Category Archives: Legal

NYT’s William Cohan Blasts “Holder Doctrine” of Headfake Bank “Settlements” With No Prosecutions

Even though there is tacit acceptance, or perhaps more accurately, sullen resignation, about regulators’ failure to make serious investigations into financial firm misconduct (probes on specific issues don’t cut it), occasionally a pundit steps up to remind the public of the farce that passes for bank enforcement.

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Top White Shoe Law Firms Cited as Enablers of Bank Misconduct

One of the tacit agreements among those at the very top of the power pecking order is not to criticize each other in public (with a few ritualized exceptions, like roughings up in Congressional hearings).

So while this account, from Susan Beck at Litigation Daily, might not seem all that bad, given the mind-numbing range and variety of bank misdeeds, what is critical to recognize here is the way that these top blue-chip law firms have abandoned their traditional role of helping clients stay on the right side of the knife edge of misconduct.

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Benjamin Lawsky Shows Other Bank Regulators How to Do Their Jobs

It’s really easy to default to cynicism these days, since you are almost always certain to be right. And that goes double as far as bank regulators are concerned.

So that makes it even more important to call attention to exceptions to that sorry rule. One big one is the New York Superintendent of Financial Services, Benjamin Lawsky. As we’ll discuss later in this post, he’s again the subject of a top story in the Financial Times for doing what the banks treat as horrifically unwarranted behavior: punishing them for failing to live up to agreements to reform their conduct. Didn’t he get the memo that that was all theater for the rubes, and no one takes those commitments seriously?

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Don Quijones: Spain Cranks Up Political Repression

Yves here. In contrast with the way that political repression is gradually becoming the new normal in America, Don Quijones chronicles how rapidly it is being put in place in Spain to curb protests against austerity and bank-favoring policies. The extreme form of shredding democracy to protect commercial interests was Chile, where as a writer put it, “People died so markets could be free.”

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Argentina: Debt Default is a Solution, Not a Problem

Unless you just returned from holiday in some ultra-remote region lacking newspapers, television or internet access (is there such a place?), you are aware that the government of Argentina defaulted on its external debt on Wednesday. A New York federal court provided the immediate cause of the default with a ruling that rendered illegal an agreement reached between the Argentine government and creditors holding over 90% of the country’s external debt.

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Argentina Deadline Day: Punishment for Rejecting the Neoliberal Consensus Nearly Complete

Today is technically the drop-dead date for Argentina to work out an agreement to pay off vulture funds that long ago purchased their distressed debt, or else the country will go into default for the second time in thirteen years. 11th-hour negotiations with a mediator have yielded no results thus far. WSJ divines momentum from the length of the mediation session, which is pretty weak tea.

The default would actually be to the exchange bondholders who already hold agreements with Argentina for restructured debt payments going back to the 2001 default. Judge Thomas Griesa prevented the country from making a scheduled interest payment to the exchange bondholders without the vulture funds getting their $1.5 billion first (the vultures paid roughly $48 million for the distressed debt, so it’s a huge payday).

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South Portland, Maine: The Mouse That Roared on Canadian Tar Sands

Yves here. The article below illustrates how local communities are throwing spanners in the works of various North American energy plays. For instance, New York State’s highest court (confusingly called the Court of Appeals) ruled that towns have the authority to ban fracking via local ordinance, a decision that sent shivers down the spine of natural gas developers.

Another development that is causing some consternation to energy industry incumbents is an ordinance passed by the city council of South Portland, Maine, which put in place new zoning rules that would prohibit the export of Canadian tar sands through the port.

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The Argentina Debt Case

Almost everyone now knows that the world of international finance is not a particularly robust one, nor is it particularly just or fair. But it has just got even weirder and more fragile, if this can be imagined. A recent ruling of the U.S. Supreme Court, refusing to hear an appeal by the government of Argentine against a decision of a lower court on a case relating to its debt restructuring agreement with creditors over a decade ago, is not just a blow against the state and people of Argentina. It has the potential to undermine the entire system of cross-border debt that underlies global capitalism today.

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Bill Black: AG Holder – “The U.S. Announces the Indictment of Citigroup’s Senior Officers for Fraud”

Yves here. I’m serving an extra heaping of contempt on the latest giveaway bank settlement, this one with Citigroup for a headline figure of $7 billion which is really $4.5 billion in cash and the rest in various chits. We’re turning the mike over to Bill Black, who excoriates Attorney General Eric Holder.

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Colorado Attorney General Files “Massive” Lawsuit Against Foreclosure Mills, Paving Way for Suits in Other States

It’s not hard to notice the contrast between the posture of a Republican state attorney general in Colorado, John Suthers, who opened up an investigation when the Denver Post exposed pervasive overbilling by foreclosure mills, versus the conduct of a Federal task force dedicated to pursuing foreclosure fraud.

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Financial Times on Private Equity Firm Grifting and Arrogance

The Financial Times weighed in today with a long, well-researched piece, Private equity: A fee too far, on an issue we’ve discussed for some time, that of private equity firm oh-too-cleverness and too often, outright pilfering, in its dealings with investors, who include public pension funds, foundations, endowments, and insurers. This article is far more […]

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Former CalPERS CEO Pleads Guilty to Bribery, Fraud, Including Taking Cash in Paper Bags

Several readers sent accounts from the California press on the latest sordid chapter in a long-standing, large scale pay-to-play scandal at the giant California public pension fund, CalPERS. Earlier this month, state papers reported disclosed that the former CEO, Frank Buenrostro, had cut a plea bargain with Federal prosecutors and was turning evidence on his (alleged) former partner in crime, placement agent and former CalPERS board member Alfred Villalobos. We’d heard privately before that story broke that the charges against Buenrostro were about to be greatly expanded, which is likely what lead the former CEO to fold. But as a CalPERS insider told us, “It was a race to see who was going to cut a deal first.”

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