29 Jan 2010

Bloomberg Catching On to the "Secret Banking Cabal"

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David Kramer at LRC relays this choice excerpt from a Bloomberg commentary by David Reilly:

Secret Banking Cabal Emerges From AIG Shadows: David Reilly

Commentary by David Reilly

Jan. 29 (Bloomberg) — The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

As thrilling as it is to see this frank discussion in a Bloomberg article, Reilly doesn’t go the full distance. If you’re stocking up in preparation for Mad Max times, you need jelly to go with your peanut butter.


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