Swiss Government Plans to Lock Away Secrets on Credit Suisse Collapse for 50 Years–We Have No Right to Know the Truth!

The “Deep State” is increasingly feeling like the “Deep Banking State.” Try to get any meaningful information to unravel the corrupt and dangerous interconnections between global banking behemoths today and some government or other entity has slapped a padlock on the information.

The latest example is the Swiss Parliamentary Commission of Inquiry that is delving into the collapse in March of the second largest global bank in Switzerland – Credit Suisse. The Commission has announced that it plans to lock away the details of its findings for 50 years. (UBS, the largest global bank in Switzerland, bought the crumbling remains of Credit Suisse earlier this year.)

Reuters reported that the Swiss Parliamentary Commission of Inquiry is also requiring that “All persons participating in the meetings and the questioning are subject to the duty of secrecy, not only the members of the commission, but also the interviewees themselves.”

The news of the 50-year lockup of the reasons for a global bank’s rapid failure is making headlines, on the basis that it’s an affront to the public’s right to know. Which, of course, it is. But the U.S. public has been suffering equally egregious lockups of information concerning the global banks based here in the U.S. for decades.

Let’s not forget what happened when the late Bloomberg reporter, Mark Pittman, filed a Freedom of Information Act Request (FOIA) for global bank bailout information from the Federal Reserve during the financial crisis of 2008. While the Fed released general details of emergency lending programs, it did not release the names of the global banks that were doing the bulk of the borrowing, or the sums borrowed by each institution.

Pittman filed a FOIA with the Fed for the names of the banks, the amounts borrowed and the terms. Under the law, the Fed had to respond in 20 business days. The Fed stalled Pittman for six months, leading to the parent of Bloomberg News, Bloomberg LP, filing a lawsuit against the Fed in the U.S. District Court in Manhattan in November 2008. Bloomberg won that suit. The Fed then appealed to the Second Circuit Appellate Court seeking to continue to withhold the information.

The Fed also lost at the Second Circuit. The Fed was too embarrassed to take the case to the U.S. Supreme Court, because President Obama’s acting Solicitor General, Neal Katyal, planned to file a brief contrary to the Fed’s position, so a group called The Clearing House Association LLC, consisting of some of the same global banks that were being bailed out by the Fed, filed their own appeal with the Supreme Court. The Supreme Court declined to hear the case in March of 2011, leaving the decision of the Second Circuit in place.

The banking reform legislation known as the Dodd-Frank Act, which was signed into law in 2010, had forced the Fed to release the transaction details of its seven emergency lending facilities in December of 2010. When the Supreme Court declined to hear the FOIA court case, the discount window transactions were released in March 2011.

Senator Bernie Sanders had attached an amendment to the Dodd-Frank Act which required the Government Accountability Office (GAO) to audit the Fed’s emergency lending programs. When that audit was released in July of 2011, it showed that the Fed had secretly sluiced more than $16 trillion in cumulative loans to the global banks from December 2007 to at least July of 2010. A statement from Senator Bernie Sanders’ office at the time included the following:

“The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.”

On March 21, 2011, Bloomberg News Editor-in-Chief Matthew Winkler released this statement:

“At some point long before the credit markets seized up in 2007, financial markets collapsed and the economy plunged into the worst recession since the 1930s, the Federal Reserve forgot that it is the central bank for the people of the United States and not a private academy where decisions of great importance may be withheld from public scrutiny. As only Congress has the constitutional power to coin money, Congress delegates that power to the Fed and the Fed must be accountable to Congress, especially in disclosing what it does with the people’s money.”

Mark Pittman died at age 52 of heart-related problems on November 25, 2009. He never lived to see the data released.

But the Pittman episode is far from an aberration when it comes to the ability of the U.S. press or the public to utilize the Freedom of Information Act (which applies to federal agencies) or other sunshine laws across America. For the past decade, Wall Street On Parade has been getting the run around from federal agencies when seeking critical information under the public’s legislated right to know about these banking behemoths. Typically, we are told the information falls under an exemption.

Consider what happened in 2021when Wall Street On Parade sought records under FOIA related to the worst trading scandal in the Federal Reserve’s history. On October 12, 2021 we filed a FOIA request with the Federal Reserve Board of Governors seeking the specific dates on which former Dallas Fed President, Robert Kaplan, had made purchases and sales in S&P 500 futures contracts in 2020. According to Kaplan’s financial disclosure forms, he had made “multiple” transactions of over $1 million in S&P 500 futures during 2020, the year that he sat as a voting member of the Federal Open Market Committee and was privy to the Fed’s unprecedented interventions in the market during the economic upheaval from the pandemic. (See Kaplan’s financial disclosure forms from 2015 through 2020 here.)

Kaplan was under very precise instructions on his annual financial disclosure form to provide the “month, day, year” of each of his purchases of securities and each of his sales. But throughout his tenure at the Dallas Fed, Kaplan listed only the word “multiple” where the specific date should have appeared on the form. This made it impossible to tell if he had been trading around the time that the Fed made major market moving announcements in 2020.

Because Kaplan sat on insider information throughout much of 2020, he should not have been trading at all, let alone in S&P 500 futures which allow an individual to trade after the U.S. stock exchanges have closed – almost around the clock from Sunday evening to Friday evening.

On October 22, we received the following response from Margaret McCloskey Shanks, the Deputy Secretary of the Federal Reserve Board of Governors who served in the dual role of Chief FOIA Officer for the Fed:

“I have determined to grant your request for expedited processing in light of the fact that the topic of your request concerns a matter that has recently been the subject of news reporting. Accordingly, your request will be accorded priority treatment and processed as soon as practicable. By granting expedited treatment, your request will be processed ahead of other FOIA requests.”

On November 9 we received a very strange communication, not from Margaret McCloskey Shanks, the Chief FOIA Officer for the Fed, but from the “Information Disclosure Section” of the “Board of Governors of the Federal Reserve System.” The letter informed us that:

“Pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until November 24, 2021, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.”

On December 8, we received an emailed letter from Margaret McCloskey Shanks informing us as follows:

“Staff searched Board records and consulted with knowledgeable staff but did not locate any documents responsive to your request.”

If that were true, why initially grant expedited processing instead of simply saying we have no such documents? Why let us know that two components of the Fed Board had intervened in the normal processing of our request? Why take almost two months (instead of the mandated 20 business days) to give us a final answer?

After almost two years, there has been no word that the SEC or Justice Department is involved in the investigation of Kaplan’s trading. Fed Chair Jerome Powell has publicly indicated that he referred the Fed’s trading scandal to the Fed’s Inspector General, Mark Bialek, on October 4, 2021.

Bialek appeared as a witness at the May 17 Senate Banking Subcommittee on Economic Policy hearing. Senator Elizabeth Warren, Chair of the Subcommittee, showed her exasperation with Bialek’s slow-moving investigation of the trading scandal, which had implicated not just Kaplan, but other Fed Bank Presidents and Powell himself. She told Bialek:

“You have had a year and a half. You did not call out the trades that we can see. Let us just put it this way, this is not strong oversight. In fact, it is not even competent oversight. It looks like, to anyone in the public, that you gave your boss a free pass, and that’s just not gonna cut it here. And even today, a year and a half later, the Fed continues to stonewall Congress, stonewall the public, on the underlying information about these trades. This is not acceptable. This is why we are pushing for an independent IG.”

But the problem with the loss of transparency when it comes to the global banks goes well beyond FOIA. Increasingly, the U.S. Department of Justice is drawing a dark curtain around the details of the charges it brings against the global banks. For example, in 2014 the Justice Department announced a $7 billion settlement with the global bank, Citigroup, which had been the largest recipient of the Fed’s secret bailouts between December 2007 and the middle of 2010. The $7 billion fine was for Citigroup selling toxic mortgage-backed bonds to pensions, charities, cities, states, hospitals and FDIC-insured banks and others. In announcing the settlement, the Justice Department said it had collected “nearly 25 million documents.” How many of those documents did the public get to see? Nine pages. (Read our report on that matter here.)

This arrogance toward the people’s right to know has now engulfed our federal court system, particularly in the Southern District of New York. The largest global bank headquartered in America is JPMorgan Chase. Everything about this bank involving wrongdoing should be open for public inspection because the bank has previously admitted to five felony counts brought by the U.S. Department of Justice.

Now JPMorgan Chase has three separate lawsuits against it for facilitating Jeffrey Epstein’s sex trafficking of children by providing him with the hard cash to pay off his victims and accomplices without leaving a paper trail. Internal records produced in discovery prove that these millions of dollars in hard cash payments occurred without the bank filing the legally-required Suspicious Activity Reports to law enforcement.

But instead of allowing the public and the press to have unfettered access to the critical documents that would allow visibility into the complicity of bank management in Epstein’s crimes, Judge Jed Rakoff has allowed the sealing of documents, protective orders and wide scale redactions of critical information.

If, as many believe, democracy in America is dying. Let us go on record today as stating that it’s dying one locked-away record at a time.