This Reuters epiphany (see headline of this diary and blockquote, below) is the part of "the Wall Street bailout story" where the documentation clearly demonstrates that the status quo conflated--specifically within the
Bush administration--their financial well-being with the well-being of the other 99% of America. And, on so many levels, that is soooo damn wrong...I couldn't even begin to address the outrageousness of this situation in a quick diary of the sort which I'm posting now. So, let's start with the latest from Reuters, below the fold...
From Reuters: "
SEC mulled national security status for AIG details."
SEC mulled national security status for AIG details
Matthew Goldstein
NEW YORK
Sun Jan 24, 2010 3:04pm EST
NEW YORK (Reuters) - U.S. securities regulators originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.
--SNIP--
The request to keep the details secret were made by the New York Federal Reserve -- a regulator that helped orchestrate the bailout -- and by the giant insurer itself, according to the emails.
The emails from early last year reveal that officials at the New York Fed were only comfortable with AIG submitting a critical bailout-related document to the U.S. Securities and Exchange Commission after getting assurances from the regulatory agency that "special security procedures" would be used to handle the document.
The SEC, according to an email sent by a New York Fed lawyer on January 13, 2009, agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG's confidentiality request.
The SEC had also agreed that if it determined the document should not be made public, it would be stored "in a special area where national security related files are kept," the lawyer wrote...
For the full story on the outrageous extent and nature of the Bush administration's actions in this matter, I refer you the Naked Capitalism guest post here on DKos, from Saturday: "Naked Capitalism Guest Post: AIG Bailout Secrets Exposed!"
And, here's Naked Capitalism's reaction: "WTF? Fed Demands 'Special Security Procedures' for AIG Details From SEC."
WTF? Fed Demands "Special Security Procedures" for AIG Details From SEC
Sunday, January 24, 2010
Yves Smith
Naked Capitalism
Francios T. sent the link to the Reuters story (Diarist's Note: see blockquote, above) describing the fact that the Fed demanded unusual security procedures before supplying "a critical bailout related document" and the the SEC said if it agreed with the request to keep it confidential, it would store it where national security related files are kept.
Sports fans, this request can point to only one of two conclusions. Either the folks at the Fed are suffering from a massive case of grandiosity, or something very incriminating is in that file. There is simply no bailout-related information that legitimately warrants that level of security treatment AFTER THE FACT (even in the very unlikely event AIG officials possessed information related to terrorist financial networks, which is legitimately limited to parties with high-level security clearances, I can't imagine that it would be the sort of thing that would also be subject to disclosure in SEC filings, and hence would be subject to back and forth among the Fed, AIG, and the SEC).
And there is no reason to think this information is this deserving of such heroic efforts. Apparently, the information includes transaction level detail like CUSIPs. As we indicated in our post last Friday, most of this information is already in the public domain (from the transaction information we have located, adding the CUSIPs is pretty easy)...
This sheds an entirely different light on the "too-big-to-fail" meme.
Basic concept: If there's ANY US company whose ongoing existence is a matter of national security, it should be broken up or shut down. Period. For the record: IMHO, this is the antithesis to the basic premise of the corporate kleptocrats, btw.
Also, for the record, both Geithner and Bernanke have gone on record stating that the breakup of "too-big-to-fail" firms is not something they would support. Hopefully, our President's recent sentiments--to the contrary--will be supported with with actual legislation that is, indeed, passed which runs counter to Bernanke's and Geithner's positions. I'm not really optimistic about this, given the level of regulatory capture that has been exhibited by our government--which essentially runs counter to the spin--of late. (Just look at my diaries from the past week for detailed documentation on these truths.)
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