Honestly, I think everyone should watch some of this testimony and cross-examination from the hearing today. It is remarkable. I was trying to explain what happened to my kids as they watched some of it. No small feat to explain.
Each person is entitled to form their own opinion on the facts. Getting to the facts here is not simple. From what I can ascertain to date, I do not believe that Geithner, Paulson and company were acting in the best interests of the American tax payers first. Maybe they told themselves that they were; maybe they were wilfully blind and actually believed that they were. But this comes down to the fiduciary duty the government officials owed to the American people who they represented in their deliberations with the banks. They had a duty to put the tax payer ahead of all other interests. They had a duty to declare all conflicts of interest. They had a duty to disclose any secret profits being made. Not only did they not honour these duties in my view, but they sought to keep the details of the dealings confidential and closed from public review until 2018. Those who were footing the bill, where not supposed to see the math.
There is a strong apprehension of bias here. The stink is thick. And in my view, there is so far no clear evidence that bailing out AIG served the best interests of Main Street first.
You can view all segments from today's hearing on CNBC.com. Here are the Paulson clips. Here are the Geithner clips.
We should listen and try to hear the truth as the hearings proceed. But as I had mentioned before, its not enough that the actors believed they were doing the right thing, they had a duty to show that justice was being done and discharged without bias or conflict. No matter what else happens, I would say they failed in this. This will go down in history as a failure of democracy and the experience shouts for the reinstatement of legislated divisions between investment banking and lending, the Federal Reserve and the Government. Quite simply, humans need formal rules and constraints around money and leverage, and between government and private interests. Without them, greed gets the better of people. Its that simple. History has born this out time and again.
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