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Andrew Cuomo's Most Recent Letter To Bank Of America
And so the noose tightens with the latest salvo out of the NY AG office. More to the point, there is no specification that charges (if any) will be only of a civil nature. The take home message however is that even as the SEC is forced to ultimately drop their lawsuit (at the expense of forever being entombed in the annals of history as the one true bidet used and abused repeatedly by their Wall Street merger partner superiors), or else risk putting Ken Lewis away, contrary to the soothing words of Hank Paulson, the Attorney General will likely not face the same conflict of interest, and hopefully will continue where the SEC is about to end any second (Marla - please conduct a poll of how long before the SEC drops its case).
Yet the AG sought to placate tempers by issuing the following brief blurb earlier on his website:
"In response to news reports about supposed developments in the
Attorney General's investigation of the Bank of America-Merrill Lynch
merger, there have been no new developments in the investigation since
the letter sent by the Attorney General's Office to Bank of America
last week. That letter is attached hereto."
Also, someone please advise if reading between the lines, one senses a slight provocation aimed at the one true source of this whole SNAFU - Hank Paulson and Ben Bernanke.
Bank of America failed to disclose those large and increasing losses to its shareholders prior to the December 5, 2008 vote. The losses were so great that Bank of America officers sought guidance - before Bank ofAmerica shareholders approved the merger - about the applicability of the material adverse change ("MAC") clause in its merger agreement with Merrill Lynch, the very same provision relied upon eight business days after the merger was approved, when Bank of America told regulators it had a legal basis to terminate the merger...Indeed, Bank of America only decided against seeking to terminate the merger when the jobs of its officers and directors were threatened by senior federal regulators...Bank of America further failed to disclose that its officers faced a conflict of interest in responding to the federal government's threat, or that it had received the government's oral commitment to support the merger with taxpayer funds.
Once done here Mr. Cuomo, please continue your investigation to its one logical conclusion.
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America needs a scapegoat. Bank of America has a fitting name. The sacrifice will be made!
How appropriate, a bag over your head.
You are either oblivious to what is going
on around you or you are one of the BoA
execs in question and need a bag over
your head to protect your identity.
I hope Cuomo is as good as Spitzer. Whatever his personal flaws, or motivations (ego, politics), he was willing to go after wall street, and pretty good at it too.
There would be A LOT more legal action right now if he were still AG.
interesting. nice catch with the letter
"...please continue your investigation to its one logical conclusion."
Admittedly, I'm not the sharpest knife in the drawer, but how can Cuomo's investigation not go there? I read through the AG's Sept 8 note and the footnote on page 5 noting Mr. Lewis' previous testimony to the AG about being told by Paulson and Bernanke that they (paulson/bernanke) don't want a public disclosure forces the AG to question Paulson/Bernanke to test Mr. Lewis' assertions. Am I missing something here? Is not the issue of failing to disclose what the NY AG is talking about in the first place?
Yes, the "offense" is failure to disclose by B of A. Their defense is what Cuomo has a problem with. B of A says that they checked with their lawyers and were told that they didn't have to disclose --- and no, Mr. Cuomo you may not talk to our lawyers because we invoke attorney-client privilege. As Cuomo said, attorney-client privilege can't be both a sword and a shield. I would expect their lawyers to be deposed. (What do you think NedZep?)
Ken Lewis & Board of Directors = start typing resignation letter
When you read back on the Great Depression, it was the Bank of the United States collapse that started the financial swirling about the bowl. How fitting that Bank of America is in the cross-hairs of today's modern financial insanity and lawlessness. If the chrome handcuffs come out of their black leather holster and are applied to Mr. Lewis' wrists, I exect his recollection of specific events to improve substantially, and criminal acts beyond his own (by Paulson/Bernanke) will be described in lucid detail.
Stay away from small planes and high priced hookers, Andrew.
Anyone considering Cuomo anything other than a populist hyper-ambitious opportunist needs to look at his record
I wish someone would consider him as the head of the SEC.
Fuck off, Paulson scum.
Aren't we all?
They are doomed...the settlement was thown out and Coumo smells blood.
Gee, I hope this is a portent of fun to come for Paulson....
Hats off to AC--keep pushing-- the stench will only get greater.
So where does all this lead? A fine? Arrests? Round two in total loss of faith by investors and subsequent hit to the market or financials?
What are the possible repercussions to the overall market?
I would imagine that would depend on what you consider faith. Perhaps reading senator kauffman's letter would help. anyone with knowledge has no faith in this market because it is clearly manipulated. if you want people to have faith you have to punish the crooks and the level of the markt be damned. I have no intention of ever owning an american stock again, tell my friends the same thing. I do make exceptions to commodity holdings and bonds.
People falsely think the stock market is actually rather impt in the economy. this is thee Bs that is fed to you vai the media and thise that control it. less than 49 percent of amerians own stocks, and the great majority own very little. the top 2-3 percent own the great majority. A nice myth to spread because it allows the elites to enact policies that restore their own wealth att eh xpense of everyone else. According to the times inflation adjusted wages are the same or lower as in teh early 80's. living standards have been maintained by credit and leverage. this has allowed those people whose wages are dependent on credit and leverage to greatly outpace GDP gowth (CEO, bankers). I have witness multiple crdit crisis in my few years (LTCM, mexicao, lat america, japan bubble, russia, this crisis, asain) the story and solution is always the same to bail out those who caused the crisis at tax payer expense. kill interest rates making those who actually save poorer. It isn't easy to realize that the great majority of principles which govern the fed are desigend to benefit only a few at the expense of many. it is always justified as helping us. that isn't the case. expansion of credit beyone the growth of niminal gdp acheives nothing. this ratio (credit/gcp) has exploded since the early 80's along with systemic risk, income disparity, and no real growing wages. therefore one must conclude that fed polivy and assumptions are based on faulty logic and a failure.
overall the market should not go up faster than nominal gdp. but some people hugely benefit. Zero hedge posted a graph showing that the majority of stock holdings in the usa were in margin. how can thsi create stability. It can't. it is ne of the reasons they did the bailout. how is going to pay when everyone has margin calls. it's a holow shell with very little real money. that is eh dirty little secret.
when you look at the bottom in effect the entire market was leverage. had it dropped anymore there was no real money to support it. that my friend would have been the real collapse and the ponzi scheme shown for what it is. remember the great majority of stocks are owned via borrowing. what happens when that debt is called for the entire market?
just solving this math question
im bored
Paulson has immunity from prosecution, doesn't he? Isn't that what he asked for in the bailout legislation? Isn't it good that he thought in advance that he may need it? Wasn't he in charge at Goldman when they were making lots of money from the subprime packaging? Didn't he get a lot of compensation for the "profits" from that? Wasn't there an e-mail at a ratings agency about getting wealthy before the house of cards fell? Isn't Mary Schapiro doing a great job thinking about getting around to possibly drafting tougher rules after trying to settle this BAC stinker for a whopping $33m that will surely be enough to compensate for the lost value to the shareholders?
I thought that was expunged from the second (passed) bailout bill. Obviously, I'd welcome someone knowledgeable to come in and correct me if wrong.
i don't see how the immunity would extend to the state(ny) or civil(shareholder) levels. it sure as hell won't help when folks come knocking on his door.
"Bank of America's officers' bald assertions".
This prejudices his case, as he obviously has particular individuals in mind.
LOL, +1
WOW, BAC traded like it was petrified.
I can see it now ...
The MOTHER OF ALL SHOW TRIALS ..... carried live on Bloomberg and CNBC, it will put OJ to shame.
Thain, Lewis, maybe even Paulson and Bernacke, slumped in
the dock in their orange jumpsuits...
It will be even more amusing to watch all the other
Banksters called as witnesses, including Jamie and Lloyd,
taking "da Fifth"...
Oh and BTW, New York State does not have a sentencing equivalent of "15 Months in Club Fed".
It's more like "25 Years to Life" in Sing Sing or Attica..
Just ask Dennis Kozlowski and Mark Schwartz...
Legal Privilege normally only attaches to correspondence and discussions created for or in the anticipation of litigation - put simply - strategic discussions for actual or anticipated litigation.
This legal advice concerns the substance of the allegations, and can not by itself be viewed as advice directed soley towards actual or anticipated litigation, as its primary tenor concerned whetheror not to disclose information to shareholders and the market - quite a substantively different purpose that the advice was being sought for.
As such, these claims of legal professional privilege can not stand as a defense - only the actual substance of those advices could possibly be used in arguments towards mitigating a failure to disclose.
Properly tested and these claims denying access to the advices will fail - simply asserting them as a complete defense without more will never work legally.
This is purely a stalling tactic before the inevitable occurs - a complete disclosing of the substance of those advices, sprinkled with (no doubt) a few juicey emails with inevitable personal comments evidencing how even BoA's own lawyers were warning the Board not to go down the wrong path of failing to disclose....
stay tuned - this should get a lot more interesting
thank you 69395
At least we know why Paulie wanted legal immunity. House of cards?
Sorry I missed this note earlier today. As for deposing the lawyers, the attorney client privilege is the property of the client, not the lawyer. If the client waives it, the lawyer must testify and answer all questions, well, at least those as to which the simple "I decline to answer under the privilege afforded me under the 5th amendment to the Constitution of the United States" is not the only rational response. It is, to say the least, a real mess and a desperate last move to announce "the lawyers did all of it," since I'll take a wild guess those wily Wall Street caliber barristers knew what they were up against and have protective file memos and signoffs to make sure they weren't the ones counting the days at Rikers. No, when it comes down to it, the businessmen will take the fall, and then the question is will they take one for the team, for Hammer's sake (or out of fear), or will they sing like little girls at a middle school spring choral concert to implicate Paulson and Bernanke. Take a guess. Will that matter is the question? Will it stick?
The comment about the extent of the failure to disclose (regarding the conflict of interest in deciding whether to disclose - as required - or not, so as not to lose your job, is a fun fact.) But they are already guilty of non-disclosure: in securities law the failure to disclose a material adverse fact is per se a violation of the law. No intent necessary. This cake is baked.
Where things get interesting is whether or not Paulson and Bernanke by their words and actions (funding the merger after the failure to disclose, "as promised") furthered a wider civil or criminal conspiracy to defraud the shareholders of Bank of America via securities fraud, in order to preserve Merrill - to what end, we don't know. It certainly looks like that - let's face it, what it boils down to is that P & B ordered Lewis to take over Merrill. Once the facts became unbearably clear Ken said "I want out", and P & B told him "no". Neither Paulson nor Bernanke gave a moment's thought about the legality of their actions, nor thought to the harm to BofA shareholders - they had a different, "loftier" agenda, decided the law couldn't possibly apply to them (or never thought it did to begin with, a failing of these elite types), and by their words and actions forced Lewis to carry out THEIR agenda. Not Lewis's. Let that sink in for a moment. Riiiiiight.
Think about it - Ken could have left that meeting, and learned from counsel his unquestionable legal obligation was to disclose the entire mess in the BofA proxy statement, and then it would have hit the news, and then. . . who knows. Or tried to have the mess leaked before the deal consummated, so it "wasn't his fault . . . " No, he was ordered not to disclose or rescind under penalty of getting banished from the kingdom, no less a threat than would be uttered by any gang member or street thug, and the plan of Paulson and Bernanke was carried out as a result, which plan would not (and they had to know could not) have been consummated but for the securities fraud itself.
The differences of standard of proof would figure in this as well, since the civil standard (50% +1) is enough to find liability, whereas criminal culpability requires no reasonable doubt left behind.
The trail leads to Paulson and Bernanke, the conclusion is inescapable that P & B are in this thing tits deep, and this one is one to watch. Of course, as things heat up, perhaps things will heat up elsewhere to distract the public's attention from the sorry spectacle.
Go get 'em Mr. Cuomo. Ask the questions. Make them answer.
Ned...thank you for taking the time to parse this out. A thorough job to say the least and it is appreciated.
I've thought all along that Lewis blew it on the mac failure as it seemed like a pretty much black and white securities law violation.
I've also had a major problem with a US gov't official "ordering" a ceo to proceed with a merger "or else"....
I sure as hell want all of the truth to come out and will enjoy watching this unfold.
Depending on the time frame and if Bernanke can be dragged into it (I hope), it could make for some very interesting politics at the Bernanke Senate reconfirmation hearings I would think.
But let's get crystal clear--if the government officials ordered a banker to commit securities fraud, that kinda sounds criminal, but is it?
And if threats or intimidation were required to get the criminal act carried out, would that imply seperate cimes, or just sleaze as usual?
Can't the feds just whistle their way into Wizard status in the history books with nary a care?
And....what did the White House know and when did they know it? What did counsel to all these important Fed players tell them and how much was written down?
I bet there are Turbo Timmy emails too. Maybe he used an alias...TTPowah? Sockittome?
Ken Lewis has been laying everything on the line, in public, in interviews, since September.....and after he finishes the part of being "strongly urged" by the dastardly duo, he then says that he reconsidered the deal and decided that, since they said he had to do the deal, he really wanted to do it....he always sounds like someone with a gun at his back saying what he was told to say....for me, it was clear as a bell from the start what was going on, and the really sad thing is that, the securities laws are there to protect investors, and here is such a crystal clear case that two men violated all, put themselves above the law, and strong armed Lewis to execute the deal...think of the damage to the BAC shareholders not only taking on a company that got gutted right after the merger, but also, paying at least twice what it was worth? And, this is only one of the horrendous crimes that these two are tied to...
...things would start looking up if those two were properly outed and prosecuted for the biggest bankheist of all history...I will never forget the day TARP passed...and the weekend that followed absolutely confirmed that we, as a nation, have been had, on a monumental scale...
It makes my blood boil every time i think about the fact that the BAC due diligence came up with a number half of what was paid...THE WHOLE DEAL IS SO BLATANTLY CRIMINAL IT JUST HURTS.
And hank and ben just somehow appear to have skated away completely unscathed....the acts of these two make a new category of how to define evil.
All americans, 70% by the fawning media count, likely 90% in reality, were against TARP. Extreme right and extreme left and vast in-between were united against it. Rep phones were ringing off the hook. Email froze up.
Yet the bastards just ignored us all. If this wasn't grounds for revolution, what does it take to make them swing in the mall? $3,800 in seized refunds?
While No fan of P&B, lest us not consider lewis not at fault in this. I am sorry I have forgotten the names, but I stand by the story itslf as published in the Ftand by Bloomberg. Lewis, becasue if prior looking at the books stated he knew merrills assets. After agreeing to the deal he sent his won valuation officer to merril who then proptly decreased tha value of the assets in question by billions and billions of dollar. (sorry I do not knw the exact figure). The merrill valuation executive refused to sign off on the validity of those valuations and resigned. Now with has hand paicked altered valuations he went to P&B and threatened to pull out of the deal. He thus managed to blackmail the govenernemt into coughing up 20 billion. So let us be clear they are all crooked. You'd think lewis could go to jial of making sure the books were cooked
Lewis is clearly no angel, and P&B will exploit that in their defense. Portrayals: P&B as selfless superhero saviors merely providing Ken with wise, honest, but nonbinding "suggestions", in a tough "whocouldaknowd" situation; Ken as Konniving Ken the Securities Cheat who greedily stepped over the line. Tsk, tsk. Shame about Ken and all. Oh well. C'est la vie.
Who should play these guys in the ABC Movie of the Week?
It appears we have a system where populist politics result in bold actions that hold our leaders accountantable. I only hope it doesnt result in paralyzing our leaders from taking any action out of fear of bank account depleting, name trashing litigation.