RSS Feed
Twitter
Facebook
Email
HomeThe Only Real Question Regarding Goldman’s Settlement with the SEC
Posted by Larry Doyle on July 16th, 2010 7:34 AM |
Who’s next?
We can debate all day long whether the settlement of SEC charges against Goldman Sachs for $550 million is fair or not. While that debate will occur all over Wall Street and throughout the world of global finance today, the question regarding the size of this settlement is not important in and of itself. I am not saying that $550 million is not a lot of money. Nor am I saying that Goldman may be getting off easy. The only question I have is, “Who’s next? ”
Are we to think that the Goldman Abacus-CDO transaction is the only ABS-backed CDO that employed improper marketing? Do not be so naive. In fact, if Goldman employed improper marketing in one deal, are we to believe they did not do the same in many others? Do you ever find just one mouse? (more…)
What Did Bank of America Know and When Did They Know It?
Posted by Larry Doyle on October 13th, 2009 8:19 AM |
Are the powers that be at Bank of America wilting under political pressure to release the details of its merger with Merrill Lynch? In fact they are and in the process, the executives at Bank of America are agreeing to waive attorney-client privilege. What are the critical points which New York Attorney General Andrew Cuomo, the SEC, those in Congress, and especially Bank of America shareholders want to learn?
1. What did Bank of America know about the ongoing deteriorating financial position at Merrill Lynch?
2. What did Bank of America executives share with their board members about the billions in bonuses to be paid at Merrill?
3. Did Ken Lewis overplay his hand? Please reference my commentary from a few weeks ago, “Documents Indicate Ken Lewis Utilized the MAC To Shake Down Bernanke and Paulson.”
The Wall Street Journal summarizes these topics this morning in writing, BofA to Hand Over Documents Related To Its Merrill Deal:
Mr. Cuomo’s investigators, as well as Judge Rakoff, have said a fuller accounting of the events surrounding the deal is a prerequisite to any resolution of the probes. BofA is hoping releasing the privileged documents will satisfy those demands, according to people familiar with the matter.
BofA’s move will likely reveal exactly what advice was provided by outside firms, according to people familiar with the matter. Those firms include Wachtell, Lipton Rosen & Katz, which represented BofA during the Merrill transaction and is a long and trusted adviser to the bank, as well as Merrill’s counsel, Shearman & Sterling LLP.
It may also show conversations with ex-general counsels Timothy Mayopoulos and Brian Moynihan. Bank of America recently hired law firm Paul Weiss Rifkind Wharton & Garrison LLP to join Cleary Gottlieb Steen & Hamilton LLP in representing the bank in the various federal and state investigations surrounding the Merrill acquisition.
“This is going to get to the down-and-dirty question of what counsel did say and did not say, what counsel meant and did not mean,” said James Cox, a law professor at Duke University.
(Associated Press) In a photo from Sept. 2008, Merrill Lynch Chairman and CEO John Thain, left, and Bank of America Chairman and CEO Ken Lewis shake hands following a news conference.
Down and dirty? I love it. Get the extra large popcorn. This should be good.
LD
Is Ben Bernanke a Well-Intended Crook?
Posted by Larry Doyle on June 25th, 2009 9:12 AM |
Do the ends ever justify the means? Does being well-intended preclude one from committing a criminal act? If our legislative bodies do not possess the heart and courage to ask these difficult questions, can we assume they are implicitly approving them? Oh, what a tangled web trillions of dollars in financial losses will weave.
The intrigue behind the acquisition of Merrill Lynch by Bank of America may never be known. Will Congress pursue total transparency and integrity to compel all pertinent parties to be fully forthcoming? Would Congress go so far as to appoint an independent investigator with powers to subpoena Ben Bernanke, Ken Lewis, John Thain, Hank Paulson, Larry Summers, and Tim Geithner? Does the rule of law apply in our country only when convenient? Bloomberg provides a peek into this intrigue, Republicans Say Fed Set Late Report of Merrill Loss:
House Republican staffers said the Federal Reserve tried to control the timing of disclosures of rising losses at Merrill Lynch & Co. in the weeks leading up to its takeover by Bank of America Corp., according to a memo obtained by Bloomberg.
The memo, prepared by staffers for Republican lawmakers at a House Oversight Committee hearing tomorrow, cites what it identifies as excerpts from internal Fed e-mails to support the conclusion. Fed Chairman Ben S. Bernanke is scheduled to testify at tomorrow’s hearing in Washington.
The e-mails show that the Fed “engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other Federal Regulatory agencies,” Representative Darrell Issa, the panel’s senior Republican, said in an e-mailed statement.
Strong words by Representative Issa.
Cover-up? Who was negatively impacted by not revealing information on losses at Merrill Lynch? Existing Bank of America shareholders, who may very well have voted against this deal.
Hiding details from other Federal regulatory agencies? Such as? The SEC. The OCC. The FDIC, which would assume a significant percentage of losses on assets purchased by Bank of America. How did FDIC chair, Sheila Bair, feel about that prospect?
“Dear Ben, Strong discomfort with this deal at the FDIC, for all the reasons you and I have discussed,” Bair said in a Jan. 14 e-mail, according to the memo. “My board does not want to do this and I don’t think I can convince them to take losses beyond the proportion of assets coming out of the depository institutions.”
Who else was clearly reluctant to finalize this transaction? Bank of America chairman and CEO, Ken Lewis. He testified in February to New York State authorities about being pressured by Bernanke and Paulson. Lewis hedged his statement about Bernanke’s and Paulson’s pressuring him, if not outright threatening him, under questioning by Congress earlier this month.
Will we learn more today from Bernanke or will this chapter close without a full accounting of what truly happened? Will Congress pass the Obama administration’s proposal to make the Federal Reserve the uber-regulator to stem systemic risk? Might shareholder rights be trampled in the process? Do the ends justify the means? Do laws mean anything? Can one be a well-intended crook? So many questions.
LD
