What Secret Is Tim Geithner Hiding About The Citigroup Bailout? The U.S. Treasury Spits On Transparency And The Grave Of Mark Pittman
Video: Oct. 25 - The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request under the Freedom of Information Act on the grounds that taxpayers ought to know how their money was being used. More than 20 months later, after saying at least five times that a response was imminent, Treasury responded with 560 pages of printed-out e-mails, none of which Pittman requested.
Here's the short version of Geithner's secret. The Citigroup ring fence was a $300 billion boondoggle for taxpayers that was thrown together hastily and without thought in December of 2008, when Citigroup's stock was trading at 90 cents, and rumors of nationalization (bankruptcy) were rampant. It was a last-ditch effort to prop up the failed and insolvent lender, and to a certain degree, it worked. Thankfully, the asset guarantee is gone and taxpayers were never forced to absorb the carcass.
Still, Geithner's intransigent response today shows that the details are ugly and Tim doesn't want anyone to know anything about them.
So much for candidate Obama's commitment to transparency, above all.
--
Watch for the Wilbur Ross comments at the bottom.
None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees.
President Barack Obama vowed to usher in a new era of open government. On Jan. 21, 2009, the day after his inauguration and a week before Pittman submitted his FOIA request, Obama directed agencies to “adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA.”
The saga of Pittman’s request shows that the promise of transparency has its limits when it comes to the government’s intervention in the financial industry, which at its peak reached $12.8 trillion in commitments. From the 2008 Bear Stearns Cos. rescue to the Federal Reserve’s policy of quantitative easing in 2010, the Obama administration has delayed disclosures and defended its right to secrecy in court.
- “This is an unprecedented crisis for open government,” said Fitton, whose Washington-based organization says it sued the Bush administration 48 times over disclosure issues. “When it comes to the bank bailout, the Obama administration has made a decision to err on the side of secrecy.”
- “At a time when the role of government and more specifically the Treasury Department, through bailouts and stimulus, is responsible for administering trillions of dollars, there couldn’t be a more important time to uphold the American people’s right to know,” Issa said in an e-mail.
In the 560 pages of e-mails exchanged in the last two months of 2008 and January 2009, Treasury employees and their colleagues at the Federal Reserve Bank of New York discuss with attorneys the department’s $20 billion investment in New York- based Citigroup and the $301 billion in guarantees. Both followed an initial $25 billion investment in Citigroup through the Troubled Asset Relief Program in October 2008.
- “We have no obligation to explain how much of Citi’s recommendations we accepted and in what ways we decided to differ,” Adamske, the Treasury spokesman, said in an e-mail.
- Second-guessing the government’s response to the financial crisis is not useful, said Wilbur Ross, the New York billionaire who runs the private-equity firm WL Ross & Co.
- “As far as I can tell, there is no evidence of any impure motivation in connection with any of the big decisions,” Ross said in an e-mail. “To me that is the issue, not whether you or I would have come to the same conclusion.”
##
Wow. Did Wilbur Ross just say that. That's a new low for the well-known, self-dealing, private equity charlatan.
Related reading:
Apr 1, 2011 at 4:32 PM
Reader Comments (13)
http://www.businessinsider.com/fed-protects-citi-and-itself-from-foia-request-sends-hundreds-of-blacked-out-pages-to-bloomberg-reporter-2010-10#ixzz13SPpiQNA
http://www.huffingtonpost.com/2010/10/25/robert-benmosche-aig-ceo-cancer_n_773772.html
http://www.huffingtonpost.com/2010/10/25/foreclosure-problems-coul_n_773724.html
Bank of America Finds Mistakes In Foreclosure Documents
http://www.reuters.com/article/idUSTRE69O2S820101025
By GRETCHEN MORGENSON
http://www.nytimes.com/2010/10/24/business/24gret.html?_r=1
http://nymag.com/daily/intel/2009/12/irs_helps_citigroup_with_massi.html
I caught that BI bit on the Fed's production of an absurdly redacted document to Bloomberg. Why would the Fed produce ANY documents before the Supreme Court decides the FOIA case? I suppose one possible answer is that the document is responsive to another FOIA request that's not part of Pittman's case. Impossible to tell one way or the other with 99% of the information redacted. Only in a banana republic...
http://www.ritholtz.com/blog/2009/12/citi-tarp-repayment-is-a-tax-dodge/
Question: Can I use our losses on AIG to reduce my own taxes? And why the hell not?
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201010261035dowjonesdjonline000266&title=update-banking-group-asks-us-supreme-court-to-hear-fed-disclosure-case
Now we get to see what SCOTUS is made of, because if the Second Ciruit's decision isn't reversed, it's gonna be GAME ON with FOIA requests to the Fed.