Present arms. Turn out those wrists. Prepare to be slapped ...
Citigroup to Pay $285 Million to Settle Fraud Charges
by Jean Eaglesham and Suzanne Kapner, wsj.com -- Oct 20, 2011
[...]
Wall Street's total price tag on settlements with U.S. securities regulators for allegedly misleading investors about mortgage bonds churned out ahead of the financial crisis surged past $1 billion with a deal by Citigroup Inc. to pay $285 million.
The New York company agreed to the payment to end civil-fraud charges by the Securities and Exchange Commission related to a 2007 deal called Class V Funding III. The SEC claimed Citigroup sold slices of the $1 billion mortgage-bond deal without disclosing to investors that the bank was shorting $500 million of the deal, or betting its assets would lose value.
[...]
As a result of the deal with Citigroup announced Wednesday, the SEC has collected a total of $1.03 billion through mortgage-bond-deal settlements. In addition to Citigroup, the total includes Goldman, J.P. Morgan, Royal Bank of Canada, Wells Fargo & Co. and Credit Suisse Group AG.
The companies neither admitted nor denied wrongdoing.
No Harm, No Foul?
All's well, that ends well ... Oh really?
Underwater, Out of Mind
GOP presidential candidates are ignoring the economy’s No. 1 problem: the housing market.
by Stacy Kaper and Jim Tankersley, nationaljournal.com -- Oct 20, 2011
[...]
Falling home prices have robbed Americans of huge amounts of presumed wealth and, as a result, drained consumer spending power, investment activity, and borrowing ability for prospective small-business owners. The median home price slumped from its 2006 high of $227,100 to $158,700 in May, a 30 percent drop, according to data from the National Association of Realtors. Homeowners across the country lost $7.4 trillion in equity during the housing price plunge. New home construction, which typically helps lead the way in a recovery, is at its lowest level since World War II. At least 5 million people have lost their homes to foreclosure, and another 3.5 million are expected to do so in the next one to two years, according to Moody’s Analytics chief economist, Mark Zandi. Nearly 15 million borrowers owe more on their mortgages than their properties are worth. One in three homes sold today are short sales or foreclosed properties.
"the country lost $7.4 Trillion in equity" in the Mortgage Meltdown Mess -- and no one's to blame!? No one really needs to "admit wrong-doing" as far as the SEC is concerned?
Where is the Justice?
Where is the long arm of the Law?
Well it may still have a its say in the Citigroup Settlement, before the latest wrist-slapping Deal is finally sealed ...
Well this is a hopeful surprise: here's a Judge that doesn't much like the SEC rubber-stamp settlements -- without any real findings of fault -- anymore than most of us do.
And this Federal District Judge in New York, still has to sign off on the SEC Citigroup Deal. Something he doesn't sound very inclined to do:
Citigroup Deal to Go to Judge Critical of S.E.C. Practices
by Peter Lattman, dealbook.nytimes.com -- Oct 20, 2011
[...]
There it was [boilerplate language] again in the S.E.C.’s announcement on Wednesday that Citigroup had agreed to pay $285 million to settle a civil complaint that it had defrauded investors in a mortgage securities deal. The bank did so “without admitting or denying” the government’s accusations.
[...]
Judge Rakoff is known for a scathing ruling in September 2009, when he rejected a proposed $33 million settlement between the agency and Bank of America over its acquisition of Merrill Lynch. The judge called it a sweetheart deal for the bank that had been done “at the expense, not only of the shareholders, but also of the truth.” (He later grudgingly approved a $150 million settlement.)
[...]
Judge Rakoff looked back at the history of the practice and found that the S.E.C. had permitted defendants to settle without admitting wrongdoing because that made obtaining settlements much easier. And defendants preferred it, he noted, because if they were forced to acknowledge their bad behavior, private plaintiffs would pile on with civil actions seeking monetary damages far greater than anything regulators were likely to impose.
Those historical reasons were met with scorn by the judge. [...]
So it's up to a Judge -- to insure Justice is done. That's as it should be, I guess.
But I'd feel a lot more confident about America's Future, if white-collar criminals started doing time.
And if blue-collar victims started getting 'the time-of-day', from our elected officials -- who far too often are quite willing to look the other way. Especially where Wall Street is concerned.
Far too willing NOT to do an objective analysis of exactly what caused "the country to lose $7.4 Trillion in equity" -- and to make damn sure it NEVER happens again. Maybe? A Trillion here, a Trillion there ... and pretty soon you can sink an economy.
With these standard SEC Settlement Agreements of 'No Harm, No Foul' being churned out like SEC party flyers, I'm not holding my breath for any real Accountability any time soon, especially from the SEC xerox machine.
What does the SEC think actually caused this Mortgage Meltdown Mess, anyways?
Termites!? If so, shouldn't they be busy hiring Terminix trucks all across the Country?
Let me remind them, in case they have conveniently forgotten this factoid too:
SEC Mission: The principal way that the SEC fulfills its mission is by creating and enforcing regulations that set the standards for the public disclosure of financial information by public companies.
Securities and Exchange Commission -- by Mark Kolakowski, About.com Guide
Funny how SEC Officials have found a way to turn "enforcing regulations that set the standards"
into
issuing Standard Settlement Agreements that neither "admit nor deny wrongdoing" by any Mega Bank accused of fraud.
I would really like to see how they've managed to twist that "pretzel logic" ... from Point A to Point $$$ ... I hope Judge Rakoff has this same sense of indignation, to demand an answer to these questions too.
Who does the SEC serve anyways? The American People? ... or the Big Banks, who have defrauded us? ... by SEC's own accounting nontheless.