Greenspan's Shameless Cash-Out to Deutsche Bank Is a Sub-Crime, Consumers Complain

Byline: Matthew R. Lee of Inner City Press: News Analysis

NEW YORK, August 14 -- And none dare call it shameless. Alan Greenspan, whose well-manicured legacy is in tatters as the predatory lending binge he allowed now roils the markets that he used to tend, is taking an undisclosed sum to advise Deutsche Bank.

   As it happens, Alan Greenspan as Federal Reserve chairman presided over merger approvals for Deutsche Bank in which detailed comments in opposition were filed, demonstrating Deutsche Bank's enabling of lenders like Delta Funding, which settled charges of predatory lending.

            For example, Reuters in November 1998 reported that

"One community activist group, Inner City Press/Community on the Move & Inner City Public Interest Law Center, on Monday formally raised objections to the proposed acquisition and this could hinder federal approval. In a letter to Federal Reserve Board chairman Alan Greenspan, the Bronx-based group said it was 'at least initially opposed to this proposed combination.' It requested access to information from the private meetings expected to take place this week between the banks and Federal Reserve staff. Executive director of the non-profit organization Matthew Lee said regulators must take a close look at Bankers Trust's investment in the subprime lending market."

            The Greenspan Fed didn't take a close look, and just handed out approvals. It also ignored evidence, relevant to safety and soundness as well as human rights, that Deutsche Bank held funds Turkmenistan's dictator Niyazov funneled off from that country's natural gas sales.

Greenspan -- no Jackson

   Notes from a meeting with Greenspan in mid-2004:

  They tell you that you must be seated before The Chairman will come in. You sit, the polished table, the Fed staffers in seats a row behind. The Chairman enters through a side door, sits in the middle of the table, his back to Constitution Avenue and the Mall. Pleasantries are exchanged. Once predatory lending is broached, the Chairman has a question: why is it, he asks, that people actually sign these contracts? Don’t they read them? Well.

  When asked about the Fed’s duty to consider applicant banks’ connections with high-cost lenders, the Chairman assures that this topic is covered in every approval order. "I don’t keep track of it all myself," he says. "I don’t have time. But I vote on the orders."   

What does Greenspan say now? He cites his personal relationship with Deutsche Bank's Joseph Ackerman as the reason he is taking the job. If they are such good friends, Greenspan should have recused himself from voting on Deutsche Bank's applications for regulatory approval.

            Then again, Greenspan didn't explain his failure to recuse himself from PNC Bank's application to acquire Riggs, despite familial use of the private jet of Riggs Bank, which money-laundered for Chile's Pinochet. (See, e.g., Washington Post of February 17, 2005.) So why should the more obscure dictator Turkmenbashi have been a problem?

            Still, consumer advocates who spent time trying to convince Alan Greenspan to be proactive on predatory lending say that his revolving door to Deutsche Bank itself cries out for action. We'll see.

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Click here for a Reuters AlertNet piece by this correspondent about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund. And see Somalia  video Analysis here

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