Make no mistake....the reason this crisis is so long and deep is the failure to prosecute and properly penalize this massive fraud, in the US and Europe. This money should have moved back to the people the first year....we are talking trillions .......that would have stabilized the state and local governments, staved off spending cuts, and jump-started the economy immediately, not to mention the added perk of down-sizing the b anks. The 99% will not let this stand.
IF THE JUSTICE DEPARTMENT DOESN'T HEAR FROM YOU THEY WILL NOT CHANGE! YOU MUST SHOUT LOUDLY AND STRONGLY AGAINST THE ATTORNEYS GENERAL IN YOUR STATE. MAKE HIS/HER NAME KNOWN AS THE ONE WHO SOLD OUT MIDDLE/LOWER CLASS AMERICA.
In Maryland, we have Doug Gansler who sold out the citizens of Maryland. He is gathering a war chest of donations from his friends he protected in the mortgage settlement. WE DO NOT WANT HIM FOR GOVERNOR AND NOW IS THE TIME TO BE PUBLIC ABOUT THIS. Write letters to the editors....talk about it with your social groups....forward this blog or website URL, or join citizensoversight in data-mining for crime with the Freedom of Information Act, but get the word out......WE WILL NOT STAND FOR THIS FAILURE TO ENFORCE LAW!
Bank of America Accord in Lawsuit Is Challenged
By GRETCHEN MORGENSON Published: April 20, 2012 New York Times
Lawyers leading a class-action lawsuit in federal court in Manhattan against the directors of Bank of America over its purchase of Merrill Lynch have agreed to settle the matter for $20 million even though damages in the case could reach $5 billion, according to plaintiffs in a parallel suit against the bank’s board in Delaware.
Calling the settlement grossly inadequate and the result of collusion, the lawyers in the Delaware case have asked P. Kevin Castel, the judge overseeing the New York matter, to order the parties agreeing to the deal to justify its terms. If the settlement is approved by the Manhattan court, all damage claims made in the Delaware suit would be extinguished. That matter is scheduled to go to trial in October.
The settlement was struck privately on April 12 by lawyers representing two public employee pension funds that had sued the directors of Bank of America for breach of fiduciary duty. The funds are the Louisiana Municipal Police Employees’ Retirement System and the Hollywood (Florida) Police Officers’ Retirement System.
At issue in both the federal and state suits is whether Bank of America’s board breached its duty to shareholders in approving the 2008 acquisition of Merrill Lynch for $50 billion and whether it misled investors about the brokerage firm’s weakening financial condition leading up to the purchase.
Struck during the depths of the financial crisis by Kenneth D. Lewis, then Bank of America’s chief executive, the Merrill deal generated billions of dollars in losses at the bank. Those losses led to Bank of America’s second request for bailout money under the government’s Troubled Asset Relief Program.
According to the lawyers in the Delaware case, the $20 million deal is inadequate in several ways. First, the amount does not come close to the $150 million fine paid by the bank in 2010 to settle a Securities and Exchange Commission suit over the Merrill deal.
Jed S. Rakoff, the federal judge overseeing that matter, said the evidence showed that the bank’s disclosures to shareholders about losses and employee bonuses at Merrill were inadequate. Judge Rakoff had rejected the initial proposal by the bank and the S.E.C. to settle the case for $33 million, calling it a contrivance at the expense of shareholders.
The Manhattan court deal is also objectionable, the lawyers in the Delaware case said, because it would not require the directors to dig into their own pockets. The bank’s insurance policies extend well beyond the $20 million cost, the papers said, although the exact coverage was redacted in the filing.
A spokesman for Bank of America declined to comment.
In addition, the court filing contended, the settlement deal is the result of collusion between the lawyers for the bank’s directors and those representing the pension funds.
The lawyer representing Bank of America’s directors approached the New York plaintiffs about a settlement, after negotiations with the Delaware representatives collapsed, the filing noted. The Delaware plaintiffs would not accept a settlement amount within the limits of insurance covering Bank of America’s directors. When the Delaware plaintiffs learned of the negotiations with the New York plaintiffs and tried to join, they were met with silence.
Joseph E. White III, a partner at Saxena White, one of the law firms representing the New York plaintiffs, said neither he nor his colleague on the case at Kahn Swick & Foti would comment.
Over the last three years, the lawyers in the Delaware case have conducted extensive discovery, taking 48 depositions, including those of all 16 Bank of America directors at the time of the merger, and their experts estimate the damages at as much as $5 billion.
The lawyers for the Delaware plaintiffs have also taken testimony from investment bankers and financial advisers who opined on the Merrill deal. There are four law firms at work on the Delaware case: Horwitz, Horwitz & Paradis; Chimicles & Tikellis; Wolf Haldenstein Adler Freeman & Herz; and James Evangelista.
By contrast, the lawyers in the New York case have done little fact-finding, the filing contended. They have deposed just two of the bank’s directors, for example, and did not determine whether the board members had sufficient assets to contribute to a settlement, the court filing noted.
As such, the lawyers who agreed to the $20 million settlement “have not taken the depositions of witnesses necessary to prove their claims, and have failed to pursue the production of highly relevant and prejudicial documents,” lawyers for the Delaware plaintiffs contended.
Such documents were identified during discovery in the Delaware case. For example, the lawyers told the court that they discovered a high-ranking Bank of America official in charge of the Merrill deal had routinely deleted documents in spite of having been advised to hold onto them.
Documents also emerged showing “threats made by the bank to its financial advisers to remove cautionary language from their fairness opinion in the proxy,” according to the court filing. Shareholders rely upon fairness opinions when voting to support or reject a merger.
Chancellor Leo E. Strine Jr. is overseeing the Delaware case, which will not be heard if the proposed settlement goes through.
Mr. Strine has noted in court hearings that the matter involves important issues of state law governing the many companies that are incorporated there.
IF YOU HEAR ANY CANDIDATE TAKE CREDIT FOR THE FINANCIAL REFORM BILL, TELL THEM TO JUMP IN THE LAKE.....THIS BILL HAS BEEN COMPLETELY GUTTED LEAVING BANKS JUST AS THEY WERE BEFORE THE CRISIS................$600 TRILLION IN LEVERAGE, JUST AS BEFORE THE CRASH.
THIS IS UNACCEPTABLE FOLKS.....IT IS YOUR VOICE AND YOUR VOTE THAT WILL MAKE THE CHANGE!
Derivatives A Dodd-Frank Regulatory Exemption Grows by 7,900%
By Karen Weise on April 20, 2012 Bloomberg Financial
For two years, regulators and business tussled over which companies that trade derivatives must submit to strict oversight as part of the Dodd-Frank financial reform. Credit default swaps and other derivatives, of course, were a major cause of the 2008 financial crisis. In meetings, reports, hearings, and letters, they sought to resolve issues like “What is a swap dealer?” and “What is a ‘financial entity?’”—questions that sound almost existential but have real-world ramifications in the $700 trillion global derivatives market.
Federal regulators made their first proposal in 2010, saying that only small players that trade less than $100 million a year would be exempt from rules requiring them to hold more capital and report more information on their trades. Regions Financial (RF), energy giant BP (BP), and other companies that write and use derivatives pushed back. They argued that a broader exemption makes more sense because derivatives trading is highly concentrated. According to the Office of the Comptroller of the Currency, five large banks—JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Morgan Stanley (MS), and Goldman Sachs (GS)—hold almost 96 percent of the notional value of all derivatives contracts. The smaller players, the argument goes, shouldn’t be burdened with extra requirements that would ultimately drive up costs for consumers.
The counterargument was that relatively small players can still create systemic risk. Before the financial crisis, American International Group (AIG), for example, was not a top-five trader, but, as we all learned, was still a linchpin in the interwoven world of mortgage derivatives. Indeed, the OCC also says (PDF) that the notional value “does not provide a useful measure of either market or credit risks.” It says risk can hinge on a lot of different factors, like leverage, liquidity, and volatility.
This week, the regulators finally settled the issue, and generally the industry won out. Regulators expanded the exemption to include companies that do less than $8 billion in swaps a year—80 times more than the initial proposal. By one estimate, that means 60 percent of swap dealers will now be exempt. Those companies, ranging from banks to energy and agricultural firms, can breathe easier now that they’re exempt. As for what the new rules mean for risk in the market, regulators say they’ll reevaluate in five years, when the threshold defaults down to $3 billion.
Weise is a reporter for Bloomberg Businessweek