Just What Is Mario Draghi Hiding? ECB Declines To Respond To Bloomberg FOIA Request On Greek-Goldman Swaps

Tyler Durden's picture

Back in February 2010, in the aftermath of the discovery that none other than Goldman Sachs had facilitated for nearly a decade the masking of the true magnitude of non-Maastricht conforming Greek debt, Zero Hedge first identified the prospectus for a Goldman underwritten swap agreement securitization titled Titlos PLC. We titled the analysis "Is Titlos PLC The Downgrade Catalyst Trigger Which Will Destroy Greece?" because for all intents and purposes it was: at that time a rating agency downgrade of the country would lead to a chain of events which would make billions in assets ineligible for ECB collateral, forcing a massive margin call on the National Bank of Greece, which likely would have precipitated a Greek default there and then.

In retrospect, considering the two years of pain that Greece has already suffered, this may have been the better option as the country would have taken its bitter medicine, and become a second Iceland case study by now, growing at a brisk pace, unencumbered by debt, free from the clutches of the Euro, instead of having its economy collapse by nearly 10% every year without any resolution in sight.

But that is irrelevant for the time being: what is relevant is Titlos itself, and what Bloomberg did after we posted the analysis. It turns out that following in the footsteps of Mark Pittman, Bloomberg sued the ECB under Freedom of Information rules requesting "access to two internal papers drafted for the central bank’s six-member Executive Board. They show how Greece used swaps to hide its borrowings, according to a March 3, 2010, note attached to the papers and obtained by Bloomberg News. The first document is entitled “The impact on government deficit and debt from off-market swaps: the Greek case.” The second reviews Titlos Plc, a securitization that allowed National Bank of Greece SA, the country’s biggest lender, to exchange swaps on Greek government debt for funding from the ECB, the Executive Board said in the cover note. The ECB's response: "The European Central Bank said it can’t release files showing how Greece may have used derivatives to hide its borrowings because disclosure could still inflame the crisis threatening the future of the single currency."


But what is far more likely is that the reason why the ECB, headed by none other than former Goldmanite Mario Draghi, is desperate to keep these documents secret is for another reason. A very simple reason:

Mario Draghi - 2002-2005:  Vice Chairman and Managing Director at Goldman Sachs International

In other words, Draghi was a key executive at Goldman at precisely the time when none other than Goldman Sachs was hired to create and facilitate the active hiding of the true extent of the Greek debt problem.

In yet other words: could it be that none other than the head of the European Central Bank is refusing to cooperate with a Bloomberg FOIA, something even the US Federal Reserve ultimately succumbed to which led the revelation that the Fed had handed out trillions in secret loans to banks all around the world  - and that includes tens of billions in under the table loans to JPM, contrary to Dimon's defense that he did not need the TARP money in Senate yesterday: he did, and much more, but since when is perjury a crime before a kangaroo court of bought politicians:

But this is not about JPM for once. Let's go back to that infernal mollusc which everyone loved to hate in all of 2009 and 2010 until JP Morgan became the world's Fed-backstopped, prop trading pinata, and the response that the ECB did provide to Bloomberg as a reason for not handing out the required information:

Disclosing the files when Bloomberg News first sought them in 2010 would have “fueled negative perceptions about Greece’s ability to honor its debt,” ECB lawyer Marta Lopez Torres said at a hearing of the European Union’s General Court in Luxembourg today. “It’s the same now with Spain” which “isn’t able to borrow money,” she said. “Markets are reacting in very volatile ways. It’s affecting the euro economy.”

In other words from Mutual Assured Destruction as a means to push through policy propaganda, M.A.D. is now the only option for heads of central banks from being exposed to the world as the very same people who enabled the current financial collapse in the first place?

Now we see...

More from Bloomberg, which explains the reasoning for demanding access to the two abovementioned docs:

These documents “played a role” in shaping policy and “highlighted there were issues” when the ECB undertook a review of its eligibility criteria for collateral in its funding operations, the ECB lawyer told the court.


The cornerstone of the ECB’s response to the crisis is to give banks as much money as they needed in return for collateral. In October 2010, the ECB changed the rules on the asset-backed securities it accepted and gave itself more discretionary power to reject collateral if necessary.


The public has a right to know how EU authorities may have allowed Greece to hide its deficit, which helped trigger Europe’s sovereign debt crisis,” said Matthew Winkler, editor- in-chief of Bloomberg News. “Greater transparency results in more accountability, and we seek this information to understand how this debt debacle unfolded in an effort to avoid repeating it.”


The Greek government didn’t originally disclose the swaps, designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. The swaps allowed the country to increase borrowings by 5.3 billion euros, Eurostat, the EU’s statistics agency, said in November 2010.


In April 2009 -- seven months before the Greek crisis erupted -- ECB officials spotted “a swap operation in unusual terms,” according to the March 2010 document.

And back to Goldman, who in the 2001 onward period was the sole bank provider of shady currency swap transactions:

In the largest derivative transaction disclosed so far, Greece borrowed 2.8 billion euros from Goldman Sachs Group Inc. in 2001 through a derivative that swapped dollar- and yen- denominated debt issued by the nation for euros using a historical exchange rate, a move that generated an implied reduction in total borrowings.


“The Greek authorities had never informed Eurostat about this complex issue, and no opinion on the accounting treatment had been requested,” Eurostat, the Luxembourg-based statistics agency, said in a statement. The watchdog had only “general” discussions with financial institutions over its debt and deficit guidelines when the swap was executed in 2001.


“It is possible that Goldman Sachs (GS) asked us for general clarifications,” Eurostat said, declining to elaborate further.


Spokesmen for Goldman Sachs in London couldn’t immediately comment after the hearing.

How about asking that other Goldman Sachs spokesman, Mario Dragi? Perhaps at the next ECB press conference journalists can finally grow a pair and start asking the really important questions instead of listening to the violins as the European titanic is steadily sinking?

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hedgeless_horseman's picture



Super Mario will stand on his head to deny the opposition.

Colombian Gringo's picture

Of course Draghi  will not respond because he is guilty. Doesn't matter anyways since he is a made bankster and will walk free like Corzine.

sunaJ's picture

Basically they used the Jim Carrey argument in 'Liar, Liar.'


- Your Honor, I object!

- On what grounds?

- On the grounds that the testimony is devestating to my case!


Don't let anything like the truth get in the way.  Is there any wonder why the markets care about the politics of nations more than the profit margins of corporations?


YuropeanImbecille's picture

This is sadly what Europe has become, a mafia-zionist-satanist shithole !

These fuckers are taking about 30% of my income to play geo politics and satanic empire building :(

The worst is that no one gives a fuck, maybe they complain a bit or write a angry letter to some propaganda outlet, but they keep voting on these criminal bastards year after year.


I keep voting for the anti-EU parties year after year, but what difference does it make when the majority are idiots and drink the satanic kool aid and eat the sugar coated satan sandwich?

I hope they all burn in hell!

ParaZite's picture

Don't degrade the term "Satanist" by associating them with these assholes.


Richard Chesler's picture

Once a Goldman crook,

Always a Goldman crook.

Manthong's picture


"So I really don’t see the usefulness of being more transparent,” Luc Coene, Belgium’s central bank governor

macholatte's picture


Actions for TPTB do NOT have consequences even when caught "red handed" working the con. Lying, cheating and stealing with impunity is their reality.


Hyman Roth: If I could only live to see it, to be there with you. What I wouldn't give for twenty more years! Here we are, protected, free to make our profits without Kefauver, the goddamn Justice Department and the F.B.I. ninety miles away, in partnership with a friendly government. Ninety miles! It's nothing! Just one small step, looking for a man who wants to be President of the United States, and having the cash to make it possible. Michael, we're bigger than U.S. Steel.

knukles's picture

The Credibility Trap.

That's true problem. 
The so called Liquidity Trap is an Economic Manifestation of the Credibility Trap.
Which is a reticence for any rational individual or business to commit capital, hire, engage in anything other than the most defensive and protective economic activities.

Dishonest and in many cases even Unelected Leaders and Bankers together Bilking the system of the Peasantry's Wealth.

Your Kleptocracy At Work.

No wonder. 

narnia's picture

There's no collateral behind these massive government promises. This storm isn't a hurricane that Lt. Dan would survive, no matter how hard the central planners try to convince them otherwise.

11b40's picture


Well, here is one Master of the Universe who won't be walking free for a good long time. Only need about 300 more sentences like this one.

citizen2084's picture

Whatever the headline says I doubt he will do 5 years.  There will a headline in the next 20-60 months that says he died of a heart attack in prison.

yep, poor guy passed away in the joint.  I am sure he will be buying the first round at his fav spot in the caymans the day after the story runs in the state media.



Silver Bug's picture

Like most politicians, some dark dark secrets are lurking in there.


Buy Silver, Take your Freedom back!

Spitzer's picture

How do you post pics ?

Do you have to be a ZH insider ?

knukles's picture

Nah.  Just get caught en flagrant delicto

fuu's picture

You need to be a contributor.

Future Tense's picture

I'm excited for Europe to finish blowing up so everyone can get back focused on the United States debt bomb. Good video here discussing why student loans will be worse than subprime mortgages when they implode:


cranky-old-geezer's picture



It wasn't just Mario and GS, every banker and hedge fund within computer distance of Greece overlooked a few billion under the table so Greece could join the EU and rip the EU off for hundreds of billions ...that bankers and hedge funds would make tens of billions on.

National governments are now profit centers for bankers and hedge funds, their sovereign access to printed money making them very profitable profit centers.

It's why bankers and hedge funds don't care about economies anymore.  They can make boatloads of easy money from those government profit centers.

Government debt paper is the only game left in town now.

Banks and hedge funds will do everything in their power to keep that game going.

Peter Pan's picture

Mario looks impressive in the photo, but i bet that there is a piece of perspex across the goal mouth.

doomandbloom's picture

Mario Draghi is not Jean-Claude Trichet 

Bananamerican's picture

how do you say "motherfucker" in Italian?

old naughty's picture


Are you implying that he cannot hide from all of the people all the time?

Muppet Pimp's picture

Bruno Iskil is not John Corzine

mrktwtch2's picture

so this time next year what will be the "current crisis"..maybe china imploding?

Great Unwashed's picture

Damn, you guys are good.

Never One Roach's picture

"Speech is silver, but silence is golden." is the ECB motto I heard at the bar last night.

sunaJ's picture

If Jamie's mom is anything like mine, she would be very disappointed, reminding him that big lies have to maintain small lies.  We are at peak dishonesty.  +1 Mom.

Mark123's picture

Got to love the logic of not releasing the information....it could harm the markets.


So exactly what is FOI for then?  Only to release information that the owner feels would have no negative impact??????  Gee, in my funny way of thinking I thought FOI was to force agencies to release information they are withholding JUST BECAUSE IT IS DAMAGING!!

Muppet Pimp's picture

When things get serious you have to lie. Jean-Claude Juncker

Dick Darlington's picture

THANK YOU ZH for bringing this up! Saw it earlier today and tweeted it forward. But posting it here will get a massive audience. Natural question that comes to mind: What has Italy done with derivatives in order to hide stuff under the rug?

InconvenientCounterParty's picture

Hammer the spike with rightous abandon until you are too weak to lift the hammer head.

You can't know exactly when the crust of the heart will yield. Just know that it will.

aleph0's picture




Nice research  ... makes Al Capone look like a Public Hero.

Dick Darlington's picture

I think it's safe to say ECB's "credibility" just "vaporized". Euro project will get even more negative reputation after this. And that boys and girls is GREAT!

GeneMarchbanks's picture

Boy, that Yen carry trade really got around. Everybody had a ride...

Zaydac's picture

" Perhaps at the next ECB press conference journalists can finally grow a pair and start asking the really important questions"

Oh come on. Even if they did have the courage they don't have the intellect or training to compose the important questions, and if they did ask the important questions they would be terrified of exposing their ignorance by not being able to tell the difference between truthful and untruthful answers. The MSM is dead, killed off by corruption and ineptitude.

falak pema's picture

once a squid man always a calamari; a bit like the skull and bones club! But that's for the DC-MIC-CIA elites! 

unionbroker's picture

oooh secret Greek poll showing pro bailout parties advancing :)

walküre's picture

pro "Spanish-model" bailout

all the money, no strings attached

It's no longer about what Greece wants to have.

It's becoming more and more about what Germany is not willing to give.

This drama is never ending. We have officially entered the Twilight Zone and Groundhog Day markets.

sdmjake's picture

Watch that step...it's a Doooooozie!

carbonmutant's picture

That house has two doors.

If the ECB can stonewall on the EU end maybe they should go after Goldman's records on this end...

youngman's picture

Must have learned all that transparency from Obama.....

ebworthen's picture

The Goldman Sachs tentacle reach is truly amazing; and it's ability to squirt a cloud of ink.

TrafficNotHere's picture

Its because of articles like this I check zeroHedge every day. Good work!!!!

Itch's picture

lol Historical exchange rates, what a dumb lie. Just how on earth do these crazy fuckers get away with it?

Duke of Con Dao's picture

here's a great line reading by Hugo Weaving in Captain America: "while the Fhurer searches for trinkets in the desert"


a play on Indiana Jones.  Mario only wishes he could sound this