Per Declassified Testimony, Bernanke Blames Blogosphere For Itemizing Disastrous Consequences Of His Actions, Says Goldman Is A Utility

Tyler Durden's picture

Following loud complaints by Zero Hedge over the weekend about the retention of Bernanke's FCIC testimony from the public's eye, yesterday the commission caved and agreed to release Bernanke's November 17, 2009 89-page closed session confidential transcript, in which, among other things, Bernanke complains about the... blogosphere. Arguably, among the most amusing comments are the circumstances which bring Bernanke to lament the surge of alternative media. On page 68, the Chairsatan, in responding to a question of why nobody could predict the disastrous consequences of Vissarionovich Jr's actions, we see another face of Bernanke - that of the man who deflects his gross incompetence which almost destroyed civilization as we know it... to those who worry too much: "I think there were people -- there were people saying -- including people at the Fed but others as well -- saying, in the year before the crisis, that risk was being underpriced, that  spreads were very narrow, that markets seemed ebullient, that liquidity was, in some sense, excessive. There were -- you know, the way I would put it is, I think there were people -- not necessarily the same people -- identifying various parts of the problems. You know, there were people who were concerned about derivatives, there were people that were concerned about subprime mortgages, there were  people concerned about the overall credit environment, there were people who were concerned about off-balance-sheet vehicles. But I think notwithstanding the claims of one or two people out there who are now sort of living on the fact that they, quote, anticipated in the crisis, I  would still say that the interaction of these things, the “perfect storm” aspect was so complicated and large, that I was certainly not aware, for what it’s worth -- and it could be just my deficiency -- but I was not aware of anybody who had any kind of comprehensive warning. There are people identified -- and the trouble is -- and particularly in this blogosphere we live in now -- at any given moment, there are people identifying 19 different problems, crises." So there you have it: the next time the entire financial system collapses, which should be within a few years at most, and unless Mars bails the Earth out, this will be the last collapse, it will be the blogosphere's fault again, for identifying too many problems again, and for supposedly 'shouting wolf' when it has been right all along.

Some other highlights from Bernanke's declassified testimony which is a must read: 

On the question of which banks were safe, and why JPMorgan, better known as the Fed's right hand and gold price suppression bank, was safe, when even Goldman wasn't:

Chairman Angelides: Can I ask a quick follow-up to what he said?

So what you said earlier, J.P. Morgan out of 13 was in a different position. Was there something that they saw or did that was definitively different in terms of market practice as an institution?

MR. BERNANKE: So J.P. Morgan was never under pressure, to my knowledge.

Goldman Sachs, I would say also protected themselves quite well on the whole. They had a lot of capital, a lot of liquidity. But being in the investment banking category rather than the commercial banking category, when that huge funding crisis hit all the investment banks, even Goldman Sachs, we thought there was a real chance that they would go under.

So I think the answer is that there were folks like Jamie Dimon, who -- you know, there is this classic thing that Chuck Prince said about having to dance when the music is playing. But that was exactly the wrong attitude. I mean, basically, if you were thinking about a longer-term -- a longer-term stability to your company, you want to think about what you have to do to make sure you’ve got plenty of reserves and protection against bad events and so on.

So there were some -- obviously, this -- to quote somebody else, Buffett: “When the tide goes out, you see who is swimming naked.” This was the thing that really separated the sheep from the goats. And the really strong people who really protected themselves came out better, and the ones who were relying on the general boom to sweep them along, they were exposed.

Most notable, is Bernanke's statement that any financial reform has to provision for the failure of Goldman, and more notably, says that Goldman is really a utility company under the current regime.

I just want to say this as strongly as possible -- the reform will be a failure if we could not contemplate the failure of Goldman Sachs. That is, there needs to be a system by which Goldman Sachs will go bankrupt and Goldman Sachs’ creditors could lose money. If we don’t have that, then we might as well treat them as a utility, because that’s what they are.

Odd: even "backward" Europe has that system now and it was just used. Furthermore, they don't bail out every single bank with the FDIC's assistance.... We do. Does that mean Goldman IS a utility? And if so, why did the bank just have a near-record bonus payout year?

Full transcript:

FCIC Interview with Ben Bernanke, Federal Reserve