Legal Commentary

Geithner-Bernanke Hearing

By Big Tent Democrat

CNN.com is running the Geithner-Bernanke hearing before Barney Frank's committee. The focus is on AIG, nothing much yet on the Geithner Plan. I actually have a lot of sympathy for Geithner and Bernanke on the AIG bailout last fall. The situation then was incredibly volatile and there simply was not time or the legal mechanism to put AIG into receivership. It is true that no negotiations took place with counterparties to AIG contracts. I think the AIG ship has largely sailed (you could of course impose a surtax on those counterparty payments and no, that would not be a Bill of Attainder). The real issue is what we do going forward. The Geithner Plan and its serious flaws.

In short, I am not one to rail against Geithner and Bernanke about AIG. I will rail against the Geithner Plan. UPDATE - as always pols are pols, Maxine Waters wasting time grilling Geithner about his CoS being a former Goldman Sachs person. The issue is not who worked for who. It is what they are going to do.

More . .

Bernanke repeats the stigma line on why we need more to maintain secrecy of participants in the TARP plan. This rationale simply no longer holds water. The entire financial industry is stigmatized now. It actually is counterproductive as instead of allowing for explication and information to be disseminated, the secrecy has tarred the entire industry. It would be much better to get all the information out. Sunlight is the best disinfectant.

I also question whether the institutions themselves can avoid disclosing their participation to the markets. This seems to me to clearly be a material event requiring disclosure under SEC regulations.

Let me say that no one can doubt that Bernanke and Geithner are smart, capable individuals. It just seems to me that they are too wedded to the idea that Wall Street, as it exists today, must be saved. They seem incapable of considering the idea that the interests of the country do not necessarily align with the idea that Wall Street must be put back together as it exists today.

Speaking for me only

Full post as published by TalkLeft on March 24, 2009 (boomark / email).