SECRECY AT THE FED: Bernanke wants to keep AIG bailout debates hidden from public view
Sep 14, 2010 at 1:59 PM
DailyBail in aig, bernanke, bernanke, fed, federal reserve, federal reserve, federal reserve investigation

Bernanke, Paulson

Bernanke, Federal Reserve

Geithner, Barney Frank

Tim Geithner, Larry Summers

New opinion piece from the editorial board at the Wall Street Journal.  For background, see the following story:


Reprinted with permission.

Federal Reserve Chairman Ben Bernanke is justly famous for his loose-money policies. But when it comes to preventing disclosure to taxpayers, Mr. Bernanke continues to tighten. In central bank speak, you could say that Mr. Bernanke's operation is not "accommodative" when responding to Freedom of Information Act requests.

This week we received a letter from the Fed regarding documents we requested in February. Specifically, we asked the central bank to release a 2008 staff memo entitled, "Issues Related to Possible IPC Lending to American International Group." Soon after the memo was drafted, the Federal Reserve Bank of New York began lending money to AIG. This might suggest that the Fed staff favored this federal intervention.

But in a CNBC interview last winter, Senator Jim Bunning said that Mr. Bernanke's staff did not think AIG was too big to fail after all. "His staff didn't agree with him," said the Kentucky Republican. "I'm talking about an email that he sent his staff after his staff recommended that the Federal Reserve not touch AIG."

Members of Congress have been able to see this memo, though not to take a copy with them. We think taxpayers should be able to see the staff memo, as well as Mr. Bernanke's response, since the taxpayer exposure at AIG eventually reached $182 billion and the decision may hold lessons for the future. But our request has been "denied in full," according to the Fed, because the documents contain "pre-deliberative intra-agency analyses and recommendations."

This is exactly the type of information that the Financial Crisis Inquiry Commission should be studying and making available to the public. We urge the commission to shine a light on this central episode in the history of the financial panic, allowing taxpayers to learn the truth.





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