This page has been archived and commenting is disabled.
Mystery of the Day: Who Wrote This Email to the Fed Just Before Lehman's Collapse?
Submitted by EconomicPolicyJournal.com
And, here it is....
Feel free to leave your best guess(es) in the comments along with your reasoning. We have our own, but will wait to disclose so as not to corrupt the noodling process.
On another note, doesn't this pretty much destroy the systemic risk argument that was used to justify the sweeping changes to the bankruptcy code in 2005, which grants exemptions for derivatives and repos from automatic stay? In other words, if all the counterparties to a bankrupt entity can liquidate the counterparty's collateral they're holding for repos and derivative trades, doesn't that fuel the "wave of selling unlike any we have seen before"?
Thank you ISDA.
»
- EB's blog
- 21426 reads
- Printer-friendly version
- Send to friend
- advertisements -
EB, you thanked the ISDA above and gave us a link, is that a clue? Clicking on that link takes you to the list of the Board of Directors of the ISDA and the top of that list is
Stephen O’Connor
Chairman
Managing Director
Morgan StanleyLet's remember GS and MS were scrambling to become "banks" around that time. bastards
The derivatives fairy?
Wouldn't it be a riot if the sender was Bernie Madoff? Especially, knowing that the tide was going out and he was swimming naked.
William Ayres
Corzine
Charlie Munger
John Mack. MS was almost forced out back then... I'm not so sure I see it surviving the next round of crash/consolidations.
This is none other than Christine Lagarde.
I was thinking IMF as a potential candidate too but DSK was still head of the IMF back then right? Seems so long ago, has not even been a year yet. Can you believe it? May 11, 2011.
Correct, I believe Christine was French Minister of Finance at the time, not with the IMF. Time flies when you're having fun...
I take back my Paul Volcker suggestion...it's someone who heads a firm that has exposure to Lehman, just not in a big way. And, its someone who for some reason won't pick up the phone and call Mr. Krozsner....hmmm. Could it be Jamie Dimon while he was still lobbying to be Treasury Secretary? They had big Lehman exposure didn't they? I don't think Corzine was back in the game yet...hmmm.
George Soros???
When are you going to tell us Tyler?
GS was actively using those terms re their Lehman exposure at the time... see the post article about their claims here
"Given that, what I would tell you is given the outcome at Lehman and whatever the outcome at AIG, I would expect the direct impact of our credit exposure to both of them to be immaterial to our results."
Read more: http://www.nypost.com/p/news/business/item_tSI9IuoohR7qqGHP0EA54M#ixzz1pxxgswPB
Obviously Joe Biden
:) Rud, if it had been Biden you know it was plagiarized from someone else.
the words are too big for Biden
My guess would be Lloyd Blankfein, who was head of Goldman at the time.
Clearly someone outside the Fed though with intimate knowledge of it's workings and the presumed authority to tell the Governor of the Chicago FRB to call him, mention of the DTCC, plus syntax and use of second person plural instead of first tell me that. Could be a foreigner. The biggest point of this e-mail seems to be the irony of the need to end the TBTF banking system while the actions urged only reinforce the TBTF banks and make them even bigger.
I had several candidates in mind but when inserting their names into the e-mail FROM line one name stood out above the others:
Maurice Greenberg, former head of AIG, Council on Foreign Relations, Trilateral Commission, one of the richest people on the planet and possibly the single most connected.
Consider this from AIG right after the collapse:
AIG’s agreements with the Federal Reserve Bank of New York
* AIG’s exposure to Lehman Brothers’ Credit Default Swaps is approximately $6.2 million, contrary to publicized reports of billions of dollars of exposure.
So small as to rate the comment in the memo "not material," yet it had to mentioned. And, the following from the same page:
* On October 8, 2008, The Federal Reserve Bank of New York agreed to provide liquidity to AIG’s securities lending program by borrowing investment grade, fixed income securities from AIG’s domestic life insurance companies, on commercial terms and conditions, in exchange for cash. The total amount the Fed is authorized to borrow is $37.8 billion.
* This agreement is separate and distinct from the two-year, $85 billion credit facility announced on September 22, 2008. This new agreement contemplates the Fed stepping in as a counterparty in a traditional commercial financing transaction, on commercial terms and conditions.
My emphasis there. Find the document here: http://www.wgains.com/assets/attachments/AIGfactsOct27.pdf
My other two guesses were a bit of a reach, then ECB head Trichet could have written it and fit except the exposure part, in order for that to fit he would have had to have meant Eurozone banks collectively and been speaking as he did for brevity owing to the format, but I would wonder why he was writing to the Chicago governor of the FRB instead of contacting his US counterpart Bernanke directly. The same goes for my other guess who is now cooling his jets in jail on a prostitution scandal, DSK. Like I said, a reach, but the irony fits these guys better than anyone else I can name except possibly former Chairsatan Loanspan who I presume still gets to weigh in, and had personal relationships with all the FRB governors, yet is now outside the system so would not use first person syntax, and can just point blank tell an FRB Governor to "call me." But, would the Fed have had exposure to Lehman two days prior to it's bankruptcy filing? More important if they did nobody would have had to tell the Chicago Fed governor that bit of info.
Of course, after his retirement from the Fed he was retained by PIMCO, Deutsche Bank, Paulson & Co., so that would make disclosure mandatory during that time window.
OK, he and Greenberg are my tied first guess.
Boiltherich
AIG and Maurice Greenberg were at very evil avaricious heart of the leveraged credit default guaranteed over lending that fuelled this whole mess beyond normal debt provsioning rules.
Greenberg knrw he was systemic failure central and would do anything to save his ass.
He is the first choiceThat gun looks like a tank
After reading all educated guesses, yours seems the most reasoned.
It's got to be Hank Paulson or Paul Volcker....
"please call" is a clue. its a chick.
http://i2.cdn.turner.com/cnn/2011/images/01/05/t1larg.homeless.voice.dis...
Sheila Bair
It was a joke email by the Obama Bin Bernanke
who is john gault?
Delete yourself, er, uh, I mean your post.
Galt not Gault!!!!!!!!!!!!!!!!
Noting the use of "game over" I'm guessing Pvt Hudson.
Marc Faber is the author.
I don't detect and accent in that email.
Greenspan a.k.a. The Maestro
Clearly a terrorist wrote that. TBTF is the establishment political mechanism for control. Government is TBTF, so elections and Rule of Law will be suspended until the TBTF crisis is resolved.
We know shifty Paulson, the Bernank, Dimon and Blankfein were on speed dial. Following my "thrown under bus" theory, I'll say Ken Lewis. The PimPco suggestion sounds good as well.
Paulson & Co. was another firm that hired Greenspan as an advisor after his retirement from the Fed. See my post below for details if you like. I agree with your reasoning though, PIMCO and Paulson both hired Greenspan and how many people can simply tell a FRB governor to "call me."
I've got to go with PIMCO - Bill Gross? They are the only ones "outside" enough to not have a vested interest in keeping the Ponzi rehypothication going - i.e. TBTF.
They also concentrate more on the repo end of things...
Looking forward to your guess EB.
Fascinating choice...PIMCO...whether Bill or Mohammed sent it
PIMCO had retained Alan Greenspan as an advisor after Greenspan left the Fed, that is why I picked him as my tied number one guess with Greenberg at AIG.
Bernie Madoff. :-).
My first reaction to your post was LOL, funny guy, clever. But when I insert his name into the send line from that memo it actually fits, of course in order to tell a FRB governor to "call me" they would have had to have had a personal relationship. Certainly from BM's point of view the game would have been over had repos shut down, without that market he could not have kept shifting the shells around on the board of his shell game. He wasn't arrested till the end of 2008.
I was going to jokingly add Madoff but started thinking about it too. Wouldnt that be the shit if Bernie was sending off little emails to that fucktard Krozner.
Carl Quintanilla?
me.
him.
John Mack
(note the similar phraseology)
http://hereisthecity.com/2010/01/14/written_submission_of_morgan_stanley/
what's my prize please?
.
That is a good, reasoned, guess.
The recipient of that message might provide a clue:
Randall S. Kroszner, Ph.D. (born June 22, 1962) is a former member of the Board of Governors of the Federal Reserve System of the United States. He was chairman of its Committee on Supervision and Regulation of Banking Institutions during the global financial crisis.
The sender? The Bernank!
Dick Fuld.
His exposure to Lehman was Big!
As in bonus pool, stock, restricted stock, post retirement healthcare benefits, office and secretarial services, ego, karma and unadulterated fuck all getting paid a bazillion dollars for doing nothing but helping fuck up the financial sector.
Way to go Dickie!
Willumstad from AIG fired by Govt 9/17/08 4 days after sending this.
Why? He was not supporting the TBTF team and was putting the TPTB money at risk with this silly talk. Fire him now came down from GS and the Govt did as told.
Steve Liesman