A splendid opportunity is in the offing, though it is premature to expect the earth to quake. As background, Hank Greenberg, former chairman of AIG, is suing the United States. The case itself is not the subject here. Starr International Company, in which Greenberg is housing his lawsuit, was the largest shareholder in AIG on September 16, 2008, the day when the U.S. government "seized control of AIG" (quoting from the September 17, 2008, Wall Street Journal).
Federal Reserve Chairman Ben S. Bernanke played a central role in the seizure. He was subpoenaed to testify (in STARR INTERNATIONAL COMPANY, INC., v. UNITED STATES) on its behalf and on behalf of a class of others similarly situated plaintiffs.
Bernanke ducked the deposition. The UNITED STATES (the Department of Justice) argued the "deposition would interfere with Mr. Bernanke's important duties in managing the nation's economy and fiscal policy." [My underlining - FJS]
Before returning to this jarring admission from
America's National Socialist headquarters, Judge Thomas Wheeler's anger v. the
UNITED STATES is offered as background.
A Bloomberg headline on May 17, 2013: "AIG Judge Asks if
U.S. Scared Board from Starr Lawsuit." The curious judge was Thomas Wheeler, who
expressed "concern" that the U.S. scared off American International Group from
joining a lawsuit by Maurice "Hank" Greenberg, its former chairman, challenging
the insurer's 2008 federal bailout." Wheeler had a "lingering concern" that a
"request by AIG and the government to dismiss [Hank] Greenberg's lawsuit" was a
product of the government "intimidating" the "AIG directors who took their seats
during the bailout."
Such a judge, glued athwartship v. the UNITED STATES'
attempt to arrogate his courtroom, was unlikely to let the Federal Reserve
chairman skip town. And he didn't. In the United States Court of Federal Claims,
No. 11 - 779C (Filed: July 29, 2013), Judge Wheeler wrote: "The Court is
persuaded that Mr. Bernanke is a key witness in this case, and that his
testimony will be highly relevant to the issues presented. Because of Mr. Bernanke's personal
involvement in the decision-making process to bail out AIG, it is
improbable that Plaintiff would be able to obtain the same testimony or evidence
from other persons or sources.... Indeed, the Court cannot fathom having to decide this
multi-billion dollar claim without the testimony of such a key government
decision-maker.... Defendant [the UNITED STATES' Department of Justice -
FJS] contends that Plaintiff should be required to pursue other avenues of
discovery first before seeking Mr. Bernanke's testimony. In its July 23, 2013
reply, Defendant also asserts that a deposition would interfere with Mr.
Bernanke's important duties in managing the
nation's economy and fiscal policy." [My underlining: Note "cannot
fathom" - Judge Wheeler is ripping mad - FJS]
Defendant's motion for a protective order is DENIED.
IT IS SO ORDERED
s/Thomas C. Wheeler
THOMAS C. WHEELER
There is so much that is wrong with all of this: The
Federal Reserve chairman, 1 - managing the economy and, 2 - running fiscal
policy. Leaving aside his eternal bumbling, the Federal Reserve chairman is a
bureaucrat with no authority to do either. Fiscal policy is for Congress.
Bernanke should be planted in front of a congressional inquiry at this very
moment, to explain himself. The Justice Department wrote the "too busy" plea to
Judge Wheeler. Instead, it should read what it wrote and draw up charges against
the Federal Reserve Chairman. Reading through Judge Wheeler's comments on May
17, 2013, and July 29, 2013, the Justice Department is guilty of obstructing
Starr International's case against the UNITED STATES.
Why might that be? Probably because of the central
charge: the UNITED STATES exceeded its authority by commandeering AIG without
compensation to anyone. If the UNITED STATES is found guilty by the courts, it
"should" (it is unwise to say "will" regarding legal decisions and precedent
anymore) place restrictions on the government's gargantuan appetite for whatever
it wants to control.
The UNITED STATES may also be attempting to preclude an
open investigation that will show how Federal Reserve Chairman Ben S. Bernanke,
Secretary of the Treasury Henry Paulson and New York Federal Reserve President
Timothy Geithner mishandled the 2008 financial crisis. This is not a secret.
Books by Sheila Bair and David Stockman, as well as the Financial Crisis Inquiry
Report (by the FCIC) have already done so. Yet, the media continues to report
how we "must thank Bernanke (or the others) for saving us from a nuclear
winter." These advocates have avoided the evidence.
A segment of Bernanke's ignorance was discussed
in "The Professor Who did NOT Save
the World." In summary: "Those who held insurance policies with AIG
or its subsidiaries never bore risk of non-payment."
Bernanke still had no understanding of AIG's structure a
year later when he testified before the Financial Crisis Inquiry Commission. The
professor did no homework. Lack of preparation by Bernanke is no longer even
surprising. His various testimony is shot through with errors.
The FCIC transcript quotes Bernanke on page 28 and 29:
"The reason AIG was set up the way it was originally, the financial products
division ["Financial products division" was the profit center that sold CDS -
FJS], which did the CDS, attached itself precisely because it was a large,
highly-rated insurance company with lots of assets. Therefore it could sell CDS
without what would otherwise be sufficient capitalization and protections
because the counterparties would know that this was a highly rated firm with
lots and lots of assets. It was precisely because of that reason when
[AIG] financial products [division] had to sell - had to come up with the
collateral - and was facing a run on its positions, that the Fed - that there
existed the collateral, the assets that the Fed could lend against." [My italics
- FJS]
This is all wrong.
The two dopes, that would be former Fed Chairman
Greenspan and Bernanke, have never been cornered by the various Congressional
and Senatorial Committees. Retired Congressman Ron Paul was a persistent
irritant to the Fed chairmen but he was not a lawyer and not equipped with a
good court room attorney's ability to make mincemeat of a fumbling witness.
Starr International Company is represented by David Boies, who, if he is at all
worthy of his reputation, will twist Bernanke (presumably, he is also
questioning Paulson and Geithner) into a pretzel of incomprehensibility. The
favorable disposition of Judge Wheeler is wind at his back. Should Boies need
any help in how to question the head of the Fed, please send him this
way.
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