A fundamental right of a functioning democracy is the right of the people to know what the government is doing–particularly with the peoples money. Let’s not be naive: we all have lived through many chapters in the country’s history where we do not know, in advance or in real-time, what the government does in our name. And, in my view, that is at the heart of the current anger roiling our country.
And now we learn of this:
New revelations that the government stopped the American International Group from revealing information about its bailout had securities lawyers and policy makers buzzing on Thursday about whether the information had to be disclosed under federal securities law, and if so, what to do about the lack of compliance.
Joel Seligman, a historian of the Securities and Exchange Commission, said the disclosure rules were supposed to apply to all public companies, with only a few narrow exceptions for things like trade secrets and national security. There was no exception for “too big to fail” companies on federal life support, he said. Companies are supposed to disclose all information that could be material, though that term is not clearly defined.
“When an organization is troubled, it actually makes disclosures of this kind more important,” Mr. Seligman said.
The exchange of information between AIG and, in particular, The Federal Reserve Bank of New York came when Timothy Geithner was the head of the NY Fed. Though the specifics of the AIG cover-up were not known at the time of Geithner’s nomination to be Secretary of the Treasury, it was certainly true that many people raised concerns that Geithner said virtually nothing during his time at the Fed about the dangers of the financial asset bubble, partly because he belonged to the same circle of people who were at the helm of the banks and financial institutions that were riding the bubble to great riches no matter the ultimate consequences to the people.
And so the question is back on the table: why do we hope for real change in the financial system if the same people who did not sound the alarm and, in fact, stood by and let irresponsibility and greed rule the day, are now in charge of changing the system?