Black and the AIG cover-up of the cover-up of the cover-up

I had originally looked to add this video to the last post on Black about the federal reserve. But the video here showing Black speaking to Bloomberg News about the recent AIG scandal and financial regulation deserves a post of its own.

The question Black asks is why haven’t we seen a more thorough investigation of AIG, a company 80% owned by taxpayers?  He also makes a good analogy to the forensic examination of airplane crashes, telling us that any experienced investigator knows to go to the black box first. In the case of a financial catastrophe, it is the models, the e-mails and other correspondence which will tell you what you need to know. He sees the most recent scandal involving the New York Fed as a cover-up of prior cover-ups.

The video is embedded below. Bill, what’s up with the beard?

I would be remiss if I didn’t point out the apparent bias the presenter shows. The host appears in visible disbelief near the end of the spot as to why this is important. She even goes as far as to ask why are we dredging up the past.  I find this a remarkably poor piece of editorial on an extremely important issue. Maybe the beard threw her.


Last week, Black also wrote a post on these ideas with Frank Partnoy and Eliot Spitzer at New Deal 2.0 that I recommend. Here is how it begins:

In a December New York Times op-ed, we called for the full public release of AIG email messages, internal accounting documents and financial models generated in the last decade. Today, a Bloomberg story revealed that under Timothy Geithner’s leadership, the Federal Reserve Bank of New York told AIG to withhold details from the public about its payments to banks during the crisis. This information was discovered when emails between the company and the Fed were requested by representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The emails requested by Issa span five months beginning in November 2008. The Fed’s request to suppress this information would not have come to light without the release of these emails. If five months of emails reveal information key to our understanding of the aftermath of the crisis, imagine what 10 years of emails could contribute to our understanding of its causes. We believe the AIG emails and other internal company documents are the ‘black box’ of the financial crisis. If we understand the failure of AIG, we will more fully understand the crisis – what caused it and more importantly how to prevent it from happening again.


Tip of the Iceberg – New Deal 2.0


Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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