We’ll Never Know How Bad the Federal Reserve Is

The central bank hides and then destroys documents.

Sen. Rand Paul (R., Ky.) still hasn’t persuaded his colleagues to audit the Federal Reserve’s conduct of monetary policy. Perhaps lawmakers could simply agree that the Fed should stop destroying documents.

Borrowed Time,” a history of Citigroup publishing today and co-authored by your humble correspondent and Vern McKinley, finds that the bank was in many ways healthier and more stable during the century when it was independent than during the roughly 100 years it has been supported by the federal government. But the government has been working hard to prevent such stories from being told.

..  the Office of the Comptroller of the Currency’s examination reports from 1991 and 1992. Bank examiners normally put particularly juicy details about what they find in a confidential section that is not shared with the bank, and today this might represent a gold mine for financial historians. Such reports are available going back all the way to the 1860s, and the record lasts into the 1930s. But oddly these examination reports cannot be accessed for later periods due to the Federal Records Act of 1950.
.. For decades now, the government’s standard practice has been to warehouse individual examination reports for banks like Citi for 30 years while refusing to release them, citing exemptions under the Freedom of Information Act. After 30 years, the feds then destroy the reports. Based on this schedule, at some point during this year, the federal government will destroy the Citibank examination records from 1988. A few years down the line, the records from the early 1990s downturn will also cease to exist. Counter-intuitively, it is much easier for someone researching the history of a big bank to get their hands on an examination report from 1890 than from 1990. It is also certainly easier to repeat history if the lessons of the past are erased.

.. When an institution like Citi has problems as it did during the early 1990s, a regulator would normally catalog all the bank’s weaknesses in a written agreement in which the bank promises to sin no more. Citibank was placed under just such a memorandum of understanding. But you can’t read it.

.. It will not be immediately clear to most taxpayers why such information needs to be kept confidential for more than 25 years.
.. How will Americans ever fix problems in a federal bureaucracy if we’re never allowed to see them?

Guest List at Donald Trump Jr.’s Meeting With Russian Expands Again

Seventeen years ago, congressional investigators looking into money laundering stumbled upon an obscure Soviet-born financier who offered special services to his Russian clients. He had opened 2,000 companies in Delaware and more than 100 bank accounts for Russian clients who moved hundreds of millions of dollars through those accounts to overseas destinations, they found.

On Tuesday, that man, Irakly Kaveladze, resurfaced as the latest foreign guest on the ever-expanding list of participants at the June 2016 meeting where Donald Trump Jr. and other Trump campaign officials were hoping to get damaging information about Hillary Clinton.

.. Rinat Akhmetshin, a Russian-born lobbyist who has spoken openly of his past as a Soviet intelligence officer and was accused of hacking one company’s computer system in American lawsuits that were later withdrawn.

.. And at Citibank alone, he opened 136 American accounts for Russian clients who moved more than $560 million through those accounts to overseas destinations, investigators said.

.. said Mr. Kaveladze was “the poster child” of the money-laundering schemes.