Breaking: New York Fed Officials Were Polite to Bankers

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Gretchen Morgenstern and Louise Story at the Times went through 250,000 pages of documents relating to the government bailout of AIG that were released last month by the House Committee on Oversight and Government Reform. Among their discoveries: Back in 2008, a couple of people close to the New York Fed suggested they ask banks like Goldman Sachs to accept a little less than what they were owed on the credit default swaps that poor, hapless, AIG was stupid enough to sell them, which we already knew. Also: During that difficult, tumultuous time, AIG signed a waiver under pressure from the government and the banks that prevented them from suing, say, Goldman Sachs (not that the Times is singling anyone out here) for, say, misleading them into selling said swaps (not that the Times is saying that Goldman did that). But the worst thing they found — the thing that proves without a shadow of a doubt that the New York Fed was colluding with the banks to take AIG for everything it had while it was lying like Brooke Astor on its deathbed — were the thank-you notes.

Check this out:

On Nov. 6, 2008, for instance, after a New York Fed official spoke with Lloyd C. Blankfein, Goldman’s chief executive, about the Fed’s A.I.G. plans, the official noted in an e-mail message to Mr. Blankfein that he appreciated the Wall Street titan’s patience. “Thanks for understanding,” the regulator said.

Do you see the tone there? Not the sneering tone of the Times in referring to Blankfein as a "Wall Street titan." Thepolite tone of the e-mail. Politeness of any sort is highly suspicious and unusual "on Wall Street," Morgenstern and Story point out, where "deal-making is famously hard-nosed with participants fighting for every penny." They know this because they've examined any and all correspondence ever between anyone who has ever worked on or near or with Wall Street. And for the record? When Gretchen Morgenstern thanks a source for their cooperation, she signs off, "Thanks a lot, asshole."

In U.S. Bailout of A.I.G., Forgiveness for Big Banks [NYT]