Quelle Surprise! More Proof that the FCIC was a Whitewash, Thanks to Angelides and Born

William Cohan has a damning account in the Sunday New York Times, “Was This Whistle-Blower Muzzled?” on how the Financial Crisis Inquiry Commission actively suppressed information that would inconvenience America’s favorite zombie bank, Citigroup. Recall that Sheila Bair’s book Bull by the Horns depicted in riveting detail how she engaged in a protracted battle with pretty much all the other regulators, with the Treasury leading the charge, to try to resolve or at least seriously clean up Citigroup, which by all the metrics the FDIC had (and even some OCC measures) was far and away the sickest big bank. Even though Bair could have put down the US depositary on her own authority, the other financial regulators withheld information about the operations not under the FDIC’s purview, which was almost half the bank. As much as she felt Citi needed to be put down, she felt she could not do so when she both had all the bank supervisors opposed to her and she was at an information disadvantage (that is, they’d pillory her even if their data confirmed what she was seeing, and because it was confidential supervisory information, she would be unable to get it divulged).

At least Bair put up a tenacious fight about Citi, even though Geithner, an acolyte of its board member Bob Rubin, used every bureaucratic device he could find to stymie her (Neil Barofsky has separately described how underhanded and persistent Geithner is, frequently working through cat’s paws). By contrast, another person who tried exposing the extent of the rot at Citi when it should have been safe to do so, long after the worst of the crisis was over, found himself blocked by people who were supposedly tasked with getting to the bottom of the crisis.

Richard Bowen III, a Citi executive who was chief underwriter of consumer lending, started warning the board in early 2006 that the bank was making way too many bad and fraudulent loans and could eventually face large losses. Increasingly desperate, he wrote Rubin in November 2007, which looks to have signed his death warrant at the global bank. Bowen demanded an outside investigation, which confirmed his allegation that mortgage lending controls had broken down in 2005. Nevertheless, CEO Chuck Prince signed the Sarbanes Oxley certification stating that the bank’s controls were sound (star NC pupils know that Sarbanes Oxley violations can serve as the basis for criminal prosecutions).

Fast forward to the Financial Crisis Inquiry Commission in 2010. Bowen was contacted early on. He gave a four hour taped interview which led to him being asked to testify in public. Here is the germane section of Cohen’s article:

On March 22, J. Thomas Greene, the commission’s executive director, gave Mr. Bowen a week to write a statement to accompany his April 7 oral testimony. Mr. Bowen says he was told he could have 30 pages….

On March 30, one of Mr. Bowen’s attorneys, Steve Kardell, a partner at the Dallas law firm Clouse Dunn, told Mr. Bowen, in an e-mail, that the F.C.I.C.’s Mr. Bondi suggested “some substantial changes” to his testimony and “thinks that the way it’s written now, Citi will declare war on both you and the F.C.I.C., and it will primarily consist of an effort to discredit you.” While Mr. Kardell noted that the F.C.I.C. investigators said they didn’t want to influence his testimony, he said that Mr. Bondi suggested trimming it by 10 pages. Peeved, Mr. Bowen instructed him to find out what changes the F.C.I.C. staff wanted to make. The next day, Mr. Kardell e-mailed Mr. Bowen, “I get the impression that the revisions are non-negotiable.”

Mr. Bowen says the F.C.I.C. wanted him to delete his concern that Citi may have materially misrepresented its certifications of internal controls, which require corporate officers to certify the accuracy of their financial statements under Sarbanes-Oxley.

Remove the names of people at Citi, he says he was told. Take out his post-Rubin denouement, his conversations with the bank’s internal lawyers and the fact that Citigroup’s outside attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP were conducting an investigation of his charges.

Mr. Kardell also said he thought the F.C.I.C. was “catching some serious, serious heat this morning.”

“Who are they catching heat from?” Mr. Bowen asked, according to a transcript of the call provided by Mr. Bowen.

“Umm, Citi,” Mr. Kardell replied, adding, “It’s just a complete all battle stations with Citi about you testifying.” He then dropped the bombshell that Brad S. Karp, managing partner of the law firm Paul, Weiss, had “gotten involved” and that “our guys” on the F.C.I.C. staff, “who are still extremely pro Dick Bowen — although I think there’s pressure to yank Dick Bowen — our guys want to see something plain vanilla pretty fast.” A stunned Mr. Bowen told Mr. Kardell, “So much for an independent Congressional commission.”

One of the appalling facts of modern life is when the head of a heavyweight white shoe firm throws his weight behind protecting a big client, he is pretty much assured of getting cooperation. That’s just how things work in corrupt elite America.

The fact that the FCIC was a whitewash is hardly news. Bowen’s four hour taped interview was not among those made available in the FCIC archives. Perversely, some but not all the ones of small fry like yours truly were. But this was just a part of their pattern of covering up for the powerful. We had noted in 2010 that the FCIC had planned to release the audios of all the interviews but then reversed themselves. We asked in early 2011 Why are Half of the FCIC Interviews Being Withheld?:

Another mystery is why so many interviews are being withheld. When they interviewed me in November (and yes, sports fans, my interview is up on the FCIC site), I was informed that 600 interviews would be released. I’m told by people close to the investigation that not all interviews were recorded; this was an oversight early in the process, but starting in July, all were apparently taped.

Now we already know that interviews of Certain Big Kahunas are being withheld, most notably that of Ben Bernanke (which was conducted in 2009 and thus illustrates that at least some of the pre-July sessions were recorded).

But that is not a sufficient explanation. The FCIC’s press release indicates that the staff met with over 700 witnesses; only “more than 300” are to be made public, with 213 released initially and the rest added by now, since the FCIC is now officially no more.

Our Tom Adams was interviewed in December and his conversation was not posted. Why would this be? His position is contrary to the report’s narrative; is that why he was excluded? Or is there a less nefarious reason why he and many others were left on the cutting room floor: that they weren’t name brands? For my taste, far too many of the well known individuals included in the roster were economists who were simply not close enough to what happened to provide much in the way of new perspective.

And if you want to point fingers at why the commission turned out to be a well-packaged regurgitation of conventional wisdom which conveniently blamed everyone except specific executives at major financial firms (if everyone is to blame, then no one can be held to account), look no further than Phil Angelides and Brooksley Born. Yes, the commission was hamstrung by design; for instance, Congress subjected it to having to get approval of commissioners from both parties to issue a subpoena, which pretty much vitiated that power. But if Angelides and Born had been serious, they could have stared down the likes of Brad Karp. Recall that what brought Nixon down was the Saturday Night Massacre, when he ordered special prosecutor Archibald Cox be fired. Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus resigned in protest. It would not have created that level of turmoil, but if Angelides and Born resigned rather than be bullied by banksters and their law firm hired guns, the media consternation would have had more impact than the commission report ever did.

And it was obvious at the time that both had been compromised. We sat in on the press call when the report was released, and wrote it up in FCIC Insider: “I Can’t Believe They Suborned Brooksley Born”:

I participated in a blogger conference call with FCIC commissioners Phil Angelides and Brooksley Born. I’m clearly not cut out for public life. It was disconcerting to hear them thumping their talking points. For instance, Angelides began by saying that the purpose of the report was to explain why we faced the choice in 2008 of spending billions of dollars to bail out the financial system or let it fail.

That’s a false dichotomy that serves to justify the unprecedented rescues. It implies that the only way the crisis could have been addressed was the course of action taken. We pointed out as the crisis was unfolding that some of the early interventions made matters worse. Even at the peak of the crisis, a range of other actions were possible but were not taken. The bias throughout the crisis was to throw money at the problem with virtually no strings attached, and even in the cold light of day, to take far too little in the way of corrective and punitive measures.

But the stunning part were Angelides’ and Born’s answers to my questions. I’ve been in communication with several disaffected insiders. And contrary to the efforts of Born and Angelides to depict critics as the dissenters (meaning the Republicans), these observers feel the investigation was inadequate and the report excluded critical drivers of the crisis. They have told me in some detail about how the staff performed its work in a vacuum. They reported that the commissioners spent virtually no time with the team leaders, did not provide input into the thinking process or interviews. They also complained of poor resource allocation decisions: that nearly 2/3 of the staff time was taken up with arranging and preparing for the public hearings, which were not terribly productive. And to add insult to injury, the staff prepared questions for the hearings only to find the commissioners ignoring them.

Another problem area was the difficulty in getting subpoenas issued…Here, with the commission having a very tight schedule to begin with, stonewalling would be a rational strategy, and my sources tell me that happened on a widespread basis, particularly after the firms under the spotlight began to see that subpoenas were unlikely to be issued….

Born stressed how many pages were produced (ahem , quantity is not tantamount to relevance), how this undertaking was even larger than the complex litigations she had overseen, and how much staff effort went into analyzing the material. I then asked how much time the commissioners spent with the lead investigators and staff. Angelides said “a ton” and that it varied by commissioner, but that he and Born “dove in”. But if you listened carefully, they did NOT discuss how they worked with staff, but that they read memos, listened to interviews, and so on.

I called one of my contacts immediately afterwards and played back the exchange. The reaction: “I can’t believe they suborned Brooksley Born”. The insider disputed the account, saying that the commissioners did not give the staff any insight into their thinking nor did they participate in the interview process (either providing questions or participating in any interviews to get a feel for the process; listening to them afterwards or reading transcripts is just not the same). Others close to the investigation confirmed his report.

While Born was brave enough in 1996 to engage in a pitched battle with much more powerful figures in Washington to regulate credit default swaps and suffer a humiliating loss, she has not bucked the system in a more fundamental way. Her participation in the FCIC gave it an aura of respectability and seriousness. To see her defend a flawed process and product shows either a lack of discernment or a misguided sense of loyalty to a diseased system.

It is unpleasant to face up to the fact that quite a few of the people who are lauded as courageous were not as brave as their PR would lead you to believe. Yes, Born as the new head of the CFTC posed the question of whether credit default swaps should be regulated, faced unified opposition from the other financial regulators, and was embarrassed before Congress by having it vote to exclude her from even studying CDS and putting the matter in the hand of “senior regulators” meaning bank cronies. She left office with her tail between her legs and didn’t speak up until it was safe to, after CDS blew up. It’s the people like Bowen who put their careers on the line who deserve public approval, not the ones who buck the system a bit, get slapped, and then go back to being complaint. Unfortunately, we have way too many Potemkin heros presented as the real thing in order to preserve the legitimacy of a corrupt ruling class.

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  1. John Merryman

    When the cancer kills the host…
    They are cooking their own golden goose. When the ecosystem crashes, top predators often are the ones to go extinct. If the banking system fails, do the bankers think they will somehow still come out on top?

    1. Pokey

      Unless things change, and there seems to be no chance of that, banks will not fail until there is a real catastrophe and the entire system teeters or falls. Bankers share ownership of Washington with like minded billionaires, so it will be “take from the poor and give to the rich” until there is nothing left to take.

      1. psychohistorian

        I am afraid it will go on much longer than that.

        The global plutocrats own almost all the media outlets so they will be used to brainwash folks into believing the source of all the problems is other than the class system with the inherited plutocrats in charge.

        If we don’t, or haven’t already with Fukushima, nuke ourselves to death, it will take mother nature to bring us to our extinction or so damn close that “civilization” as we know it will become a memory/myth.

        Perhaps the global plutocrats have not read enough anthropology to understand that fraud and corruption don’t survive well in small groups…the kinds that may survive.

    2. F. Beard

      If the banking system fails, do the bankers think they will somehow still come out on top? John Merryman

      Maybe they’ll lose their heads but the banking model* itself will likely survive because it flatters people that they are worthy of their neighbor’s stolen purchasing power.

      *Usury for stolen purchasing power.

    3. jonboinAR

      Well, yes, they do think they will come out on top. I, myself, don’t see anything that would suggest they won’t. As others have pointed out, severe disparities of wealth can go on for centuries and may be more usual than not. I don’t see 1789 as being imminent here.

      1. F. Beard

        I disagree and the reason is the PTB are true believers and think TINA. They will insist TINA till their doom in my opinion because:

        1) They believe in the false certainty of accounting even when, for example, the Liabilities of the banking system as a whole are mostly virtual.

        2) The Left made a mess of things re: Communism.

        3) They are ex-Hippies and wish to prove how serious they are by NOT giving a peace a chance.

        4) They don’t believe in God or least not the God of the Bible who commands justice and condemns oppression of the poor.

  2. diptherio

    We should know by now that NO politician can be trusted, period…ever. Sure, occasionally you’ll get a McKinney or Kucinich, but they are the rule-proving exceptions. 99% of national office holders don’t give a rip about anything apart from their own careers. Sure, they’ll buck the system if they think it will win them some brownie points with campaign funders or constituents, but no one in Washington takes a principled stand, even if that’s what they claim to be doing. It’s all kayfabe, babe…(Ned Stark wouldn’t last any longer in Washington than he did in King’s Landing…)

  3. David NYC

    Speaking of stonewalling, Citi’s unresponsive response to April 2010 Bowen’s allegations arrived 7 months later, in November 2010, affording staffers little time for follow up.


    It’s also clear that that was an internal schism within the FCIC. GOP members boycotted the hearings in Miami, Las Vegas, Bakersfield and Sacramento where predatory lending and fraud was examined.

    GOP members minimized the impact of fraud in their dissent; Peter Wallison said there was no evidence. Plus, staffers had to deal with Wallison’s demands that Ed Pinto’s crackpot analysis be used to frame the report.

    Though the report pulls its punches and the public disclosures are incomplete, the publicly available interviews, CDO documents, and compilation of data remain an invaluable public resource.

    1. LucyLulu

      “GOP members minimized the impact of fraud in their dissent; Peter Wallison said there was no evidence.”

      I don’t recall the details of the FCIC report anymore (it all runs together after a while), but Wallison and GOP members were probably being honest. There was no evidence of fraud, because any evidence of fraud was thrown out during the investigation. The paragraph following what Yves posted above, ending with “So much for an independent commission.” (for those having difficulties with paywall):

      But after a night of prayer, Mr. Bowen acquiesced. He cut the offending passages and his testimony by eight pages. “It’s better to get something on record than nothing,” he decided. He also figured that when he testified on April 7, he’d be able to provide more detail. But that morning, he had breakfast with Mr. Kardell, who told him that Mr. Bondi had said that he was not to respond to the commissioners’ questions about his departure from Citigroup. If the commissioners asked him, for instance, what happened after he e-mailed Mr. Rubin, he was to be silent, and claim “employment issues” as justification. When one commissioner, Peter J. Wallison, asked what had happened, Mr. Angelides cut him off.

      I was surprised when there were no responses when I posted the link, and then Lambert reposted it on his Links page yesterday. While I already know our Congress is a corrupt entity, the story still blew me away. This was such an important investigation, discovering the causes so future crises could be averted, and that they’d intentionally game the findings. Perhaps others find it less surprising. Others who have followed NC longer.

  4. charles sereno

    “The perfect is the enemy of the good.”

    While this saying has its uses, Yves’ criticism of Brooksley Born illustrates its misuse. Born’s justly celebrated heroics vs the likes of Greenspan, Rubin, and Summers only enlarged her failure to support a just cause in a far easier battle. One hopes it was just “a lack of discernment.”

  5. Dan Kervick

    Can any of these public officials be charged with obstruction of justice? Or are they all immunized? If they heard testimony that Citi falsified its Sarbanes-Oxley report, don’t they have some duty to report it somewhere?

  6. middle seaman

    One may conclude that the hide and don’t seek system described in the post is unique to our corrupt banking system. That’s not the case. Most American systems are built on not making waves, staying on the well paved road, trying as much as possible to make the higher ups happy. Integrity and following the law are nice but only optional.

    Other countries form investigative committees using well known independent individuals whose honesty and integrity is beyond reproach. FCIC used well known insider apparatchiks whose product can be controlled and molded.

  7. susan the other

    Disappointing but not surprising. Just one more example of why we need to change the system completely. All the career pols and bureaucrats will be prevented from taking the easy way out. If we can’t put them all in jail, which we can’t, then we should imprison them in a system that works strictly for all the people.

  8. JEHR

    I feel really sad about the characterization of Born as “suborned.” But I once heard her being asked about what she thought about the financial crisis and she refused to say anything. What we don’t know is how the Rubinites may have pressured her into her passive position. She is certainly another example of (William Black’s) gresham’s dynamic at work.

  9. Jess

    Yves and some of the east coast observers can perhaps be faulted for not seeing this coming, but those of us in California were and are completely not surprised. I knew the whitewash was baked into the deal the minute that Angelides was appointed. He’s nothing more than a Dem party hack, DiFi and Pelosi with a penis. (Well, I think he has one.)

    1. Yves Smith Post author

      Ahem, I did see it coming, in fact, I wrote skeptical posts regularly, before the report was issued:

      http://www.nakedcapitalism.com/2010/02/rubin-greenspan-prince-to-be-grilled-by-financial-crisis-inquiry-commission.html (notice aside indicting Angelides was known to be a lightweight)





  10. down2long

    Thanks, Yves for at least some reality check among all the hallelujahs we’ve had to endure on the five year anniversary of the The Big Swindle.

    I for one have found it especially nauseating as I am still fighting the banks on the ground, five years after all the window dressing to prove “things have changed.”

    Wells Fargo just initiated foreclosure proceedings on a property I own, four years after the confirmation of my Chapter 11. I dutifully sent in checks for 3 1/2 years for the payment approved by the court, and Wells Fargo dutifully sent them back. Last year I reopened my bankruptcy case to save a building on which Chase was doing a “voluntary foreclosure” that is I was current, the loan term had expired, but my original (fair) judge had moved on to a different district, and my new “judge’ Judge Sandra S. Klein , who used to work as a fraud investigator for the U.S. Trustee, and who thinks only individuals commit fraud, and furthermore that her mission in life as a judge is now to exact revenge on all debtors by ruling against them almost all the time. (Check her record.)

    It is eye-opening to see a judge turn a blind eye to a bank ignoring the ruling of a Fed. Bankruptcy Court. After all, if the court itself has no respect for its rulings, how can you expect anyone else to? Of course, that feature is now baked in, or as Lambert would say, that’s a feature, not a bug. One argument in the case was that two banks had been refusing my court ordered payments and reporting me to the credit bureaus, thus making impossible a refi. The judge saw no problem with the banks on its face. I was welcome to file written arguments. (

    In the meantime, they have reported me as late to the credit bureaus for four years, ruining my credit as I try to rebuild it. I did pay off all my creditors per the plan one year early, but of course, in America, that is meaningless. I still get calls demanding payment. The most recent one was from Green Tree Servicing to demand how I planned to pay off “my discharged debt?” WTF????

    I am planning a jury trial in L.A. I want the bank to explain to a jury how they can foreclose when we will have counsel on the stand and present each returned check to them, as well as the Bankruptcy Court ruling re the total. (Yes, I have to go to state court – I’d be back before that jackal Klein if I return to Fed court.) It is, after all, a contract dispute, bad faith, etc. There is also the fact that the loan was transferred from MERS to the B of A – the trustee for a Morgan Stanley trust originated in 2006 – in 2011, long after the underlying trust was closed. Lots of legal twist and turns.

    I have had four lawsuits in the intervening four years since everything “is all better.” It has exacted a terrible financial toll on me, as well as an emotional toll. I spent fifteen years restoring my buildings, working on the transitioning communities where I bought (driving out the gangs at great personal peril in one case. The only thing that saved me was that the gangs thought I was a Scientologist – and that was a bigger gang than them.)

    Of course, I have the unusual characteristic of finding tremendous strength in doing battle and fighting for what I believe is right. “Resentment keeps me alive” I once said to my startled therapist. I was just as awestruck by the truth of my statement to myself.

    Finally, with all the hoopla about “all fixed” dying down we are faced with the specter of a system that really is going to collapse.

    Mortgage originations – the government’s gift that kept on giving to the banks through all the fees and origination points the banksters stole on their way to unloading the loans onto Fannie and Freddie are over.

    Wells, Chase, etc. laying off thousands of mortgage employees. Half of all purchases cash.

    It is the WalMart scenario writ large. As Yves once said vis a vis the banks. “That’s what happens when you blow up your customers” the banks have destroyed their consumers. The rich don’t need their money. Any wealthy person with half a brain will not be a counterparty to bank (yes you can always get the stupid pension funds and their stupid advisors to bite, but those funds will wind down as defined pensions disappear. See the FT article on worthless “financial advisors” from yesterday.

    I would love to get my leverage even further down, but it is difficult to do with crippling legal fees eating up my income. Over $200K and counting.

    The populace is too overwhelmed by trying to get by and drugged by TV and media to do anything meaningful, but the capitalist pressure cooker may blow just blow itself from the scorched earth policies it has been obliterating anything in its path for the last 30 years.

    1. down2long

      It is of course worth mentioning re The FT and NY Times stories on JPMorgan balking at a 22 Billion $ settlement over mortgage fraud that my performing loan Chase foreclosed on was a loan they got esentially for free from the FDIC. Yes they lost $550 – $600k off the principal I was paying on but Slimin’ needed cash to offset the Whale losses. No prob.WaMu and Chase shareholders took the hit.

      Now of Course Chase is furious that along with the free gift comes (minimal) WaMu liabilities Of course in Amerikkka that is not how banksters opera sharpiete. They take the profit and the rest of us takes the loss. I’m sure Debevoise and Covington sharpies at the SEC OCC TREAS etc. Will fix this oversight lickety split.

      1. LucyLulu

        Just an idea from a non-legal person. I don’t know if you are an attorney yourself or representing yourself pro se (which I hear IS a life-consuming task, learning the law on the fly). If JPMorgan only took a minimal hit off the loan when it got it from WaMu, can you also argue that JPM can only sue for losses they actually incurred? My (albeit primitive) understanding is that one can’t sue for damages that one has not sustained.

        In any case, go get ’em! Somebody here who posts as Dolley Madison won her case pro se, similar case where she made all her payments but they claimed she didn’t, and got a ruling that the bank lacked legal standing to enforce her mortgage.

    2. Stupendous Man - Defender of Liberty, Foe of Tyranny

      “Resentment keeps me alive!”

      Do ya mind if I borrow that?

      1. down2long

        By all means. It is going on cremurn (or whatever they call the Tupperware they put your ashes)to replace “Enough about me.” Or maybe both. It is MY swan song after all.

        Also Lucy, thanks for the heads up. I am not confident enough to go pro se. I did it briefly in Chapter ll when I had run into another scoundrel lawyer and had to keekp the case alive. That was hair raising.

        The bank refusing my payments is actually ASC. (Chase was a different fiasco – they foreclosed after the loan expired, even took a couple of extra payments and put them in “suspense” which of course they never returned. They pulled “suspense” act in Alabama on someone and the judge returned the house to the borrower and fined JPM triple damages of the worth of the house. ONLY JPM has the balls to accept payments and still foreclose, such is the power of SLIMIN’.

        But I had a similar situation with Deutsche Bank. In fact I will be using a similar lawsuit since I always mailed ASC and Deutsche checks the same day, certified/return receipt. Literally, it’s the same lawsuit.

        Deutsche made me a very attractive settlement. Which they should’ve after four years of ignoring the laws. They did not want to go to trial.

    3. Banger

      I’m moved by your story. I would never have bothered to fight anything in court (good judges are few and far between)–ultimately you might win a Pyrrhic victory; however, sometimes we must take a stand and go down swinging so I respect you for it.

      We do not live in a Constitutional Republic based on rule of law and due process and this is hard for most people to grasp. We once were that but that era is long gone–we are gradually transitioning to a rather interesting neofeudal situation with echoes of fascism–very nouvelle cuisine.

  11. Skeptic

    Let’s all step back a minute and realize that this all started with 9/11. Both Chairman Kean and Lee Hamilton, the Democrat Rubber Stamp, on the Kean Omission have written publicly that they were stonewalled:


    Thus, the most formative event of out time has never been properly investigated. Trillions down the Rabbit Hole but we do not really know why. And TARP and all the successive financial depredations are intimitately connected to 9/11.

    Why then should we expect that any other event or issue would be properly investigated? The default and norm are fraud, evasion, deceit. Spend your time and energy accordingly.

  12. LucyLulu

    A couple other influencing factors, peut-etre?

    Unlike those other conversations, though, Mr. Bowen’s Feb. 27 interview, a transcript of which I have read, is not publicly available. Instead, the document, along with the commission’s other records, was sealed and sent off to the National Archives, where it may be reviewed beginning in 2016. “Why five years?” Mr. Bowen wondered. “I don’t know. I’m sure it’s just a coincidence that five years is the statute of limitation for fraud.”

    On March 22, J. Thomas Greene, the commission’s executive director, gave Mr. Bowen a week to write a statement to accompany his April 7 oral testimony. Mr. Bowen says he was told he could have 30 pages. “Tell us what you told us behind closed doors,” he says the F.C.I.C. staff told him. He took that to mean he should feel free to name names, as he had on Feb. 27, and to explain what happened to him after he wrote to Mr. Rubin.

    A week later, he finished his 28-page testimony. Just as he sent it to the commission, the Treasury announced that it intended to sell 7.7 billion shares of Citigroup stock — with an estimated value at the time of $32.2 billion. The projected profit at the time, $7.2 billion, would be among the largest from the government bailouts. (The government ultimately made about $12 billion.) Mr. Bowen suggested, in his Dallas speech, that it was probably just a coincidence, but that he had some lingering doubts.

    This is exactly the kind of collusion between government and the banking sector Simon Johnson wrote about in 2009 in The Quiet Coup, normally found in banana republics. Until this alliance was broken, he said the IMF found it futile to provide rescue funds. But we don’t need the IMF. We have Congress instead, and failing that, the Fed. Our Fed can act in secret, and without Congressional approval claiming its emergency powers (though funds weren’t distributed until 4 months later….. some emergency). Just like the NSA….. and FBI obtaining call records for 20 business and personal lines of AP reporters using an administrative subpoena (no court/judge or probable cause required).

  13. Banger

    Not much of a surprise for me. When officials or front-line regulators have to try and call to account truly heavy-hitters and made-men they just can’t. I don’t think you should blame people for being faint of heart. Most people don’t understand that when the stakes are very high (in this case, the stakes were and are astronomically high)that the people who stand to gain billions will not hesitate to hurt you and your family if you come after them. Why this is not well-understood is beyond me–why would I even have to say that? The United States is, when it comes to truly important matters, no different than any other place dominated by armed and criminal gangs we’re just more polite about our transactions.

  14. peace

    Excellent detailed analysis of specific individuals’ and institutions’ malfeasance and collusion to benefit their own interests. I prefer this to NC threads that paint in ambiguous broad strokes of us versus a vaguely defined and therefore insuperable deep state.

  15. RBHoughton

    I am not overly impressed by bankers except they dress well, smell of flowers and say nothing – notable achievements. The chaps who actually dream up the scurrilous bankers’ plans are lawyers, accountants and economists. Its these foot soldiers who need regulating.

    I am reminded of Imperial China which examined putative civil servants solely on their understanding of propriety. If they fully comprehended that, they could be magistrates throughout the country. The West clearly needs something similar. All professionals should evidence their understanding of social responsibility – then holding them to that standard becomes simple and effective.

  16. Jesse

    “These people are so used to being told by interns and finance reporters and other ballwashers that they’re geniuses that they pretty soon come to believe it, which is how concepts like “We’ll never lose a dollar – it’s all hedged” go unchallenged in rooms full of econ majors who’ve just bet the whole store on the mortgages of underemployed janitors and palm-readers.

    Somebody, please, tell these guys quick how smart they’re not, or else we’ll be in another crisis before we know it.”

    From Matt Taibbi this evening @ http://www.rollingstone.com/politics/blogs/taibblog/aig-ceo-robert-benmosche-compares-bonus-criticism-to-lynch-mobs-20130924#ixzz2frVwVOOE

  17. Hugh

    Wasn’t the primary conclusion of the FCIC that the GFC was a result of poor regulation, i.e. the government’s fault?

    Commissions, by and large, are kabuki exericises. They are meant to convey the impression that, in response to public outrage and anger, something is being done, and the problem is being addressed. The reality is that the reverse is true. Commissions are devices of delay to let public sentiment die down. They are structured in terms of mission, principals (the big names associated with them), staffing, deadlines, powers, and funding to produce a whitewash, and they invariably do. The Angelides Commission was a textbook example. Obama’s NSA review panel is another. The joke was that the FCIC was touted by the powers that be as another Pecora commission. Again, this could not be further from the truth.

    1. LucyLulu

      “Commissions, by and large, are kabuki exericises.”
      That is so true. Rare is the Commission that anything meaningful comes of. When was the last time we had something akin to the Pecora Commission or the Church Commission?

      If anybody needs a job the NSA is searching for somebody for their Civil Rights Protection board. It pays $173,000/yr plus awesome federal benefits. Once you get your first raise, you too can be making as much as a Senator, while not expected to accomplish anything (since you will only be privy to fictional narratives of agency activity).

  18. TC

    “By contrast, another person who tried exposing the extent of the rot at Citi when it should have been safe to do so, long after the worst of the crisis was over, found himself blocked by people who were supposedly tasked with getting to the bottom of the crisis.”

    Long after the worst of the crisis was over? That’s a huge assumption with C$85 billion a month and no way out challenging your claim here (C$ = “Confetti dollars”). Which is to say I am sticking to the view U.S. money center banks are hopelessly insolvent, and although Citi may be more dead than the others, this does not change the fact that, the name of the game from the get go in the aftermath of 2008’s collapse has been let’s play make believe these “banks” aren’t dead, every last one. As it is rather evident the many entities these so called “banks” sunk remain brain dead (with the EMU’s banking system being the most apparent), albeit hooked to life support to sustain appearances of a heart beat, and as the “plan” from the very beginning was to transform an “implicit” guarantee securing a mountain of illegitimate debt into explicit means to further increase systemic leverage, while any and all resistance to this plan was just crushed, well, we see the FCIC is just part of this scam: a pressure relief valve of sorts and not much else.

    “if Angelides and Born resigned rather than be bullied by banksters and their law firm hired guns, the media consternation would have had more impact than the commission report ever did.”

    Another huge assumption. Yeah, “media consternation.” Good one!

    Don’t get me wrong, I’m not dissing your view that, the FCIC simply was a slick part of the canned goods the cover squad produced following the 2008 crisis revealing them all brain dead. Yet there’s no substitute for political action if it’s change you desire. As the only timely “media consternation” we can count on is your fine blog here, and as you “Support the Occupy Movement,” then why not go on full bore promotion mode for NYC mayoral candidate Randy Credico of the “Tax Wall Street Party“?

  19. Anon13

    Real financial reform cannot — and will not — occur unless we break the stranglehold of these banks on our financial system, economy and democracy.

    We MUST break up these TBTF banks.

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