More Secret Money Went to Goldman

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3 Responses

  1. Jennifer Taub says:

    So, I’m still trying to understand why this was not disclosed earlier. According to Bloomberg, quoting the Atlanta Fed, the official story seems to be that this was no different from regular open market repo operations and not 13(3) lending — but that seems odd. These were 28 day terms and also, invites the question of what the Sanders Amendment asked for — The language of the Sanders amendment is here: http://sanders.senate.gov/​imo/media/doc/Document2.pd​f.

    The amendment lists the various programs and ST OMO was not on the list. . .there was a catch-all for 13(3), but if this doesn’t fall under that, then the Fed decided to be coy. . .

    Which then makes one wonder whether the regular open market repo/monetary policy transactions with the primary dealers are disclosed (meaning dealers and rates identified) and how to tell the difference between emergency lending and business as usual.

    The implications may be significant given the Dodd-Frank changes on emergency lending.

    I think there is a question buried in here among the commentary.

  2. Lawrence Cunningham says:

    Jennifer,

    Thanks for the excellent sleuthing! Concerning what’s really up:

    Not stigmatizing recipients was the government’s argument for secrecy about which firms, Goldman and other money center banks, got the taxpayer money that Paulson and Geithner funneled through AIG.

    Weak though that argument always was, even in late 2008, it is ludicrous three years later. That increases the chances that government’s strenuous objections to disclosing are more parochial, such as:

    (1) Paulson did not want the world to know that he bailed out his beloved Goldman Sachs, where he had been CEO during the incubation of the crisis; and

    (2) Geithner does not want the world to know he bailed out the banks that are the shareholders of the company, the FRBNY, where he was President ahead of and during the crisis.

  3. Jennifer Taub says:

    Larry, thank you for the response.