Byron Dorgan: “some while ago the Federal Reserve Board orchestrated a $3.6 billion bailout of something called Long-Term Capital…”

“some while ago the Federal Reserve Board orchestrated a $3.6 billion bailout of something called Long-Term Capital Management, the highflying hedge fund, which I think calls into question the leadership at the Federal Reserve Board and calls into question what they think is important and what they are willing to ignore. The federally insured banks were lenders and investors in this Long-Term Capital Management fund. The GAO, in its 1999 report, requested by myself and Congressman Markey, Senators Harkin and Reid, found that federal regulators failed to detect lapses in risk management by lenders, and others, that allowed Long-Term Capital Management to become large and excessively leveraged until after the crisis. Mr. Greenspan testified that the intervention in the Long-Term Capital Management debacle was needed to prevent a crisis in the global financial markets. But then he appears just as quickly to dismiss the Fed role in the bailout as little more than a spectator providing office space.…”