Treasury enabled Street cheats

[CuteOldGuy]

Remember that wonderful strategery developed by Presidents Bush and Obama to save our collapsing economy? The one that was going to bring jobs and plenty to the land? Ever wonder what was really going on? Well, here it is, the big banks got bigger, thanks to leaks by now Treasury Secretary Tim Geithner and others. We were snookered. From the article:

It is official: The big shots on Wall Street had inside information during the financial crisis. And all the little shots, like you, were cheated.

I’ve already documented exclusively in previous columns how Treasury Secretary Hank Paulson had numerous telephone conversations throughout the financial crisis with friends on Wall Street. Paulson, of course, would have been in possession of highly confidential information that could have been used for insider trading.

And Paulson’s phone calls, at least in some instances, seemed to coincide with unusual activity in the stock market.

Now it comes out that Tim Geithner — who just gave up the US Treasury secretary’s job — was accused in 2007 by a Federal Reserve official of leaking market-moving info to people at banks.

Transcripts of the Fed’s meetings for 2007 were released late last week. While everyone else seems astounded that these notes show how clueless the Fed was about the impending turmoil, I think the even more shocking revelation is how dishonest people in sensitive government positions were.

Jeffrey Lacker, head of the Richmond Federal Reserve Bank, is the one who accused Geithner of having a big mouth — or worse. The Fed held an emergency telephone meeting on Aug. 16, 2007.

One day later, the Fed shocked the financial markets by allowing banks to borrow more cheaply at the Fed’s discount window. With this lower discount rate — as it is called — the financial markets rallied nicely, in fact more than 10 percent. So the information that Lacker said Geithner, then vice chairman of the Fed, leaked was of monumental importance to traders.

Here’s part of the transcript from the aforementioned telephone meeting:

MR. LACKER: Vice Chairman Geithner, did you say that [the banks] are unaware of what we’re considering or what we might be doing with the discount rate?

VICE CHAIRMAN GEITHNER: Yes.

MR. LACKER: Vice Chairman Geithner, I spoke with Ken Lewis, president and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.

CHAIRMAN [Ben] BERNANKE: OK. Thank you. Go ahead, Vice Chairman Geithner.

VICE CHAIRMAN GEITHNER: Well, I cannot speak for Ken Lewis, but I think they have sought to see whether they could understand a little more clearly the scope of their rights and our current policy with respect to the [discount] window. The only thing I’ve done is to try to help them understand—and I’m sure that’s been true across the System — what the scope of that is because these people generally don’t use the window and they don’t really understand in some sense what it’s about.

Bank of America was in Lacker’s district, so that’s why he was talking with Lewis. And I think it would be safe to assume Geithner was telling other banks as well, especially since rumors started spreading and the stock market moved mysteriously higher on Aug. 16, the very day of the telephone meeting.

Bottom line: The way Paulson, Geithner and probably others were treating confidential information means that the laws on insider information were essentially repealed by their actions.

Anyone who has been convicted of profiting on information he or she shouldn’t have had should be ticked off right now.

http://www.nypost.com/p/news/busines...1Uoh3laxBrrOXN

[timpage]

Totally agree. We need more government regulation of the financial industry and stricter enforcement of our existing laws to prevent this kind of shit. The republicans and people like you, who believe in an utterly unregulated market-place, provide a breeding ground for scumbag speculators to steal money.

How was that?

[CuteOldGuy]

Then you support auditing the FED? Then you must support complete transparency of our monetary system. Sunlight is the best disinfectant.

You are asking the fox to provide security for the henhouse. But your answer to everything is more government. The more regulations there are, the more influence the banks and others can buy, and more loopholes can be made for friends and donors.

The answer is transparency, like Obama promised and lied about.

[timpage]

Originally Posted by CuteOldGuy

Then you support auditing the FED? Then you must support complete transparency of our monetary system. Sunlight is the best disinfectant.

You are asking the fox to provide security for the henhouse. But your answer to everything is more government. The more regulations there are, the more influence the banks and others can buy, and more loopholes can be made for friends and donors.

The answer is transparency, like Obama promised and lied about.

Transparency mandated and enforced by who?

[Submodo]

Originally Posted by CuteOldGuy

The big shots on Wall Street had inside information during the financial crisis.

Inside info hunh?

I guess OJ Simpson had inside information about the murders of Nicole and that waiter too.

[timpage]

Originally Posted by CuteOldGuy

Then you support auditing the FED? Then you must support complete transparency of our monetary system. Sunlight is the best disinfectant.

You are asking the fox to provide security for the henhouse. But your answer to everything is more government. The more regulations there are, the more influence the banks and others can buy, and more loopholes can be made for friends and donors.

The answer is transparency, like Obama promised and lied about.

Transparency mandated and enforced by who? You don't want to answer this one because you know who has to mandate it and who has to enforce it, right?

[CuteOldGuy]

No. It's a stupid question. Use the GAO, FOIA, and rotating auditors to make sure no one has skin in the game. Simple accounting techniques and procedures.

But you demand answers from me, why don't you answer my questions? Of course transparency would have to monitored, but it would be cheaper than all the regulations, and more effective.

But you prefer secrecy and big government, because deep inside, you are afraid to make decisions for yourself. And you ignore Obama's lies, because if you notice them, you will realize HE DOESN'T GIVE A DAMN ABOUT YOU, and that makes you uncomfortable.