FT continues to defend the indefensible

On the heels of last week’s outrageous assertion that the second AIG bailout didn’t represent a “backdoor bailout” of the banking industry, the Financial Times is at it again in its reporting of Tim Geithner’s miserable day being grilled on Capitol Hill. The main article in the paper – “The hindered haircut” – is a pretty balanced piece, but the piece in the online Lex column is an abomination. The column concludes:

“Elsewhere, this autopsy has descended into minutiae – such as whether purchases required disclosure on a security-by-security basis, information for which there is a negligible public interest argument. The big picture is that in a crisis questionable decisions are made under pressure without malicious intent. Bury this corpse now.”

Wouldn’t public officials love it if all debacles were resolved thusly?

As I have said in this space on multiple occasions, the Fed’s purchase of toxic financial instruments from AIG would not have been my choice (I think a game of brinkmanship was called for in order to secure the best deal possible); however, it’s a judgment call, and it very well may have saved the global financial system. What isn’t a judgment call is doing it all in the dark. Yes, there are congressmen lasered in on the substance of all this – way, way after the fact – but the real outrage concerns the underhanded evasion of responsibility. Remember that? That’s the thing that comes attached to power. Besides, we’re not talking about some trifling Long Term Capital Management bailout here…this is $70 billion. I know it’s easy to become inured to the money pile when you report on it every day, but you’d think the Financial Times – or any news organization – would have some appreciation for the magnitude of this. The government can’t shower money like this on private businesses in the dark. That is what the pillorying of Tim Geithner is about at the end of the day, not so much the actual decision, which is one many reasonable people would have made, even if it lacked chutzpah.