[THS] Karl Denninger: Is That A Cop Investigating Big Banks?

[The Harder Stuff in news and commentary]

http://market-ticker.denninger.net/

Thursday, May 13. 2010
Posted by Karl Denninger in Corruption at 08:42

Is That A Cop Investigating Big Banks?

If so, it's about damn time...

    May 13 (Bloomberg) -- U.S. prosecutors and the Securities and Exchange
Commission are cooperating in a preliminary criminal probe into whether banks
misled investors about their participation in mortgage-bond deals, the Wall Street
Journal said, citing a person familiar with the matter.

The list is a who's who of the big banks.  JP Morgan, Deutsche Bank, UBS, Citigroup,
Goldman, Morgan Stanley.

All in all eight banks are being scrutinized by both the toothless SEC but more-
importantly Andrew Cuomo, who wields a fairly nasty set of powers through NY's
Martin Act.

    Cuomo is investigating whether Goldman, Morgan Stanley, UBS, Citigroup, Credit
Suisse, Credit Agricole SA, Deutsche Bank and Bank of America Corp.’s Merrill Lynch
misled rating companies to obtain higher ratings, the New York Times said. Cuomo
issued subpoenas on Wednesday, the newspaper reported.

Hmmmm... now that's a good sign.

We know from the public data flow, including testimony before the Congress, that
firms did use their knowledge of rating agency models to "tailor" submissions.
Whether this rises to the level of intentional deception for the purpose of gaming the
system remains to be determined, but that this sort of thing happened isn't
conjecture - it's admitted fact.

"Changes to prevent it from happening again" are insufficient.  Those who were
defrauded, if they indeed were, are entitled not only to recompense but to criminal
sanction against wrong-doers as a means of dissuading firms and individuals from
doing it again.

I'll believe this is real when I see handcuffs come out.