Eliot: Release all the AIG-Fed emails. (100108)
Mort Zuckerman
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Subject: Eliot: Release all the AIG-Fed emails. (100108)
Date: Jan 8, 2010 10:22 AM
http://www.businessinsider.com/the-new-geithner-aig-emails-are-merely-the-tip-of-the-iceberg-2010-1
The New Geithner-AIG Emails Are Merely The Tip Of The Iceberg
Eliot Spitzer and William Black | Jan. 8, 2010, 7:09 AM
In a December New York Times op-ed, we called for the full public
release of AIG email messages, internal accounting documents and
financial models generated in the last decade. Today, a Bloomberg
story revealed that under Timothy Geithner’s leadership, the Federal
Reserve Bank of New York told AIG to withhold details from the public
about its payments to banks during the crisis. This information was
discovered when emails between the company and the Fed were requested
by representative Darrell Issa, ranking member of the House Oversight
and Government Reform Committee.
The emails requested by Issa span five months beginning in November
2008. If five months of emails reveal information key to our
understanding of the aftermath of the crisis, imagine what 10 years of
emails could contribute to our understanding of its causes. We believe
the AIG emails and other internal company documents are the ‘black
box’ of the financial crisis. If we understand the failure of AIG, we
will more fully understand the crisis - what caused it and more
importantly how to prevent it from happening again.
The emails today detail the efforts of the Fed to suppress the
disclosure of payments made to banks such as Goldman, Sachs Group for
reimbursement of their credit-default swap exposure. When the Treasury
Department stepped in, AIG had at least $440 billion in credit-default
swaps outstanding. The Fed, led by Tim Geithner, paid Goldman, Sachs
Group and other banks 100 cents on the dollar for these instruments
rather than negotiating a lower rate closer to the actual value,
(estimated by some to have been as little as 20 cents). In testimony
to the Congressional Oversight Panel, Tim Geithner insisted it was
necessary to make these payments in full, arguing that even a small
downward negotiation would prove catastrophic to the financial sector.
Elizabeth Warren, head of the oversight panel has repeatedly
challenged repeatedly this assertion.
Regardless the size of the payments, the Fed’s request to suppress
both their amount and the parties to whole these payments were made
would not have come to light without the release of these emails.
Without the rest of the emails, we will be unlikely to fully
understand what led to the collapse of AIG and the financial markets.
If we can’t understand it, we will be unable to prevent it from
happening again.
As such, today we are renewing our request for the full public
disclosure of all AIG documents. We believe the government should put
these documents on-line, thereby establishing an open-source
investigation that would allow journalists and citizens the
opportunity to piece together the story of what happened at AIG and in
so doing more fully understand what happened in the broader financial
collapse. AIG — and more specifically its credit-default swaps
exposure — was an important contributing factor to the crash of the
financial markets. What sets this company apart from others that
played a role in the crisis is that we, the taxpayers, own it. As we
noted in our original piece, US taxpayers bought 80% of AIG when they
bailed the company out with $180 billion last year. As owners of the
company, taxpayers are also owners of AIG. As owners of the company we
can demand the release of these documents.
The taxpayer’s stake in AIG is held by the A.I.G. Credit Facility
Trust, whose three trustees are Jill M. Considine, a former chairman
of the Depository Trust Company and a former director of the Federal
Reserve Bank of New York; Chester B. Feldberg, a former New York Fed
official who was chairman of Barclays Americas from 2000 to 2008; and
Douglas L. Foshee, chief executive of the El Paso Corporation and
chairman of the Houston branch of the Federal Reserve Bank of Dallas.
We call on these three officials (interestingly all former Fed
officials) to immediately release the documents we request.
The value of these documents, if it were ever in doubt, was certainly
proved by today’s revelations.
Release the emails.
Eliot Spitzer is the former governor of the state of New York. He
blogs for Slate and contributes guest posts to New Deal 2.0.
Roosevelt Institute Braintruster William K. Black is an Associate
Professor of Economics and Law at the University of Missouri-Kansas
City. He is a white-collar criminologist and was a senior financial
regulator.
Frank Partnoy is the George E. Barrett Professor of Law and Finance
and is the director of the Center on Corporate and Securities Law at
the University of San Diego. He is one of the world’s leading experts
on the complexities of modern finance and financial market regulation.
"[Real] scientists are *fiercely* independent. That's the good
news."-- NIH's Top Fool, Anthony Fauci
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