Rolling Stones' Matt Taibbi: I find it incredible to believe that Geithner didn't know

about the bonuses. Taibbi, on Morning Blow, previewed a piece he has upcoming in the magazine, "The Big Takeover". I did not find it on the web, yet.

As John Ridley asked: are they lying or incompetent?

Or both. And throw in "protecting their interests". Why do we keep making excuses for Geithner and Dodd??

Edited to add the link (thanks Vinca and Blogslut!). And some of the copy. OMGOMGMG!!!!!!!!


http://www.rollingstone.com/politics/story/26793903/the...

The Big Takeover

The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution (added bold)

MATT TAIBBIPosted Mar 19, 2009 12:49 PM

It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

-snip-

Time for a Democrat in Treasury.

banks and rich people.

Arianna Huffington is calling the bailout the Achilles heel of Obama's admin. The bailout was created to get bank lending again - which they are not doing. One thing that has not changed from the Bush admin - Wall Street is running the Treasury Department. It's been that way for decades - and that's what has to change.

But Geithner and Summers are both foxes in our henhouse. Obama got played by his advisors on this one.

But the advisors are probably foxes, too. The entire fiancial industry seem to be crooked these days.

and Geithner and Summers need to be investigated.

:cry:

:hi:

I'm going to edit my OP to give the correct title. Thanks again.

I'll give you one major example. In fact, it's one related to the foundation of his conspiracy theory.

Taibbi wrote: "According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter."

Not true. The auditing is explained here: http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#9

And you can read the reports here: http://www.federalreserve.gov/boarddocs/rptcongress/

Exhaustively researched? More like exhaustively embellished to make for a wild conspiracy theory. Like any good conspiracy theorist, Taibbi would probably dismiss that information (in fact, he already has) because it's on the Fed's website. (Insert X-files music here.) And even if he wouldn't say that, I'll just assume he would and plead guilty to making stuff up like he does.

(I wrote a bit down below to Hannah's response as well).

The Fed General Info FAQ Link says

"To ensure financial accountability, the financial statements of the Federal Reserve Banks and the Board of Governors are audited annually by an independent outside auditor. In addition, the Government Accountability Office, as well as the Board's Office of Inspector General, can audit Federal Reserve activities."

'An independent outside auditor' doesn't tell me much of anything. And the GAO, who I always assumed was able to fully audit the Fed, apparently can't inspect actions on monetary policy matters? Not trying to be a pain, just hoping to learn something if I'm misguided.

From some angles he looks like a skinny, angular version of Bill Clinton, and from others a ventriloquist dummy.

Dodd did. He lies.

Even everyone on DU knew the score. C'mon now. :eyes:

capital to come clean on this. I'd much prefer that, than the lying and hemming and hawing going on now. We will NOT solve out economic woes with this mindset.

There is only one person IRL that I can discuss this stuff with, my brother, every other single person I know just rolls their eyes when I try to speak of anything serious.

if it's even solvable in the first place.

Which is why I think we should just kick it all to the curb and start all over.

in the bush gang's lap, where it rightfully belongs, by pointing out that this really happened last year.

I've said that Geithner is Wall Street's inside man ever since the day he was selected. (I got major crap from the "moderate" idiot zombies here for saying so, too.)

should not have been such an uphill battle here on DU.

Wall Street, Clinton's Wall Street faction, friggin Kissinger, the IMfuckingF!!!, the Fed (on Wall Street)...

The only thing he hasn't done to raise a red flag is to work for Dick Cheney.

No, it should not CONTINUE to be an uphill battle.

and as usual matt is spot on. we are fucked...

<snip>


It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

<snip>

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

-snip-

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers

-snip-

As I keep reading, I'm getting angrier and angrier. And sadder and sadder. This really spells it out.

(edited to add even more - WAKE UP PEOPLE!!!)

I am angry at obama for not listening and doing the right things. He has been bought off by the same rich fuckers.

I am feeling a profound sense of disconnect. Why is anybody laughing?

.

thanks, that helped make sense of it all quite a bit more.

:thumbsup:

*

100 cents on the dollar.....and more will be paid out until all bets have been paid off and banks get money from both ends....it's all so simple...and so friggin corrupt! (IMO)

I guess we can share a hankie on this one, if we can afford the hankie.

I really don't understand.

The bonus' couple billions are hot stuff of course, but this is the iceberg. Required reading imho.

:kick:

and I agree completely

In the extended entry, I provide a lengthy, detailed timeline of AIG bailouts and bonuses, from September 2008 through the present. The timeline includes the role Timothy Geithner and Larry Summers played in those bailout and bonuses. It shows that, more than any other government employee, Timothy Geithner is responsible for the bonuses at AIG. Larry Summers provided Geithner with assistance in this matter, but overall the blame almost entirely rests on Geithner himself.

In response to this scandal, it is time for President Obama to demand Timothy Geithner's resignation. The timeline in the extended entry explains why. Not only is Geithner the person responsible, but it would demonstrate that President Obama is deadly serious about reform in the financial services industry.

Taibbi's inimitable style makes it interesting, even while the hair is rising on your neck at seeing it all spelled out. Kicking it back up for the evening crew, and a big R here.

I think he's a terribly unimaginative writer and extremely lazy, stylistically speaking.

Maybe you didn't mean he was beyond imitation; maybe you meant no serious writer would want to imitate him.

with your assessment - though as you point out, "inimitable" is rather exaggerated. The word popped into my head and - being a lazy writer myself - I used it because I like it. I notice below by a subject line (didn't get to the post yet) someone says MT wishes he were HT. Perhaps, though I find them very different. I love HT but he's exhausting. (I once sat in a diner having lunch as I read the first chapter of one of HT's books and was laughing so hard I literally had tears running down my face. Fortunately, it was the sort of diner frequented by construction workers and lawyers, crazies and Councilmen, so no one cared.)

So, we'll have to agree to disagree on Taibbi, though I take back your justly criticized "inimitable."

When I saw that I lost any hope I had that he may surprise us and save this Republic.

Tim knew, so did Obama. Too sad, it was a great and honorable country for so long. So many gave their lives so Tim and co. could screw us just a bit more.
:patriot:

If no one has authority to audit the Federal Reserve, that is absolutely bone chilling. Ironic how the Rolling Stone was able to provide such an excellent and thorough piece of journalism, yet our media somehow knows nothing?

:puke: :puke: :puke:

A Brief History of Federal Reserve Audits

Since its inception in 1913 the Federal Reserve System has been subjected to a variety of financial and performance audits by Congress, the executive branch, and private accounting firms, although responsibility for this task has shifted from time to time....

In 1978 Congress passed the Federal Banking Agency Audit Act (31 USCA 714). It placed the Federal Reserve System back under the auditing authority of the GAO. The Act significantly increased the access of the GAO to the Federal Reserve Banks, the Board, and the Federal Open Market Committee (the FOMC). Since then, the GAO has conducted over 100 financial audits and performance audits of the three Federal Reserve bodies.3

Scope of GAO Audits

Some of the more important GAO performance audits of the Fed have been in the areas of bank supervision, payment systems activities, and government securities activities.

In the first area, the GAO examined how well the Fed was enforcing its regulatory powers over its member banks. In 1992 it drew attention to the Fed's sluggish compliance with regulatory reforms mandated by the Foreign Bank Supervision Act of 1991.

In examining the Fed's payment system activities, the GAO made the Fed aware of how its pricing policies for such services as check-clearing affected private suppliers of check-clearing services, and also suggested ways to speed up the process of check collections.

Security markets for government debt is a crucial market, and GAO performance audits of the Fed have lead to more openness in the primary dealer system, particularly concerning the disclosure of price information. The GAO is also involved in several ongoing performance audits of the Fed such as analysis of risks and benefits of interstate banking, regulation of derivatives, and the budget of the Federal Reserve system.2

Audits By Private Accounting Firms

Financial audits of the Fed are also conducted regularly. Each Reserve Bank is audited every year by independent General Auditors who report directly to the Board of Governors. These examinations involve financial statement audits and reviews on the effectiveness of financial controls.

Each Reserve Bank also has its own internal audit mechanisms. The Board contracts each year with an outside accounting firm to evaluate the audit program's effectiveness. Price Waterhouse conducted an audit of the Board's 1994, 1995, 1996, 1997, and 1998 financial statements and filed this report in the Board's 1996 Annual Report (nearly identical ones appear in other Annual Reports):

'We have audited the accompanying balance sheets of the Board of Governors of the Federal Reserve System (the Board) as of December 31, 1995 and 1994, and the related statements of revenues and expenses for the years then ended. These financial statements are the responsibility of the Board's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted accounting standards and Government Accounting Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estmates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of the Board as of December 31, 1995 and 1994, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

As discussed in Notes 1 and 3 to the financial statements, the Board implemented Statement of Financial Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits, effective January 1, 1994. In accordance with Government Accounting Standards, we have also issued a report dated March 25, 1996 on our consideration of the Board's internal control structure and a report dated March 25, 1996 on its compliance with laws and regulations.4'

The Board has also contracted with Coopers & Lybrand to conduct annual financial audits of the Board and the individual Federal Reserve Banks.

Exemptions to the Scope of GAO Audits

The Government Accounting Office does not have complete access to all aspects of the Federal Reserve System. The Federal Banking Agency Audit Act stipulates the following areas are to be excluded from GAO inspections:

(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;

(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, open market operations;

(3) transactions made under the direction of the Federal Open Market Committee; or

(4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to items.

In 1993 Wayne D. Angell, then a member of the Board of Governors, submitted testimony before a House subcommittee on the reasons for the restrictions on GAO access. He commented, By excluding these areas, the Act attempts to balance the need for public accountability of the Federal Reserve through GAO audits against the need to insulate the central bank's monetary policy functions from short-term political pressures and to ensure that foreign central banks and governmental entities can transact business in the U.S. financial markets through the Federal Reserve on a confidential basis.2

http://www.geocities.com/CapitolHill/Senate/3616/flaherty6.html

Almost had a heart attack when I read that bit and my poor little heart can't take much more. :scared: I always believed the GAO audited the Fed but it looks like there are exemptions?

"Exemptions to the Scope of GAO Audits

The Government Accounting Office does not have complete access to all aspects of the Federal Reserve System. The Federal Banking Agency Audit Act stipulates the following areas are to be excluded from GAO inspections:

(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;

(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, open market operations;

(3) transactions made under the direction of the Federal Open Market Committee; or

(4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to items."

First of all, an audit would not cover deliberations and decisions of anything. Secondly, there would be no audit on things like interest rates for example.

Taibbi took that and wrongly extrapolated that to mean: NO auditing. He's just wrong.

Edit: typo

See post 45: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5293954&mesg_id=5300093

otherwise it's as Taibbi said. the taxpayers are paying for the losses but the executives are keeping all the profits for themselves.

:eyes:

On a more minor note, he's a bad writer.

See post 45 for one example on his conspiracy theory tendencies and how he lies in his stories: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5293954&mesg_id=5300093

:cry:

If he even can, that is. He thinks he's writing for a bunch of frat-boys.

As if.