Commentaries
Now raising intellectual capital
The FDIC plays hide the ball too
The Federal Reserve is fighting hard to keep details about the $2 trillion in emergency loans it has made during the financial crisis from seeing the light of day. And now it seems the Federal Deposit Insurance Corp. also has started playing the game of keeping secrets from the public.
The American Banker earlier this week reported that the FDIC is holding back on disclosing information about failed bids for troubled banks the government agency has taken over. The industry newspaper reports the FDIC is delaying the processing of Freedom of Information Act requests seeking such information, while the agency reviews its disclosure policy.
The FDIC announcement is disturbing because it comes at a time that the FDIC has been forced to close banks at a brisk clip and just put in place a plan for allowing private equity firms to bid on bank assets. (Full disclosure: my wife used to be an editor for the American Banker).
The FDIC’s position on releasing information about failed bids is not as sweeping as the Fed’s opposition to a Bloomberg News lawsuit seeking access to information about the $2 trillion in emergency loans. But as The Audit, a Columbia Journalism Review blog, point outs, the FDIC’s stance is another move towards “creeping government secrecy.”
Naming banks
A federal judge’s ruling that the Federal Reserve must disclose information about the $2 trillion in emergency loans it made during the financial crisis has been hailed by a number of commentators, including Matthew Goldstein, as a significant victory for transparency and accountability.
But Paul Kasriel, the economist with Northern Trust, wonders if this week’s court decision is a disturbing repeat of a legislative action during the Depression that helped spark bank runs.
The big Fed news
A federal judge’s ruling that the mighty Federal Reserve must release information about some $2 trillion in “emergency” loans made during the financial crisis is a big blow to the central bank’s self-styled image as an impenetrable shrine.
US District Judge Loretta Preska should be applauded for not taking the Fed’s bait that to release information about the banks and financial institutions that received those loans would imperil the financial system. Preska rightfully concludes that the Fed’s fear is based on mere speculation and “conjecture.”
Goldman should disclose more
Goldman Sachs doesn’t report second-quarter earnings until Tuesday, but some Wall Street analysts aren’t waiting to sing the giant investment firm’s praises.
What’s impressing the analysts the most is Goldman’s ability to again print money like no one else — especially when it comes to trading stocks, bonds, commodities and currencies. Bank of America analyst Guy Moszkowski sounded almost giddy the other day in predicting blowout trading revenues for Goldman, describing the firm as “arguably the most well-respected investment bank.” Moszkowski now expects net trading revenues to top the record $25 billion raked in by Goldman in 2007.
Goldman’s derivatives puzzle
Earlier today I posted an item saying that Goldman Sachs is hard as ever to figure out, based on the kind of information (or lack thereof) that it publishes about its operations. I focused on a little-known Goldman real estate management company called Archon Group.
And now comes derivatives guru Janet Tavakoli with a nice followup, noting that Goldman offers few details in regulatory filings about its derviatives business, despite having some big exposure to those often complex investment contracts.
Goldman still puzzles
Investing in Goldman Sachs still requires a leap of faith in the investment firm’s ability to out-trade, out-wit and out-muscle everyone else on Wall Street.
Sure, the bulls will say that with fewer competitors and with the Federal Reserve keeping bank borrowing costs near zero, Goldman’s traders should be able to print money. But here’s the thing: The post-federal bailout version of Goldman is as much of an investing riddle as the pre-crisis Goldman that many critics called a giant hedge fund or an inscrutable black box.
Who is the Fed accountable to?
It’s pretty clear the Federal Reserve is going to emerge as the big winner in the Obama administration’s proposed overhaul of the financial regulatory system. But any grant of new powers to the Fed must come with legislation requiring greater accountabilty from the nation’s central banker.
Now this is not meant to knock the job the Fed has done in the current financial crisis. In many respects, Fed Chairman Ben Bernanke should be applauded for showing a willingness to improvise and come up  with creative solutions for trying to limit the damage to the banking system and the economy. But throughout the crisis, Benanke & Co. have shown an utter disdain for transparency and full disclosure.
-
The Wall
