The financial mess has now gotten to a point where Wall Street veterans are starting to speak out and question why the Obama administration does what it does, and how much longer it thinks it can continue doing it.
Sandy B. Lewis and William D. Cohan make clear in the New York Times that they have no confidence in the policies conducted so far, since they are based on deeply flawed assumptions about what is wrong in the first place, and the loudly promised and much touted transparency Obama couldn't stop talking about not so long ago is nowhere to be found. Lewis and Cohan pose a series of queries. They start off addressing the part the public has unwittingly been cast in:
* Why is so much effort being put into propping up those at the top of the economic pyramid — the money-center banks, the insurance companies, the hedge funds and so forth — when during a period of deflation like the one we are in, any recovery will come only by restoring the confidence of the people down at the bottom of the pyramid?
* ... what is the plan to get the American people out of all these equity stakes we now own and don’t want?
Soon, though, they move towards the more sinister part: the utter lack of openness surrounding all the trillions used to bail out broke banks and carmakers:
* As for those impossibly complex securities that caused so much of the trouble — among them derivatives, credit-default swaps and asset-backed securities — the S.E.C. should have the power to make public all the documentation surrounding these weapons of mass financial destruction, including all data about the current costs of buying and selling them and the cash flow underlying them.
* Why is the government still complicit in making the system ever less transparent, even when it comes to what should clearly be considered public information? For instance, it took more than a year for the Federal Reserve to disclose that it had agreed to pay BlackRock — the huge money manager that is 45 percent owned by Bank of America — and others $71 million in a no-bid contract to manage the $30 billion of toxic assets that JPMorgan did not want when it bought Bear Stearns in March 2008. And that is only one of the five contracts BlackRock has with the government as a result of this crisis — the nature of the other contracts remains secret.
* And what has become of the S.E.C.’s year-old investigation into who made short-dated, out-of-the-money bets in March 2008 hoping Bear Stearns would fail — bets that were suddenly worth millions of dollars when the company did collapse later that month? Why do we still not know why Mr. Paulson, Mr. Geithner and the Federal Reserve chairman, Ben Bernanke, allowed Lehman Brothers to file bankruptcy last Sept. 15 but then, a day later, saved A.I.G.?
* Or why last November this trio decided to absorb potential losses on $301 billion of Citigroup’s shaky assets, when conventional wisdom among insiders held that they were worth only $150 billion at best? Also, before Dick Fuld, Lehman Brothers’ chief executive, appeared before the House Committee on Oversight and Government Reform last October, it demanded from company executives boxes of documents about what happened at Lehman and why. Where are those documents?
More:
http://theautomaticearth.blogspot.com/2009/06/june-8-2009-not-by-long-shot.html
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