The greatest practitioner of mass propaganda in the 20th Century and the evil genius behind Kristallnacht once wrote:
If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.
I am writing this diary to suggest that the Big Lie of our times, the lie that has rendered the largest white collar crime in history utterly invisible, the one which we hear repeated almost every day from the mouths of Hank Paulsen, Timothy Geithner and many many others, is a lie about the most important financial institution in America, the one that manages the other banks and controls monetary policy, the New York Fed. The big lie asserts or implies that THE NEW YORK FED IS A PUBLIC INSTITUTION WHOSE OFFICIALS ARE DRIVEN BY PUBLIC SERVICE.
Let's briefly sample how this lie is told and then briefly deconstruct it. Timothy Geithner has been getting grilled lately about some of the more horrific details of the recent bank bailout, specifically using taxpayer money to pay off AIG derivatives at 100 cents on the dollar. After Rep. John Mica (R-FLA) suggested sGeithner might consider resigning, he retorted with almost Achillean coolness:
I have worked in public service all my life. I have never been a politician. I have served my country as carefully and ably as I can.
A few months earlier on the Lehrer NewsHour of May 8, 2009, Geithner had elaborated on the true nobility of his motives:
I’ve been in public service all my life. I’ve spent all my life working in government on ways to make our financial system stronger, better economic policy for this country. That’s the only thing I’ve ever done. And I would never do anything and be part of any policy that’s designed to benefit some piece of our financial system. The only thing that we care about and the only obligation I have is try to make sure this financial system is doing a better job of meeting the needs of businesses and families across the country.
Hank Paulson, who was Secretary of the Treasury during the period in question, concurs with the almost reverential attitude toward the New York Fed, telling Charlie Rose yesterday:
I believe from the bottom of my heart that, having worked with the people at the Fed as closely as I have, the New York Fed, I just know that -- what they were driven by, and they were driven by protecting the system and protecting the American people.
DECONSTRUCTION OF THE BIG LIE
The New York Federal Reserve Bank is NOT a public institution. To the contrary, according to the Wikipedia article on the Federal Reserve System, the NY FED is one of the
[t]welve regional privately-owned Federal Reserve Banks located in major cities throughout the nation, which divide the nation into 12 districts, acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors.
It makes these banks sound like some kind of subcontractors for the Treasury, perhaps the way Blackwater was a subcontractor to the Pentagon or the old fashioned "tax farmers" collected the taxes for the crown and kept a percentage for themselves. In a separate article specifically on the New York Federal Reserve Bank Wikipedia says:
The New York Federal reserve is a private bank, the largest, in terms of assets, and the most important of the twelve regional banks.
Can we really quote Wikipedia authoritatively? No, but we do have a 1982 District Court ruling, Lewis v. United States (68 F.2nd 1230 ) later affirmed by the Court of Appeals:
Federal reserve banks are not federal instrumentalities but are independent, privately owned and locally controlled corporations in light of the fact that direct supervision and control of each bank is exercised by its board of directors.
Bloomberg in a 2006 article actually identified the TEN BANKS THAT OWN THE NEW YORK FED. They are:
--Citigroup
--JPMorgan
--Deutsche Bank AG
--Bank of New York Co.
--Charles Schwab Corp.'s U.S. Trust Co.
--M&T Bank Corp.
--Banco Popular Espanol SA,
--HSBC Plc
--Mizuho Financial Group Inc.
--Royal Bank of Scotland Group Plc.
A mere glance at this list tells us why the Big Lie must at all costs be protected and hidden from view. We must all pretend that the New York Federal Reserve is a public institution full of dedicated American public servants because the truth that it is actually owned entirely by private banks some of whom are FOREIGN BANKS WHO DIRECTLY BENEFITED FROM THE AIG BAILOUT would be enough to drive voters batshit.
But it gets worse. The members of the board of directors of the New York Fed were CEOs or members of the board of the very banks which would be most directly affected by the key events orchestrated by the New York Fed, such as the sale of Bear Stearns, the failure of Lehman Brothers, the rescue of AIG, and the like.
Who were these public servants on the board of the New York Federal Reserve Bank during this fantastic almost mythical disbursement of taxpayer money to banks?
--STEPHEN FRIEDMAN, board member of Goldman Sachs, served as CHAIRMAN OF THE BOARD OF THE NEW YORK FED during the period in question.
--JAMIE DIMON, CEO of JPMorgan, was a CLASS A DIRECTOR OF THE BOARD OF THE NEW YORK FED during the period in question.
--DICK FULD, CEO of Lehman Brothers, was a Class C member of the board (he was a so-called "public representatives," which shows you what "public" means at the New York Federal Reserve).
--TIMOTHY GEITHNER is the acerbic eunuch who serves this mighty priesthood. Geithner joined Kissinger's group out of college, and then came under the tutelage of the Chief Eunuchs, Larry Summers and Bob Rubin over at Treasury in the Clinton years.
But who picked Timothy Geithner to be the "public official" to "serve" as president of the New York Fed? A real expert on the subject, former New York Governor Eliot Spitzer, tells us:
So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros.
Thus the foxes selected the "public official" to guard the national treasury and regulate the banks. He would serve as president under the direct supervision and control of the chairman (who was on the board of directors at Goldman Sachs) and the Class A board members which included as we have seen the CEO of JPMorgan.
Now we have set the stage and named the dramatis personae for the Kristallnacht of American economic history -- the series of events which included the forced sale of Bear Stearns, the collapse of Lehman Brothers, and then the magical transfer of trillions of taxpayer dollars to bail out AIG and American banks and also French and German and Japanese banks, events memorialized in the AIG bailout and the cash out of AIG derivatives at 100 cents on the dollar. All of these decisions -- or in the case of Lehman, failure to act -- were based on the solemn judgment of the "public officials" at the New York Federal Reserve Bank who, during the day, were actively directing the very multinational financial institutions which were at the heart of the crisis.
Joseph Goebbels said: “Think of the press as a great keyboard on which the government can play.” One thing the master keyboardist must do is avoid dissonant notes -- such as any discussion whatever in any form of the actual governance and status of the New York Federal Reserve or its incestuous relationship with the very banks it is supposed to directly govern. A beautiful example of how the master keyboardist played this financial meltdown was how all media -- cable, New York Times, Washingtpon Post, etc -- never even mentioned the most spectacular conflict of interest of all time which occurred during the forced sale of Bear Stearns to JPMorgan in March, 2008. A contemporary article in New York magazine, entitled, "The Heist," described the deal as a "shocking triumph" for Jamie Dimon, the CEO of JPMorgan, "the best deal ever." Dimonj had paid $260.5 million for a company whose last reported net worth was $11.7 billion and whose headquarters building alone was worth more than $1 billion. And the beautiful thing, from Jamie Dimon's point of view, was the support of the American taxpayers that he had been able to wring from Timothy Geithner As the article put it:
The Fed has guaranteed some $30 billion of Bear’s less-liquid assets, leaving JPMorgan free to feast on the attractive ones, such as the firm’s prime-brokerage desk (which provides trading and other services to hedge funds), a business that JPMorgan barely competes in. Bank of America is reportedly shopping its own prime-brokerage business for $1 billion. Dimon got Bear Stearns’—the third largest in the industry—for less than a quarter of that, and that’s if you ignore the rest of the business entirely
But never once did any major media ever mention (and I invite any Googler to prove me wrong on this) NO MAJOR MEDIA EVER MENTIONED IN ITS COVERAGE OF THE BEAR STEARNS SALE THAT JAMIE DIMON, THE CEO OF JP MORGAN, WAS ACTUALLY THE BOSS OF TIMOTHY GEITHNER AT THE NEW YORK FED BECAUSE DIMON WAS A CLASS A BOARD MEMBER OF THE NEW YORK FED. That dissonant note was not sounded. The Big Lie behind the ongoing financial collapse (although there were quite a few other lesser lies) is that the New York Fed is a fair arbiter among competing financial interests and somehow therefore an independent agency serving the public good. Au contraire, we are being gamed by Harvard boys with the ethics of Bernie Madoff.