Secrets of Federal Reserve Doomsday Book Leaking During Slow-Moving Trial
On October 13, The Wall Street Journal published an article titled Inside the Fed’s ‘Doomsday Book’.
Inside the Fed’s ‘Doomsday Book’
The Federal Reserve’s secretive “Doomsday Book” is leaking out bits at a time during a slow-moving trial in a tiny Washington courtroom.
The “Doomsday Book” is a compendium of legal opinions, in some cases stretching back decades, that explore the legal limits of the Federal Reserve in the event of a financial crisis. According to testimony provided by former New York Fed President Timothy Geithner, it is kept in various forms at the central bank’ fortress-like building there.
The Fed is fighting hard to keep the “Doomsday Book” under court seal so it can’t be released to the public, but parts of it are trickling out in testimony in a trial related to the government bailout of American International Group AIG +0.52% Inc.
There are at least three versions of the book. One was published on June 19, 2006, another in 2012 and a third in 2014.
The book contains a summary, between 1 and 2 inches thick, containing references to a number of different legal opinions. Mr. Geithner had kept his copy in his office, he said during three days of testimony.
“It’s kind of a big, fat binder,” he said. He said “we did occasionally go back and consult it as things were eroding around us. … It was a reference material that described precedent and authority.”
The book is considered “evidence” in a trial brought by AIG shareholders who are suing the U.S. government over the 2008 bailout. David Boies, who is representing plaintiffs in the case, has obtained the three versions of the book and said during trial that it contains “forms, legal memos, and other papers, sometimes in paper form and sometimes on a CD-ROM.”
Mr. Boies read from the book’s first page: “The ‘Doomsday Book’ is a collection of emergency documentation and memoranda compiled by the Legal Department of the Federal Reserve Bank of New York.”
He continued: “It is maintained in three forms: a complete paper version (copies kept in the Law Library, Records, and EROC),
CD-ROM and paper introductory section (distributed widely through the Legal Department) and on the Legal server (in the ‘LEGALDOCS’ library; ‘Doomsday Book Materials’ folder.)”
Page 53 of the book refers to a legal memorandum written by a former Fed general counsel Howard Hackley.
“The Doomsday Book says, with respect to the Hackley memorandum, ‘This is probably the most important historical document in the collection: a piece of original legal scholarship” that “is an extensive legal history of Federal Reserve lending activities.”
He offered a bit more: “The legal analysis is excellent and thorough and where necessary imaginative. The policy analysis reflects conventional early 1970s Federal Reserve public statements, and is generally less useful than the legal analysis.”
Meanwhile, Mr. Boies said page 36 of the 2006 version of the Doomsday Book contains a legal opinion written by former Fed general counsel Virgil Mattingly that “expresses an informal opinion… that Federal Reserve Banks do not have the power to make nonrecourse loans.”
The “Doomsday Book” of course contains much more, which is one reason why the Fed is fighting to keep it secret. The book also includes a section determining whether the Fed can loan money to cities and towns during a financial crisis.
What’s the Fed’s opinion on this?
We’ll have to find out on Doomsday.
Please click here to read the article online.
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