The bailouts of October 2008 kept some very rich people keep their money. They did not wind up like employees of Lehman Brothers, which was allowed by the Secretary of the Treasury to fail.
The Federal Reserve is now in damage-control mode. Ron Paul has inflicted a lot of damage. This is going to get worse.
Today’s Treasury Secretary was the president of the New York Federal Reserve Bank in October 2008. He was at the center of the crisis.
Unlike the CEO’s of Goldman Sachs and other major players, he has always been salaried. He does not have the money to pay defense attorneys $500 an hour. But he may soon have to do just that.
Lehman Brothers Holdings Inc. (LEHMQ) and its creditors late Thursday said they want to subpoena Treasury Secretary Timothy Geithner to question him under oath over allegations J.P. Morgan Chase & Co., (JPM) illegally siphoned billions of dollars from the collapsing investment bank in the days before it filed for the largest bankruptcy in U.S. history.
In a filing accompanying Lehman’s filing, made in U.S. District Court in Washington, Lehman’s official committee of unsecured creditors said Geithner has thus far refused to comply with an Aug. 9, 2011, subpoena, and it wants a court to force Geithner to give a deposition by a March 16 deadline.
“Despite being a crucial fact witness on these issues, Secretary Geithner has refused to appear at a deposition in accordance with a valid subpoena issued by the Committee,” the committee’s lawyers said in the filing. Geithner was president of the Federal Reserve Bank of New York at the time of the Lehman collapse.
Geithner has a problem. He will not be able to fool lawyers, the way he fooled Congress about his tax returns. He will not be able to blame iu all on TurboTax software.
They will get him on the witness stand at some point. He will be forced to tell the lawyers what the chain of events was in the biggest bailout in history. If he takes the Fifth Amendment, he will find himself unemployed.
In any case, he is now facing legal fees that I would not wish on anyone.
If the lid is ever taken off this can of worms, the public will find out about the nature of crony capitalism. With lawyers involved, and millions of dollars at stake, the lid will be taken off.
Over time, the voters’ trust in the existing system will disappear. Then will come a political day of reckoning. It will take an economic crisis to accomplish this, but that crisis is coming.