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FOR IMMEDIATE RELEASE
CONTACT: Institute for Public Accuracy (IPA)
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167
Treasury Pick and Openness
Professor of public affairs at the University of Texas at Austin, Auerbach wrote the book Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan's Bank.
He said today: "During the nomination hearings for Secretary of the Treasury, Timothy Geithner should be asked for the details of the negotiations that have been conducted by the Fed that may now amount to over $2 trillion in loans. Have the Fed's recent loan policies been conducted in the backroom without a complete paper trail for the taxpayers and elected officials?
"Last week it was reported that New York Federal Reserve President Geithner was involved in the 1998 Fed-orchestrated private bailout of LTCM [Long-Term Capital Management] by private-sector banks. LTCM had earlier rejected a bailout offer from Goldman Sachs, AIG and Berkshire Hathaway. When he appeared before the House Committee on Financial services, Greenspan could not or would not tell Congress the details of the bailout, apparently because the nation's central bank produced no detailed public records. The testimony of the Greenspan Fed did not indicate the existence of a paper trail. Members of the Committee on both sides of the aisle attacked the backroom deals of the nation's central bank.
"These actions put the Fed in the same league as the tycoons of an earlier age, such as John Pierpont Morgan, whose financial deals in the 1907 financial crisis were made out of sight of the public or its elected officials."
Auerbach was an economist with the House Committee on Financial Services including during a period when Texas Congressman Gonzalez attempted to achieve a level of meaningful oversight over the Fed. Gonzalez was continuously thwarted by Greenspan.
For background, see Robert Scheer's new piece "Wall Street Robber Barons Ride Again."