What Part Of Bernanke's Secret FCIC Interview Constitutes A Disclosure Of National Secrets?
Now that the FCIC has declassified all of its interviews with the people responsible, or profiting, for the housing crisis (among which are those of John Paulson, Hank Paulson, Lloyd Blankfein, Dick Fuld, Jonathan Egol (the man who helped Fab Tourre construct Abacus), Alan Greenspan and of course Agent Orange himself - Angelo Mozilo), there is one interview strangely withheld. That of the man largely at the heart of everything - Ben Bernanke. From Bloomberg: "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 interview is quoted in the congressionally authorized
panel’s final report, which cites the November 17, 2009,
“closed-door” session in 11 footnotes. The Fed chief discussed
a range of topics including the central bank’s failures and why
the government rescued Bear Stearns Cos. and let Lehman Brothers
Holdings Inc. go bankrupt, the FCIC report shows." And yet, it appears to contain information so sensitive it would once again rain fire and brimstone on everyone, and like an audio medusa, lead to widespread petrifying contagion everywhere it was heard. Once again we discover that the Fed has learned nothing from the Pittman episode, nor from the Paul campaign to bring some transparency to its actions. We do learn, however, that the Fed continues to believe it is above the people, and that the information it is privy to will never be voluntarily released to those whom it supposedly serves courtesy its three mandates, all of which have the words "Russell" and "36,000" in them.
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.
In the unreleased interview, Bernanke also criticized credit-rating companies, discussed how he underestimated effects from the subprime-mortgage crisis and said the central bank’s lack of aggressiveness in mortgage regulation “was the most severe failure of the Fed in this particular episode,” according to the report. Bernanke told the FCIC that after Lehman failed, the Fed was concerned Goldman Sachs Group Inc. would “go under.”
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.
But don't worry - Ben is not being singled out. There are other whose disclosure, were it made public, would destabilize the financial system, as nobody can trust those peasants for being able to think for themselves.
“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.”
This tendency to classify Fed releases, however, is quite odd - because even the man who singlehandedly profited to the tune of $15 billion from Bernanke's lack of oversight and ability to think clearly, John Paulson, blames the Fed:
John Paulson, whose Paulson & Co. hedge fund made $15 billion betting against subprime mortgages in 2007, said better oversight of home loans by the Federal Reserve System would have helped prevent the crisis.
“The Federal Reserve did have oversight for the mortgage area, and there was very little oversight given in the mortgage area,” Paulson said in an October 2010 interview released today by the Financial Crisis Inquiry Commission on its website. “Demanding that proper underwriting guidelines be followed, not allowing ‘no doc’ loans, requiring a down payment, even if it’s just 5 percent,” would have gone a long way toward preventing the crisis.
The lack of underwriting standards, excessive leverage at banks, and financial institutions that sold derivatives without having sufficient equity are among the main reasons for the crisis, he said in the interview with commission, which was charged by Congress with delving into the origins of the 2008 financial collapse.
Paulson said his firm researched the mortgage markets in 2005 and early 2006 and found subprime loans had “no underwriting standards at all.” Mortgages underwritten in 2006 were inferior to those from earlier periods, he said.
“None of this made any sense to us,” Paulson, 55, said, recounting his experience obtaining three mortgages before the housing boom. “When I purchased my home it was very strict underwriting standards. I had to provide two pay stubs, two years tax returns, three months of bank statements, all sorts of credit card information.”
“If you had margin requirements against derivatives AIG could have never happened,” he said.
And now that the FCIC is shutting down after spending an $8 million budget to uncover absolutely nothing new, the only real question is what is in the unreleased "disclosure." But that would likely cost Phil Angelides another several million, in order to commission a San Fran Fed study on the impact of releasing the only information that is relevant. So, as usual, it is better to not ask questions, and to leave it to our betters and smarters to do what they are truly good at doing: stealing from the middle class in broad daylight, with threats that any change to that particular status quo would lead to global assured destruction, and a world in which the reason for the existence of central banks is, even more, put into question.
We can't wait for the next iteration of the FCIC, some time in 2 years, when instead of housing, the topic under discussion is just when did we allow the market to be overvalued by a few million percent, and just why is the S&P at zero.