You are missing my point as well. I am not defending the heads of Wall Street banks in the 2000s. My point is the following. If you were able to travel back in time to the late 1990s and remove all the people who were banking CEOs during the economic crisis from the face of the earth (Vikram Pandit, Lloyd Blankfein, Ken Lewis, Stan O'Neal, Jamie Dimon, John Mack, John Thain, Dick Fuld, etc.), the financial crisis still would have happened in much the same way. (I acknowledge that Lehman might not have imploded in exactly the way it did but for Dick Fuld.)

I say that not because the banking executives were blameless, but rather because the issues at investment banks that contributed to the economic crisis went far beyond the impact of a handful of high level executives. As I said, the issues were endemic and systemic. And to a significant degree, they remain unaddressed.

In contrast, many high profile corporate implosions (Enron, Worldcom, Refco, Adelphia, etc.) are directly attributable to the actions of just a few people.

I get your point. I agree with it as far as it goes. But the reason the issues are endemic and systemic is because the elites (who as Victor pointed out will often find a scapegoat) have actually influenced laws to the point where they can't even be prosecuted for using the entire financial system for their own personal gain.

I guess facile is the word but it seems to imply the argument isn't valid in the larger context and I think it is. It's about elites not being held accountable when they screw over the non-elites. Sometimes that's by pinning your crime directly on them and sometimes it's by them suffering the hardship caused by your actions. I mean....distinctions with out much difference.

The Wall Street 2008 crisis represented an extensional threat to the entire elite power structure, especially that centred around NYS.

Prosecutions could have and should have easily started around the Rating Agencies selling their ratings and the corrupt Bankers who paid for them. That crime of negligence, collusion and manipulation and fraud is certainly one that could be proved in court.

But just imagine this running through the SDNY Prosecution office where to get immunity or even some form of participation leniency from ones crimes one must divulge all known criminality they have been exposed to.

Just imagine once Exec one points a finger up stream to get a deal, who Exec 2 might point at.

I think there is no hyperbole in saying the whole thing may have unwound in a sea of confessions and finger pointing that would have caught up politicians and also many of their friends and family members working in and with Wall Street.

I actually can't see it going any other way unless the Prosecutors only have a$$ed it to get a few names but not pushing to get all.

It was the collapse of Wall Street they feared.

And I maintain the collapse could not only have been absorbed but lead to a faster recovery if instead of bailing out Wall Street with all that money, it was instead given as a mortgage (debt) credit directly to homeowners who would be forced to use it at their local community banks to pay down their mortgages thus creating what the system needed, liquidity for the Banks, but also creating something more important, liquidity to the citizens and the ability to stay in their homes. Win/Win/Win.

It would have created the Rise of the Mid Tier Banks and the collapse of the Banks Too Big to Fail, a good thing.

Instead firms like Steven Mnuchins were given guarantees by the gov't that they could buy up mortgages to put some liquidity in to the system with their losses (if they had any) protected. If instead you give the same mid tier banks that deal but to keep their clients in their homes, those banks could easily raise more liquidity with a 'no loss guarantee' just like Mnuchin got.

Disgusting grift for the Elite at every level.

There was a conflict of interest in terms of how the rating agencies were compensated, but it wasn't nearly as transactional as your post suggests. The rating agency models for RMBS in the mid-2000s were terrible, and not mainly because of how the rating agencies were paid.

It would be more accurate to say that Wall Street banks didn't really care whether the ratings were accurate. They knew they could sell an unlimited volume of AAA RMBS. They became very expert at knowing exactly what was required in order to generate a AAA rating at the top of the stack. And the investor appetite for AAA RMBS was unlimited until at least 2007 because there had been few if any downgrades of RMBS that were already in the market and yields on RMBS were higher than yields on anything else that was rated AAA in the market. For institutional buyers who wo were required to allocate a lot of dollars to AAA paper, buying RMBS was a no-brainer.

The banks of course didn't care what the actual risk of the bonds (or the underlying mortgages) was because they weren't holding the risk.

Ha good one I forgot about that case.

I think the Credit Rating Agencies could be charged and dissolved for not honouring their fiduciary duty which is to the Citizens and not the big banks. Instead they sold that to the Big Banks and I think both could be culpable in that exchange.



I don't think that is strong enough.

I think they very much cared. I think it was their top priority. They did not want them "accurate"... they wanted them "positive and hyped up", and if that coincided with accurate, every once in a while, well they got lucky.



Yes a bribe.

Indict them for that!

Yes the bribes were working well.


Agreed.

Charge them.

Prosecutors typically love unsympathetic defendants that they know the public will be thirsting for some justice from. The Wall Street Banks and Rating agencies would have been up against it, had they been forced to face a jury following that aftermath.

I didn't mean that the banks became expert in knowing how much they had to pay the CRAs. The fees were pretty much standard. They became expert in knowing exactly what sort of collateral pool and exactly how much subordination the CRAs would require for a AAA rating.

In gambling terms, the banks are the sharps. If they see a soft line (a soft credit rating), they know how pound it.

Nah. That was more on Paulson's handling of it, and acquisitions falling through than Dick Fuld himself. Granted Dick is apparently a dick.

One of The Guys of Wall Street gave Epstein $100 million from like 2015-2019 the guy called Leon black

https://fortune.com/2021/01/26/leon-...pstein-apollo/

‘Advice. Easily the biggest guy to get Epstein’d

the Credit Bureau officials were excepting perks that would compete with the most generous of salaries. Helicopter and private jet use. Properties, etc.

Surely a jury could see those rightly as bribes and the officials as not doing their fiduciary duty.

That's fair.

Except they were. Which is why lehmans went bust and others had to be bailed out

Generally speaking, investment banks used securitizations as a way to avoid holding the risk on mortgages that they either originated through their own subsidiaries or purchased from other mortgage originators. The banks had differing appetites for taking exposure either through holding higher yield bonds that were lower in the stack or holding residual interests.

Lehman had more appetite than most. It was an outlier in terms of how much direct exposure it had, and how much leverage it relied on to get that exposure. Bear Stearns was an outlier as well. And many banks had investments that were closely tied to the housing market.

To be more precise, I guess that I should have said that the bankers who were responsible for the securitizations didn't care about the actual risk.

The idea was to package a load of morgages and then dice and sell all various bits making a profit while leaving no risk. The reality was they were always stuck with a bit of risk that they couldn't offload but they got the regulators to agree it wouldn't consume their balance sheet (normally you have to have a big enough balance to cover your risks but if you dont include them...)

The real culprits are the regulators who were dangerously far worse than useless. Sure blame bankers but that's like blaming the foxes once you've welcomed them into the henhouse

Somewhat interestingly, the team (at Morgan Stanley iirc) who did the original work on CDOs, avoided the mortgage market because they could never make the maths add up to a profit. I can't recall the details but it in Gillian Tete's book iirc (FT Journalist)

I don't know anything about the original team at MS who worked on CDOs, but Morgan Stanley definitely participated in the RMBS market, though not as heavily as some of its competitors.

For a lot of bankers who worked in the RMBS market, whether the math worked over a 6-8 year time horizon was only marginally relevant. They booked a lot of income in the period before everything fell apart. A disconnect between long term performance and compensation was one of the systemic problems in the financial sector at the time.

Also, it's not as if the concept of pooling mortgages and selling securities that are backed by the cash flows from the pool is inherently flawed. If the mortgages had been properly underwritten, if the proper disclosures had been made to investors, and if the securities had been properly rated, the concept would have worked just fine.

[QUOTE=Rococo;57317701]I don't know anything about the original team at MS who worked on CDOs, but Morgan Stanley definitely participated in the RMBS market, though not as heavily as some of its competitors. Could be a different team or a different bank.

Absolutely although there's usually a change as the busines developes. Early it's rocket scientists developing new products and persuading skeptical bosses/regulators/rating agencies that they work. Gradually as the profits roll in they move into the hands of greedy idiots who just see the profits and dont even have the talent to see why they worked.

It's not obviosuly true because it's all about correlation. It works very well for bonds (before the greedy abuse) because each company going bust had a high degree of independence as well as correlation because of the economy. The mortgage market is much more highly correlated, with defaults being strongly related to interest rates. In the end they sold so much rubbish it was collapsing before interest rates went up but that single variable being able to bring the house down virtually overnight didn't apply to, say, junk bonds.

Anyway feeling guilty about this derail so on topic legal question

Does UK to USA extradition apply to civil cases? I'm thinking about his royal thingy prince andrew. Looks like he is being served whether we pay for a police guard or not.

https://www.bbc.co.uk/news/uk-58574350
I assume andy wont turn up unless forced to (to be fair nor would I or anybody sane even if inncocent)

There is no such thing as extradition for civil cases. But there are mechanisms for effecting service in this sort of situation. After he is served, he can participate or not. If he chooses not to participate, then eventually a default judgment will be entered against him. That judgment potentially can be enforced in any jurisdiction in which he has assets, although ease and reliability of enforcement varies wildly by jurisdiction.

In a typical case, enforcement of a US judgment is trivially easy in the UK, almost as easy as enforcing against assets in the US. There might be serious impediments to enforcing a judgment in the UK against a member of the royal family. I dont know anything about that nuance.

Free Ghislane Maxwell. I believe all women.

Maybe Epstein will break her out.

Intersting. Txs.

What about this?
https://www.theguardian.com/uk-news/...eal-settlement
How does that work unless andy was specifically part of the deal? Or does it imply he was?

This is interesting. I cant imagine that Prince Andrew was a signatory to the settlement agreement between Giuffre and Epstein. I assume that he is arguing that he is a third party beneficiary of the agreement.

If you were litigating against a corporation, it would be standard to give releases to the relevant corporate entity, all subs and affiliates, all employees, etc., as part of the settlement and those releases would be respected.

But if parties intend for an unrelated person to be a third party beneficiary of a settlement agreement, they need to be quite specific. In other words, if the settlement agreement purported to give releases to "all friends and associates of Jeffrey Epstein," i dont think that would be enforceable. If the settlement agreement purported to release Prince Andrew by name, then it might well be enforceable.

I also wonder if TPB provisions in a sexual assault settlement might be stricken as against public policy.

Also, LOL at Alan Dershowitz for acting in his personal capacity to request the unsealing of a settlement agreement between Giuffre and Maxwell "as a matter of professional ethics," and big golf clap for Judge Preska for telling Dershowitz that no one had appointed him to the position of "roving ethics monitor."