idea to screw your own customers?
    when you constantly get the bailouts, you don’t care about your customers.
    but after all these different bailouts, what did the banks do with the money?
    they invested a lot of it in the foreign countries.
    why did they invest in the foreign countries?
    because they said in America the taxes are too high.
    why are the taxes so high?
    because the governments is broke.
    and why is the governments broke?
    because they spent all their money on the bailouts.
    is this all some kind of a sick joke?
    yes, in a way, it is.
    what kind of joke is it?
    well, do you work for a bank?
    did you get any of the bailouts?
    do you pay income taxes?
    than the joke is on you.

    1. Cedric Regula

      I thought it went something like that, but without any access to reality, how would I ever know for sure?

    2. psychohistorian

      Nice! Thanks for that.

      My only complaint is that is says nothing about the folks that own the banks and why they would put and keep such people in power.

  6. razzz

    …because it’s a matter of national security, that Benny disclosed his banking system is insolvent, not to be revealed to rating agencies.

  7. Hubert

    Well, if they keep back “interesting” interviews then I have to conclude that the ones we are allowed to listen in are not so interesting.
    I listened to Burry and Chanos. Burry has some interesting parts but is hard to follow in his way of speaking. Chanos is outspoken as always.
    I went 25 minutes into Buffett and then just got away with telling his stale stories. Proposal: If someone finds unknown things in the tapes, please post here which interview at which time-marks ……..
    The questioning in all cases stroke me as one of interested 30-35 year old journalists. Engaged legal minds would have opened many interesting leads. F.e. Chanos mentions that due to the autumn 2010 bankruptcy report the Lehman balance sheet hole now has expanded to 190 billion dollars from the already incredible 150 billion. Reaction: zero. HEy, what is 190 billion between taxpayers and creditors…. Dear FCIC: how about a follow-up question there ? Maybe to Dick Fuld or that CFO girl and maybe with subpoena ?

  8. bayleaf

    Unfortunately, the tolerance of the American public is not even close to being breached. Perhaps their continued greed and complacence will someday bring on an Egyptian-style revolt – possibly the only real solution.

  9. Hugh

    It’s a reflex. Our elites are out to protect each other, not inform the public. I am reminded of the late Tim Russert testifying at Scooter Libby’s trial. He said he assumed that any conversation he had with a source (like Libby) was off the record unless specifically told otherwise, the very opposite of what good journalistic practice used to be.

    Then too look at the millions and millions of documents our government classifies. Very few of those actually need to be classified. It isn’t about security but control. They only want us to know what they want us to know. They do not want a lot of information out in the public domain for us to make up our own minds, and just possibly hold them accountable for their actions.

  10. MichaelC

    Until the key mechanism that explains the cause and severity of the inflation/bust of the bubble, specifically the proliferation of toxic mortgage loans that enabled it post 2006, is referenced in any discussion about the FICCs findings then discussions about the FICC findings/disclosures are interesting distractions.

    ‘Normal’ market mechanisms were working to constrain the bubble by 2006. It would have been messy had the bubble burst in 2006, but if the market was structured as it was pre- 2006 then the PTBs purported understanding and remedies at the time might arguably have had some merit.

    The FCIC findings seem to perpetuate the myth that previously normal market operations had not been corrupted by this new element.

    It seems to me that its inevitable that as the foreclosure issues,( I wonder how many mortgages are snared in the servicer process are post 06 vintage?) and the various investigations of the hedge funds who participated in the scam work their way through the courts the significance of the Magnetar trade will need to be the focal point for regulatory development.

    It’s curious to me that ProPublica has been silent about the key miss in the report. One would think if they were serious they would have already followed up with their own version of your “Why was there demand for Bad Mortgage Loans”.

    Till that day arrives, you’re the water carrier for this critical point. I recommend you embed a link to the Why was demand.. piece in every FICC related post.

    It’s not even a controversial point any longer, just a willfully underreported one.

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