Posted on Monday, February 14, 2011
The Financial Crisis Inquiry Commission, created by Congress to investigate and report on the causes of the market meltdown late last decade, won’t publicly release its full 2009 interview with Federal Reserve Chairman Ben S. Bernanke, a commission spokesman said.
The FCIC is withholding records when there is “legal or proprietary information in those interviews that meant they could not be made public,” or no audio, transcript or summary exists, Tucker Warren, the FCIC’s spokesman, said after the panel yesterday released more than 300 witness interviews. He declined to elaborate on Bernanke. The interview is among records being transferred to the National Archives that will be made public in five years, Warren said.
“There’s absolutely no reason to hold it,” unless it contains proprietary details about banks or international trading, said University of Texas Professor Robert Auerbach in Austin, a former congressional economist and author of the 2008 book “Deception and Abuse at the Fed.” “Bernanke will be long gone when it comes out, and that’s not a way to establish responsibility,” Auerbach said.
The interview is quoted in the congressionally authorized panel’s final report, which cites the November 17, 2009, “closed-door” session in 11 footnotes. The Fed chief discussed a range of topics including the central bank’s failures and why the government rescued Bear Stearns Cos. and let Lehman Brothers Holdings Inc. go bankrupt, the FCIC report shows.
I. Withheld From Public
Bernanke’s is among 200 to 300 interviews that are being withheld from the public now, Warren said. Michelle Smith, a spokesman for the Fed Board of Governors, declined to comment. The FCIC is now in the process of shutting down, having concluded its work, Warren said.
In the unreleased interview, Bernanke also criticized credit-rating companies, discussed how he underestimated effects from the subprime-mortgage crisis and said the central bank’s lack of aggressiveness in mortgage regulation “was the most severe failure of the Fed in this particular episode,” according to the report. Bernanke told the FCIC that after Lehman failed, the Fed was concerned Goldman Sachs Group Inc. would “go under.”
The commission interviewed Bernanke more than nine months before he gave public testimony to the panel in September 2010. It’s the only “closed-door session” with anyone that’s cited by the FCIC in its footnotes.
II. Near White House
The FCIC’s meeting with Bernanke lasted 90 minutes and was held at the commission’s eighth-floor office near the White House, according to Bernanke’s daybook from the Fed.
“There are others that are at a Bernanke level that won’t be made public as well,” Warren said. “Bernanke is not being singled out in that regard.”
The FCIC released audio this week of interviews with other Fed officials, including Vice Chairman Janet Yellen and Governor Kevin Warsh.
The 10-member commission released split findings last month. While the Democratic majority pinned much of the blame on Wall Street firms and Washington regulators, Republican members issued two dissents that criticized Democrats for failing to uncover the actual causes of the crisis.
The commission was created by the Fraud Enforcement and Recovery Act passed by Congress and signed by President Barack Obama in May 2009. Among its charges was to “seek testimony or information from principals and other representatives of government agencies and private entities that were significant participants in the United States and global financial and housing markets.”
The crisis panel came under the scrutiny of Representative Darrell Issa, chairman of the House’s Oversight and Government Reform committee, in July after it asked Congress for an additional $1.8 million on top of its $8 million budget.
Issa, a California Republican, has pledged to look into the group’s spending and said he also wants to investigate why its members were unable to come up with a unanimous conclusion for the final report.
By Joshua Zumbrun and Scott Lanman, BLOOMBERG