Rolling Stone Contributing Editor Matt Taibbi discusses his feature “Secrets and Lies of the Bailout,” along with Neil Barofsky, Former TARP Special Inspector General.
Secrets and Lies of the Bailout: One Broker’s Story
POSTED: January 8, 2:50 PM ET
George wasn’t alone in asking that question. As I learned during the course of researching the “Secrets and Lies” piece, the SEC seemingly wondered the same thing when it saw the Bloomberg reporting in 2011. From the feature:
Two former high-ranking financial regulators tell Rolling Stone that the secret loans were likely subject to a 1989 guideline, issued by the Securities and Exchange Commission in the heat of the savings and loan crisis, which said that financial institutions should disclose the “nature, amounts and effects” of any government aid. At the end of 2011, in fact, the SEC sent letters to Citigroup, Chase, Goldman Sachs, Bank of America and Wells Fargo asking them why they hadn’t fully disclosed their secret borrowing. All five megabanks essentially replied, to varying degrees of absurdity, that their massive borrowing from the Fed was not “material,” or that the piecemeal disclosure they had engaged in was adequate.
In any case, when George thought about the issue, he suddenly realized he was in a bind ethically. He wanted to tell his clients about the non-disclosure problem, and how that might have helped cause their losses, but as the SEC’s letters make plain, there was really no way to do that without pointing out that his own company, Wells Fargo, was one of the firms that had not disclosed its billions in secret borrowing.
Read more: http://www.rollingstone.com/politics/blogs/taibblog/secrets-and-lies-of-the-bailout-one-brokers-story-20130108#ixzz2I6LqwnXu
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