Envelope, Please

Messrs Geithner, Bernanke, and yet another gentleman from the former investment bank Goldman Sachs, (Bill Dudley who replaced Geithner as President of the NY Fed), went before the House Financial Service Committee to answer questions about the AIG bailout today .

Notwithstanding the alternately inane, occasionally relevant but hopelessly mangled, or just downright painful questioning from House members typically out of their depth, ie: the usual, m* was rather looking forward to today's hearing. The opportunity to focus attention on the decision process behind one of the most extraordinary actions taken thus far in the crisis, the initial and now ongoing operation to keep AIG on life support, seems long overdue.

Mere hours after Lehman Brothers was inartfully "allowed" to file for bankruptcy (most market participants having been lulled into complacency by the extraordinary measure of a $40bn Fed loan to JPM to help smooth the passage of Bear Stearns into its long goodnight), the Fed and Treasury reversed course, again, and advanced AIG $85bn (for 80% of the firms equity) to meet collateral calls from its trading counterparties and prevent a bankruptcy.

The justification put forward at the time, that a "disorderly" bankruptcy risked unknown but assuredly catastrophic effects on the financial system and the economy, was the party line in today's hearing. And yet as the taxpayers' tab continues to mount, after multiple rounds of capital injection, extraordinary funding facilities, and last week's unveiling of the Fed's nuclear option, debt monetization, we have no further understanding of our financial saviors' analysis than a platitude about risk and catastrophe. For this we have unleashed trillions.

Surely, we the people deserve grittier stuff than that. Its our dime. It's pithy, sure, but m* wants to know where are the Powerpoint slides? Where are the charts? Surely there is a scratch-pad someplace with AIG's off balance sheet liabilities and the potential losses a potential bankruptcy might have entailed? A meeting agenda, a presentation, a back of an envelope?

Or have these gentlemen from the Fed, and now Treasury, led us down a course of treatment, founded on no more than a fear of an uncertain and painful future, that risks transforming our financial corpus beyond all recognition? If the analysis is correct, and the course of action appropriate, what is there to hide? Gentlemen, the envelope please.