THE ANCIENT

Posted at 7:50 p.m. ET

The New York County (Manhattan) district attorney is Robert M. Morgenthau. He is 89.  Yes, you read that correctly.  He is also the son of Henry Morgenthau, FDR's secretary of the treasury.  On money matters, Bob Morgenthau knows, and he remembers.  Here, for the Wall Street Journal, he discusses a matter we've alluded to here - the secrecy, and the knowledge gaps, regarding our financial woes.  This is short, and well worth reading:

A major factor in the current financial crisis is the lack of transparency in the activities of the principal players in the financial markets. This opaqueness is compounded by vast sums of money that lie outside the jurisdiction of U.S. regulators and other supervisory authorities.

The $700 billion in Treasury Secretary Henry Paulson's current proposed rescue plan pales in comparison to the volume of dollars that now escape the watchful eye, not only of U.S. regulators, but from the media and the general public as well.

We make no charges here, and we even drop no hints.  But I still want to know how this huge financial crisis struck right in the middle of an American presidential campaign.  Morgenthau is suggesting how hard it is to find out.

There is $1.9 trillion, almost all of it run out of the New York metropolitan area, that sits in the Cayman Islands, a secrecy jurisdiction. Another $1.5 trillion is lodged in four other secrecy jurisdictions.

Some of that money could be used to advance political causes, without our ever knowing it.

Most recently, two Bear Stearns hedge funds, based in the Cayman Islands, but run out of New York, collapsed without any warning to its investors. Because of the location of these financial institutions -- in a secrecy jurisdiction, outside the U.S. safety net of appropriate supervision -- their desperate financial condition went undetected until it was too late.

I find it fascinating that the political players are not calling for much of an increase in information.  When John McCain called for a blue-ribbon commission to investigate what's happened, he was either ignored, or ridiculed.  The ridicule came from Barack Obama.

We have to learn from our mistakes. Any significant infusion to the financial system must carry assurances that it will not add to the pool of money beyond the safety net and supervisory authority of the United States. Moreover, the trillions of dollars currently offshore and invested in funds that could impact the American economy must be brought under appropriate supervision.

If not supervision, then at least scrutiny.  I want to know, for example, how much of this money is controlled by hostile powers.

If Congress and Treasury fail to bring under U.S. supervisory authority the financial institutions and transactions in secrecy jurisdictions, there will be no transparency with the inevitable consequences of the lack of transparency -- namely, a repeat of the unbridled greed and recklessness that we now face. Because of the monolithic character of world financial markets, a default crisis anywhere becomes a default crisis everywhere.

Whether you agree or disagree with Morgenthau's call for more regulation, his call for more information should not be controversial.  I'm especially concerned about this issue should Obama be elected.  There is a rim of secrecy around his life, even his political views.  The name Obama and the word "openness" are not usually used in the same sentence, and they won't be.

Open the books, please.

September 30, 2008.