The Fed’s “Doomsday Book” Has Been Revealed

Back in 2011, shareholders of insurance giant American International Group (AIG) filed a $40 billion class action lawsuit against the US government over the terms of its controversial bailout of AIG during the 2008 financial crisis.

In 2014, the trial case came to focus on an intriguing oddity. In cross-examination, the plaintiffs learned of a set of documents that the New York Fed—the heart of America’s Federal Reserve central bank and the primary wheeler-dealer in the chaotic days of the global financial collapse—dramatically refers to as its “Doomsday Book.”

This book, it was discovered, contained the various legal opinions and memoranda that the Fed used to determine what power it has to manipulate the financial system in the event of a large-scale crisis. And, it seemed, there was a good chance that the central broke its own rules with all its bailout shenanigans and financial sleight-of-hand during the 2008 collapse.

However, the plaintiffs’ reasonable request to see the book and examine these supposed emergency powers was immediately rebuffed by the Fed. New York Fed lawyer John S. Kiernan, for example, was adamant that the Fed would not open up the book for the court. “Of the tens of thousands of documents that we have produced in this case, the Federal Reserve Bank of New York has sought to retain confidentiality because of the internal sensitivity of only this one,” he told the United States Court of Federal Claims.

The court was eventually able to pry the relevant documents out of the Fed’s clutches, but the Doomsday Book has remained under court seal for years . . . until now.

Late last year, an enterprising researcher managed to get his hands on a copy of the elusive book. And what that book contains should shock you (if you’re paying attention).

Find out all about the Doomsday Book, how to read it, and what it tells us about the nature of the Fed’s self-declared emergency powers in this week’s important edition of The Corbett Report Subscriber.