If you’re Ken Lewis, you’ve gotta think, when you hear a knock on the door, it’s probably pranksters dropping off a lit bag of poo or something, and you don’t answer. Today, though, it wasn’t flaming crap, it was a little blue bundle of papers:
Bank of America Corp.’s (BAC) Chairman and Chief Executive Officer Kenneth Lewis was issued a subpoena by New York State Attorney General Andrew Cuomo regarding Merrill Lynch & Co., Inc. (MER), the Wall Street Journal reported citing people familiar with the matter.
The report added that Attorney General Cuomo’s office is investigating whether Bank of America withheld information from investors in violation of state law.
(Probably related to when BAC knew about that $15bn Q4 loss related to the Merrill deal, no? Particularly interesting to hear what he has to say about this if you are of the opinion that the answer to that question is “at the outset, but there was government insistence behind the scenes that they enter this dumb deal regardless.”)
Ken // Feb 20, 2009 at 4:17 am
I love lamp
Rajan // Feb 20, 2009 at 6:11 am
Much is being of the frauds orchestrated by Madoff and Stanford through cheating investors by offering unrealistically high rates of return. These frauds are nothing new. This is what precisely happened on a gigantic scale with mortgage-backed securities which reputed banks on Wall Street sold to gullible investors promising much higher rate of return than what was earned by the banks themselves as interest on the underlying mortgage assets. It has not yet dawned on the self-styled experts who claim to be the financial wizards in Washington, DC that mortgage payment defaults and the resulting foreclosures only brought forward and accelerated the inevitable financial melt-down. Even if there had been no defaults in mortgage payments and no foreclosures, the negative NIM (Net Interest Margin, to the financially challenged) itself, resulting from the unfavorable (to the banks) disparity between the mortgage interest rates and the rates of return assured by the banks on the securitised derivatives (which are now appropriately labeled as ‘toxic cocktail’) they sold to ignorant investors, would have, in any case, sunk the banks in dire straits sooner than later.
In effect, the banks were borrowing money (leveraging themselves, to use the Wall Street jargon) at higher rate of interest and lending it to the mortgagees at a lower rate. The banks had cleverly used the convoluted, complex way the mortgage-backed security derivatives were structured to hide this basic fact and blind the investors who bought these securities to the perilous situation they got themselves into. It was not without reason that Warren Buffet, the Sage of Omaha, had described these derivative instruments, way back in 2002, as the “financial Weapons of Mass Destruction”. Here is the link to what Buffet said about derivatives: http://www.fintools.com/docs/Warren%20Buffet%20on%20Derivatives.pdf. Why, then, are these crooks on Wall Street also not arrested and charged with fraud? But, on the contrary, these rascals are being showered with billions of dollars of taxpayer’s money for bailing them out of the hole they have themselves dug themselves into!
Joe the Broker // Feb 20, 2009 at 7:01 am
Ken Lewis is a liar and criminal that should be jailed. But American justice isn’t for wealthy individuals, only those that afford high priced lawyers.
Ken // Feb 20, 2009 at 8:12 am
No, I really do love lamp.
CD Unemployed // Feb 20, 2009 at 8:42 am
He won’t go to jail.
Though he should. Ken and company “eliminated my position” in December. Where is my golden parachute? If execs get multi-million bonuses for failure, why can’t I get something for increasing the company’s profitability for 11 years?
John Hix // Feb 20, 2009 at 9:36 am
Never steal any thing small because sixty percent of what you steal has to go for legal defense to the lawyers you are in bed with.
Frank B // Feb 20, 2009 at 11:24 am
Maybe the good Attorney General can also investigate the Countrywide division of BOA. I am interested in getting more information on the top secret Countrywide- Cris Dodd real estate deal.
CB // Feb 20, 2009 at 3:05 pm
Everybody’s got an axe to grind now. The whole economic crisis, at least here in the good ol litigious USofA could end in a tangle of lawsuits. I hadn’t given a whole of consideration to THAT until thinking about Ken’s predicament here, his laid off employees (ex. comment #5), and all the foreclosed people, etc.
TonyS // Feb 20, 2009 at 3:28 pm
Hey, more lawsuits will stimulate the economy!
wild // Feb 22, 2009 at 10:57 pm
No doubt, the roladex of excuses will continue to rein. Excuse #221 ‘da Feds made me do it’ will be used daily this year. #221 is easy shut down of nosy local AG’s. This is Cuomos grab for the ‘light sabre’ probably nothing more. *blue papers…we don’t need no stinking blue papers*
wild;)