And that is so even though the NY Fed under Geithner KNEW Lehman Brothers was falsifying its books and lying to investors about it:
Quite a few observers, including this blogger, have been stunned and frustrated at the refusal to investigate what was almost certain accounting fraud at Lehman. Despite the bankruptcy administrator’s effort to blame the gaping hole in Lehman’s balance sheet on its disorderly collapse, the idea that the firm, which was by its own accounts solvent, would suddenly spring a roughly $130+ billion hole in its $660 balance sheet, is simply implausible on its face. Indeed, it was such common knowledge in the Lehman flailing about period that Lehman’s accounts were sus that Hank Paulson’s recent book mentions repeatedly that Lehman’s valuations were phony as if it were no big deal.
Well, it is folks, as a newly-released examiner’s report by Anton Valukas in connection with the Lehman bankruptcy makes clear. The unraveling isn’t merely implicating Fuld and his recent succession of CFOs, or its accounting firm, Ernst & Young, as might be expected. It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations.
We need to demand an immediate release of the e-mails, phone records, and meeting notes from the NY Fed and key Lehman principals regarding the NY Fed’s review of Lehman’s solvency. If, as things appear now, Lehman was allowed by the Fed’s inaction to remain in business, when the Fed should have insisted on a wind-down (and the failed Barclay’s said this was not infeasible: even an orderly bankruptcy would have been preferrable, as Harvey Miller, who handled the Lehman BK filing has made clear; a good bank/bad bank structure, with a Fed backstop of the bad bank, would have been an option if the Fed’s justification for inaction was systemic risk), the NY Fed at a minimum helped perpetuate a fraud on investors and counterparties.
This pattern further suggests the Fed, which by its charter is tasked to promote the safety and soundness of the banking system, instead, via its collusion with Lehman management, operated to protect particular actors to the detriment of the public at large.
And most important, it says that the NY Fed, and likely Geithner himself, undermined, perhaps even violated, laws designed to protect investors and markets. If so, he is not fit to be Treasury secretary or hold any office related to financial supervision and should resign immediately.
There's more - read it all.
And the point stands - Geithner was derelict and incompetent in his duty as NY Fed head at best; at worst, he was an out-and-out crook who helped Lehman commit fraud.
And yet we hear nothing from President Accountability about Geithner's actions as head of the NY Fed.
Not one thing.
Just another example of hypocrisy from this most hypocritical of presidents.
I can't wait to see how many seats Dems lose in November.
And I can't wait to see President Accountability held accountable himself in 2012.
And if things don't change soon, he will be.
UPDATE: Cunning Realist points out how another architect of the financial crisis has just gotten rewarded by President Accountability.
That would be Janet Yellen of the San Francisco Fed who Obama just nominated to be Vice Chairman of the Federal Reserve:
Yellen has her fans, but I'm not one of them. One of the most important issues in monetary policy right now is the debate about whether the Fed should short-circuit asset bubbles in real time or wait to clean up the expensive mess. Yellen's position was clear as early as 2005, an important year in the chronology of the bubble:
This brings me to the debate about how monetary policy should react to unusually high prices of houses -- or other assets, for that matter. ...
In my view, the weight of a decision to deflate an asset price bubble rests on positive answers to three questions. First, if the bubble were to collapse on its own, would the effect on the economy be exceedingly large? Second, is it unlikely that the Fed could mitigate the consequences? Third, is monetary policy the best tool to use to deflate a house-price bubble?
My answers to these questions in the shortest possible form are, "no," "no," and "no."
If there was any accountability for policymakers who played a role in the crash, Yellen's disastrous and date-critical underestimation of the bubble and its consequences would be enough to keep her in the Pacific time zone.
Yet one more example of Obama rewarding failure, short-sightedness and outright incompetence and yet one more example of how in Obama's America, only teachers are accountable.
To paraphrase Mel Brooks, it's good to be in high finance!