@Nouriel, enough with the pro-Fed propaganda already.
Reposted with permission from EconomicPolicyJournal.com
We recently revealed that the Government "Accountability" Office audit of the Fed's emergency practices during the financial panic (which caused so much consternation even in watered down form) was a complete whitewash. In its review of the Fed's outsourcing practices, the GAO failed to mention the most damaging and suspicious sole-source (no bid) contract awarded to BlackRock, which was for managing the New York Fed's toxic Bear Stearns portfolio, otherwise known as Maiden Lane. This contract would generate $108,000,000 in fees and was one of the largest awarded during the bailout period, but it might also have saved JP Morgan $1.1 billion in losses from its Bear Stearns acquisition.
The Reserve Banks, primarily FRBNY, awarded 103 contracts worth $659.4 million from 2008 through 2010 to help carry out their emergency lending activities. A few contracts accounted for most of the spending on vendor services. The Reserve Banks relied more on vendors more extensively for programs that provided assistance to single institutions than for broad-based programs. Most of the contracts, including 8 of the 10 highest-value contracts, were awarded noncompetitively due to exigent circumstances as permitted under FRBNY’s acquisition policies.
For example, FRBNY noncompetitively selected BlackRock as the investment manager for Maiden Lanes II and III because BlackRock had already evaluated the underlying assets pursuant to an engagement with AIG prior to the extension of credit by FRBNY.
To Sarah Dahlgren/NY/FRS@FRSRe: Sole SourceSpent some time with him [Tom Baxter, Jr., FRBNY GC] tonight. (He doesn't understand ML3, and I can't begin explain it either -- so don't needle him! -- and I am going to have [Paul] Whynott [FRBNY VP] spend some time with him tomorrow, BTW, you might touch base with Joyce [Hansen, FRBNY Deputy GC] about her reaction to Sunday's briefing; I think she had some concerns about how ML3 was presented to Geithner, which she expressed to Paul.) [Geithner] knew that Stephanie [Heller, FRBNY Asst. GC] was handling the Blackrock contract -- he didn't express any concerns -- and I explained that, in contrast to MLI, we had a clear reason to sole source it this time (that they had already modeled, etc.). So, although I have no worries, yes, probably worth reviewing it with him [Geithner] before taking it to Tom."
FRBNY awarded contracts in accordance with its acquisition policy, which applied to all services associated with the emergency programs and single-institution assistance. FRBNY is a private corporation created by statute and is not subject to the FAR. Instead, FRBNY developed its own acquisition policy, called Operating Bulletin 10.
4.3 Exceptions to Competitive AcquisitionsA. Procedures other than competitive solicitations or small purchase procedures may be used in the following circumstances. The Contract Representative should draft a memorandum with sufficient supporting documentation to justify the use of the exception to acquisition procedures, and obtain the approval of a senior officer (Vice President or higher). The approving senior officer must have the appropriate level of signing authority, pursuant to Operating Bulletin No. 2, for the expected dollar expenditure. A copy of both the approval memorandum and senior officer approval should be placed in the acquisition file of the Contract Representative area and forwarded to the Procurement Division as the central repository for contract information.Contracts in excess of $500,000 that are not competitively bid must be approved by the Bank’s Board of Directors pursuant to Operating Bulletin No. 2.1. Sole Source. The property or services are available from only one responsible supplier and no other type of property or services will satisfy the Bank’s needs.Commentary(1) A sole-source acquisition involves no competition and should be utilized only when justified and necessary to serve Bank needs. A sole-source award should generally be made only where no other source of supply is available.
STEPHEN FRIEDMAN, Chair and Federal Reserve AgentChairmanStone Point Capital, LLC, Greenwich, Conn.DENIS M. HUGHES, Deputy ChairPresidentNew York State AFL-CIO, New York, N.Y.JAMES DIMONChairman and Chief Executive OfficerJPMorgan Chase & Co., New York, N.Y.JEFFREY R. IMMELTChairman and Chief Executive OfficerGeneral Electric Company, Fairfield, Conn.CHARLES V. WAITPresident, Chief Executive Officer, and ChairmanThe Adirondack Trust Company, Saratoga Springs, N.Y.RICHARD L. CARRIÓNChairman, President, and Chief Executive OfficerPopular, Inc., San Juan, P.R.INDRA K. NOOYIChairman and Chief Executive OfficerPepsiCo, Inc., Purchase, N.Y.VACANCY 2010 BLEE C. BOLLINGERPresidentColumbia University, New York, N.Y.