The Federal Reserve has a “Doomsday Book” which functions as an emergency manual and is filled with recommendations for how the central bank’s officials should deal with sudden financial crises. According to The Wall Street Journal, the book, which has never been made public, was entered into evidence last Tuesday during a $40 billion class action lawsuit between shareholders of bailout recipient American International Group, Inc and the US government over the government’s seizure of 79.9% of the company’s equity following its September 2008 bailout.
The lawyer representing AIG’s shareholders, David Boies, obtained three different editions of the book through a subpoena and then entered them as evidence. The New York Times is reporting that the lawyer representing the New York Fed, John Kiernan, subsequently requested that the books be kept under seal in an effort to prevent their contents from becoming public record. US Court of Claims Judge Thomas Wheeler accepted the copies of the Doomsday Book as evidence under a temporary seal, pending a future hearing at which the merits of the seal would be evaluated.
While the veil of secrecy provided by the seal could be lifted at that future hearing, Aaron M. Kessler said in his piece for The New York Times, “Mr. Boies did not appear to mind if most of the contents remained secret, as long as he could ask Mr. Geithner certain questions that related to the Fed’s texts.” On that particular day, former US Treasury Secretary Timothy Geithner had taken the stand to testify. A lawyer for the Department of Justice, David Boies, Judge Wheeler, and Timothy Geithner’s attorney whispered among each other in the courtroom, debating which contents from the copies of the Doomsday Book would be fair game to mention during Boies’ questioning of Geithner.
During the proceedings, Boies stated that Timothy Geithner carried an edition of the book with him during the 2007-2008 financial crisis, an accusation which Geithner denied, saying, according to The Wall Street Journal, “I don’t think I ever carried it around… I was shown it at one point.” Geithner had mentioned the existence of the Doomsday Book in his book Stress Test, in which he indicted that he was unimpressed with its recommendations.
Said Geithner of the Doomsday Book, “We did occasionally go back and consult it as things were eroding around us… I don’t think it would be fair to say I consulted it extensively during that period.” He also indicated that Fed officials ultimately ignored the book’s recommendations and chose to implement their own emergency tactics instead.
Meanwhile, the contents of the Federal Reserve’s Doomsday Book remain secret, for now.