The News of the World scandal, back in the spotlight thanks to The New York Times Magazine, continues to grow.
The Guardian reports that former Home Secretary Alan Johnson is now all but accusing Scotland Yard of lying to him about the extent of the News Corp. paper’s spying. And it got a leaked document from Johnson’s old office that says Scotland Yard pushed back hard against opening an independent investigation into the scandal.
That fits with the NYT‘s portrait of a police agency bending over backward not to investigate the friendly News Corp.
The coverup is worse than the crime, as they say, and the Financial Times reports that parliament will open a new investigation—this one focusing on Scotland Yard’s doings in the case.
The whole thing reeks. And the pile-on has begun:
Two retired senior Met officers also queried on Tuesday why the Met inquiry had not pursued obvious leads.
A good place for American papers to start asking questions would be in the office of the current CEO of Dow Jones, Les Hinton, who headed News International at the time of the scandals.
— Speaking of the Brits, what’s up with the Conservative government’s appointees? First they hire Andy Coulson, who was editor of News of the World at the time of the hacking scandal, and whom the NYT reports knew of his reporters activites, as communications director for the prime minister.
Now David Cameron has hired HSBC chairman and former CEO Stephen Green to be the UK’s Trade Minister. Green pushed for the disastrous acquisition of subprime boiler room Household Finance back in 2002, an acquisition that helped lift subprime to “respectability.”
— The Wall Street Journal‘s Peter Eavis asks a smart question about the Financial Crisis Inquiry Commission’s hearings on Lehman Brothers, which he says show the perils of short-term financing:
Why didn’t Dodd-Frank do more to limit banks’ use of things like repo markets, in which banks take out short-term collateralized loans?
And I don’t recall seeing much about this, which Eavis highlights (emphasis mine):
Understanding securities firms’ reliance on triparty repo, the Federal Reserve in early 2008 set up a special credit line, called the Primary Dealer Credit Facility, to effectively backstop the market. Brokers could post securities with the Fed for financing instead. In an April 2008 email, a senior Treasury official said that Lehman had packaged up illiquid assets into securities to “game” the PDCF.
Eavis says the financial-reform law doesn’t cut it on this:
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.Yet Dodd-Frank is weak on this issue. It says regulators can demand limitations on a financial firm’s short-term debt but doesn’t specify ceilings. Instead of setting up ways to impose haircuts on a bank’s secured creditors if necessary in a wind-down, which would inject more market discipline, the legislation merely sets up a study on this subject. What is more, it establishes procedures for the government to widely guarantee bank debt again.
