The Federal Reserve acted subservient to banks while posing as a regulator

Evidence

The ability to act subservient to the banking sector while posing as a regulator has been a major factor in the trajectory of the current crisis. For instance, the Fed dictated to AIG that it must keep all details of the bailout secret, even from the SEC (Walsh, “Fed Advice to AIG Scrutinized”). This was done to hide what was arguably one of the most corrupt aspects of Fed behavior in the early phases of the crisis, namely, pretending the system of credit default swaps had any integrity whatsoever. Moreover, the Fed has persistently used underhanded tactics, like having the private banking lobby block most scrutiny of Fed actions, to consolidate its lack of political accountability (Auerbach, 2008, pp. 5, 157–59). It fought the Freedom of Information Act request of Bloomberg to disclose its actions during the crisis retrospectively all the way to the Supreme Court through surrogates from the banking industry. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2082

Categorization

• XREF: Extends the ‘thought collective’ thread — the Fed as insider institution colluding with private banking rather than regulating it. Connects to the Milgrom/private-governance readings about institutions serving the group they oversee. — connects to: Global South elites also profit from Federal Reserve rate hikes — Clara E. Mattei, Escape from Capitalism, 340; The Federal Reserve is structurally owned and controlled by private member banks — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 522; Financial reform legislation was subverted into regulation of regulators. (+5 more)
• QUESTION: The claim that the Fed forced AIG to hide bailout details even from the SEC — worth chasing the Walsh source for the exact mechanism and whether the SEC later took action.

Broader Connections

• The Federal Reserve is structurally owned and controlled by private member banks #expands (0.90) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 522
• Banks with Fed directorships were more likely to receive TARP funds #exemplifies (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2083
• Federal Reserve crisis lending quietly enlarged the biggest banks at taxpayer expense #exemplifies (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 508
• Financial reform legislation was subverted into regulation of regulators. #corroborates (0.82)
• Financial reform legislation was converted into an effort to restrain regulators #corroborates (0.82)
• The Fed’s COVID-era policies shifted public resources to large corporate capital holders. #exemplifies (0.80) — Clara E. Mattei, Escape from Capitalism, 377
• Regulatory capital rules redefine banks as investor vehicles rather than funding distributors #expands (0.78) — Ève Chiapello, Financialisation of Valuation, 64