The Banking and Strategy Initiative

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The legal fallout of the crisis | Advantage zyaada

Among the ones that escaped the notice of the fourth estate earlier, there was some legal action against banks for mis-declarations and civil fraud such as the mortgage ‘quick-cycles’ of Long Island. ( I forget, it was either multiple mortgages on the same property, directly to the construction company or for non-existent addresses) That’s been selling at Citi, BofA and even Wells Fargo. Now Mort (Mortgage Securitized ABS) papers or online forms incomplete and warehoused without adequate audit also is beyond target for lawmakers and the lying lawyers. What is happening though is a couple of privilege actions against State Street, penalized $310 million by the SEC.

NYTimes: According to a complaint filed by the S.E.C., State Street set up the Limited Duration Bond Fund in 2002 and marketed it as an alternative to a money market fund. By 2007, however, the fund was almost entirely invested in subprime securities. State Street misled many investors about the fund’s exposure, the S.E.C. said, but provided particular investors with more complete information.

The fund was subscribed by “dozens of Massachusetts charities and retirement funds” and it looks likely these were ‘left behind’ because they were not the top 10 or 20 or 50 investors in the fund. State Street’s internal advisory groups advised some other investors to redeem their holdings in the fund. This fund accounted for $13billion, a tangible proportion of the GDP and a proud part of the $3T under management at SSGA. Everyone was doing their bit to save the world. It’s just the some who thought it didn’t need any saving or the others who thought that everything is rotten, both of them are swimming out there with fiduciary obligations from them like the Madoff Bros’ Clients fighting for air.

On that front, Madoff’s clients looking to hold on the NAV towards the end when Madoff ‘fessed up are fighting an uphill battle with the courts set to rule that losses will be partaken basis their initial investment. so if they’ve withdrawn that much..they’re easy money (can the court even try to get to a place where most of these clients actually knew what was going on?) Meanwhile up at, right up the creek, a gentleman in Queens sold a lot of 21% Fixed Income bonds in the fortnight after the Madoff disease broke to the press. After.

Just like Martha Coakley ( and she just lost an election to Scott Brown, so she gets to carry the health phantoms too) Andy Cuomo, New York’s Attorney General is charging against Bank of America for civil fraud about letting ML bankers get away with a $3.6 billion bonus and hiding billions in losses at Merrill, promptly refilled by Paulson before the week was over. However, n an interesting protein B flex of the tale, SEC announced a settlement in a press note on the same day, charging BofA $150 million for the merger millions. Cuomo, is going after the persons, Joe Price, ex CFO and who else but Kenneth Lewis. The Congress  in the meantime had gone after Hank Paulson and the Federal Reserve (Geithner and others) . Well, the people must learn the truth. Somehow.

Goldman Sachs’ , Deutsche Bank and even HSBC would be up against a lot of charges for securities fraud as was happening in minor cases in 2009, though they all seem to have worked out clean and simple ways of moving forward and breaking away from the crisis ridden past of 2008. 2009 wasn’t much of a crisis except for re-engineering careers to get that unemployment rate.

Is it the beginning or the end

Please note that I do not say the beginning of the end or any such melodramatic / Jack Bauer kind of stuff ( i like the guy, but i could like LAX too and the Smoke Monster..)

The crisis this time wasn’t as simple as any of the network blokes though. It was a hard hitting knock that lasted well over two years and then only retreated to the edge of beyond. Now, that’s just back up again after the big game tomorrow.

It’s a new beginning, really. Compliance, regulation, the law’s about making the world better, and doing it real-time.. not like this – after the crow went down and the scavengers completed the party, we have legal action, that’s one awfully slow learning America and an even slower Europe (europe learnt regulation at light speed, it put in the regulation to stop the next crisis in the last decade, now just twiddling thumbs..)

And that’s all, folks.tune in to NPR radio for more human interest stuff on the weekend. Thanks for reading, keep writing back.


This entry was posted on February 7, 2010 by in Financial Markets, Infrastructure, O'nomics, Uncategorized, US and tagged , , , , , , , , , , , .


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