Spitzer: NY Fed “an absolute sinkhole”
To say former New York Governor Eliot Spitzer is no fan of the Federal Reserve Bank of New York would be an understatement.
After arguing financial regulatory reform proposals being discussed in Washington fall short, he said:
“One institution needs to be completely overhauled: The New York Fed,” he said.
At a panel in New York, Spitzer lambasted the New York Fed as “an absolute sinkhole when it comes to what went on over the past ten years.”
“There wasn’t a single person there who knew what was going on because this was all one club,” Spitzer said. “Every member of that club wanted to protect what was going on,” he said.
“The New York Fed has failed heartily and something has to be done about it,” he said.
The New York Fed was at the center of the Fed’s crisis management efforts, and has come under fire for decisions made in the bailout of insurer American International Group and the failure of Lehman Brothers.
Insider recalls the day that Lehman died
Joseph Tibman was a senior banker at Lehman Brothers for 20 years and is now the author of “The Murder of Lehman Brothers, An Insider’s Look on the Global Meltdown”. Tibman writes under a pseudonym to preserve his ability to work in finance. The views expressed are his own.
September 12, 2008 was a Friday like no other.
Just one day earlier, I was somewhat concerned about the hammered Lehman Brothers share price and the persistent rumors about my firm, but I had been here before. Well not exactly here. But I was sure Lehman would survive as an independent firm.
Had I overdosed on the Lehman-distributed talking? Soon after I arrived at my office in the Lehman headquarters at 745 Seventh Avenue on the north end of Time Square, it was clear my world, and that of all those around me, was spinning off its axis. The word was out. The Federal Reserve Bank and U.S. Treasury were in the building. So were Bank of America and Barclays Capital. Or were they?
What did it matter where they were? This was it. Two of our competitors, far weaker in investment banking, were negotiating to buy us. All I can remember, even after just a couple of months, is obsessively trading Blackberry messages with restless colleagues and perpetually scanning television general and business news channels for just one more sliver of incremental info, for hope. My world had stopped rotating.
Throughout the weekend, our Blackberries continuously hummed, expressing the collective freak-out. Then a bombshell dropped. Merrill Lynch was to be acquired by Bank of America in a government-brokered deal. We were toast. We would fail. If there were to be a Lehman deal, it would have been announced at the same time. Fail. This was surreal. On Sunday, many of us rushed to the office to retrieve personal possessions, just in case we were locked out on Monday. The firm had not yet been pronounced dead, but the Lehman I had long made my second home was teetering on the brink.
Another overpaid banker gets teary-eyed over his 2008 bonus being smaller than his 2007 or his forthcoming 2009 bonus.
If you have a job that pay the bills, be happy, 9.7% of the country don’t.
from From Reuters.com:
How has the credit crisis affected you?
The demise of Lehman Brothers a year ago sparked a collapse in financial market confidence and set of a series of reactions that have spread hardship into the four corners of the globe.
Reuters News has charted the key events and their impact in "Times of Crisis" -- a major new multimedia production on Reuters.com. (See it here.)
We'd like to add the experiences of Reuters readers. So, if you or your family have been affected by the events of the past year then use the comments section below to share your story.
I had been a college graduate for 3 months when Lehman collapsed. Since then, I’ve gotten a better job with better wages, improved my living standard, and paid off the credit card debt I accrued in college.If the recession had come a year or two later, I probably wouldn’t have been as cautious starting out and I would be feeling the effects more than I am.
Who do you blame for the credit crisis?
Greedy bankers are routinely blamed for the credit crisis but one British-based poll of — well, financiers — spreads the blame more widely.
Gary Jenkins, head of fixed income research at Evolution Securities, wanted a more specific scapegoat and ran a poll of about 200 mostly fund managers and investors asking them to pick their credit crisis culprit. Former U.S. Federal Reserve Chairman Alan Greenspan was the clear winner, picking up 35 percent of the votes. He has been widely criticised over the past year for low interest rate policies that helped fuel the credit boom.
Former U.S. president Bill Clinton also figured quite prominently with about 10 percent of votes, and British prime minister Gordon Brown got quite a few.
Some bankers were singled out, including Fred Goodwin, former chief executive of Royal Bank of Scotland and Richard Fuld, the head of collapsed Lehman Brothers.
In a related article in Euroweek, Jenkins also had a unique culprit — Bill Gates of Microsoft. None of the maths behind structured credit could be done without spreadsheets like Excel, Jenkins reckons.
So who do you think is to blame?
(Reuters photo: Kevin Lamarque)
I have a hard time blaming lenders because of their greed. I certainly don’t feel sorry for them. They took the risk and now they have to pay for their greed. Massive losses on bad loans. Got what they deserved. Borrowers, though? How can you borrow more than you can afford. Spend it. Then blame someone for lending you too much?
from Global Investing:
Bowling for Whistleblowers
Attention Wall Street whistleblowers: your banking job might be at risk, but here's your shot at Hollywood stardom.
The Academy Award-winning filmmaker is looking for “brave” financial industry insiders to help him make his next film which will focus on the financial crisis – or what Moore calls “the biggest swindle in American history.”
“Based on those who have already contacted me, I believe there are a number of you who know "the real deal" about the abuses that have been happening. You have information that the American people need to hear, “ Moore said on his website.
He called on those working for banks, brokerage firms or insurance companies to “participate in the telling the greatest crime story ever told” by contacting him.
The director, who took on the gun lobby in Bowling for Columbine in 2002, the Bush administration in his controversial 2004 documentary Fahrenheit 9/11 and the U.S. healthcare system in his 2007 polemic Sicko, pledged to protect the identities of those who step forward.
Moore says the unnamed film – currently in production – will shed light on the “abuses” that have led to crisis, which has claimed Wall Street giants Lehman Brothers and Bear Sterns and prompted a government bailout worth hundreds of billions of dollars.
“I just can't say much right now. I'm sure you can understand why. One thing I can tell you is that you're gonna like this movie when I'm done with it," he says.
