Regulators Inch Forward on Investigations, Settlements of Dubious CDO Dealings
by Marian Wang ProPublica
Regulators and prosecutors have been notoriously slow [1]at taking action against the dubious dealings during the financial crisis, but it seems they’ve inching forward on investigations of certain mortgage-backed securities deals bundled, packaged, and sold by major financial firms.
As Bloomberg has reported, JPMorgan said in regulatory filings that it is in “advanced” talks with regulators to resolve investigations of its CDO deals [2]. And Goldman Sachs—which paid $550 million last year [3] to settle a Securities and Exchange Commission lawsuit over a CDO deal called Abacus—also said in filings [4] that it’s still being scrutinized for that deal as well as others.
Which other Goldman CDOs have caught the attention of regulators? The language in the filing [5] is pretty vague:
Group Inc. and certain of its affiliates have received subpoenas and requests for information from other regulators, regarding CDO offerings, including the ABACUS 2007-AC1 transaction, and related matters.
It’s worth noting that Goldman has been publicly criticized for some of its other CDO deals aside from Abacus. One such deal is Timberwolf, which a senior Goldman executive [6] once referred to in an email as a “shitty deal”—a phrase that was repeatedly quoted by Sen. Carl Levin in a Senate hearing last April.
In our story last summer about banks’ self-dealing [7] in the run-up to the crisis, we also detailed a less-noticed aspect of the Timberwolf deal: A November 2006 internal memo [8] stated that “Goldman is approving every asset” that will end up in Timberwolf. An independent manager was supposed to be selecting assets for the deal, and the memo raised questions whether about Goldman fully disclosed its involvement to the other investors in the deal. Goldman told [7] us at the time: “The securities included in Timberwolf were fully disclosed to the professional investors who invested in the transaction.”
In its regulatory filing, JPMorgan Chase disclosed that it “is currently in advanced” negotiations [2] with regulators, but the bank didn’t specify which deals were the subject of these talks.
What we do know and have reported is that the SEC is taking a hard look [9] at a JPMorgan CDO deal called “Squared.” The SEC formally warned executives involved in the deal that it may sue them over Squared.
They have been focusing on whether the bank adequately disclosed to investors that a third-party hedge fund, Magnetar, had a role in the selection of assets for the CDO.
As we reported [10], Magnetar often bought up the hardest-to-sell slices in CDOs, pushed for riskier assets to be included, and placed bets that would yield millions when the products failed. Its strategy with Squared, as with its other deals, paid off:
Magnetar earned about $290 millionoff its bet on Squared. The firm does not appear to be a target of the SEC’s investigation and declined to comment to Bloomberg. It previously told us it “did not choose the assets in any CDO [11],” though emails recently published by the Financial Crisis Inquiry Commission suggest otherwise [12].
Follow on Twitter: @mariancw [13]
~
I hope they are looking at M & T Bank/Corporation because all them are being paid through this bank….I have a good mind to make a You Tube Video, go to 1 Plaza Place, Buffalo, New York, and act like the man in Cairo and Flick my bick…..I would stand out front hand out flyers discouraging people from using this bank because all our Government Officials and leaders are being paid through this bank and that is why they are being protected from the press….They use more robo-signatories and false brokers—-realtors who harass customers that are living in same neighborhoods, and have forged documents through the courts than any other bank I know….the sad part is that the judges and clerks of the courts plus attorney are being bought off by these MOFO’s and nothing is being done about it. But remember we have to vote everyone in office at this crucial time out of office…Anybody that will have 4 years or more by the time 2012 rolls in here…..We the people put them in office and only we can take them out of office. Go back and find out who help Fannie and Freddie put the refinance issues into to play. We can take responsibility and say they we did not have to do that , but we did. Hind sight is 20-20 we can be responsible but they know they wrote people into loans they know they could not afford. The only way to beat the banks is to tell everyone you know that is looking to buy not too, we have driven down the interest rates, and they will go lower, but the object of the game here is drive down the prices…..the longer we wait the lower the prices will go …..lets all stand together to be the banks, and our government at their own game…..Or we will become a one world order…..please see the big picture and there are other issues that will soon come up that we will be shocked about and it will contribute to making the world worst….and our government especially…..let stop all the racketeering
JP funnels Madoff’s money:
http://finance.fortune.cnn.com/2011/02/28/jpmorgans-907-million-madoff-bonanza/
WF (Wachovia), BOA, HSBC funnels the drug cartel’s money:
http://www.bloomberg.com/news/2010-07-07/wachovia-s-drug-habit.html
And you wonder why they want to keep a lid on all this mortgage mess, they got other more important s**t to work on. Securities fraud, tax fraud, fraud in our courts, in our public land records, desolating pension and retirement funds, bankrupting nations, etc. etc.
`how can they justify continuing foreclosures. obviously they bet on us to fail. and when we did fail and did not leave the houses their job becomes harder. their meetings prob. included what happens when one of the mortgAGESdefault but hey dont leave the house? well tell them we can not help them with a mofication until they are in imenent default. then when they are jsut about to be review by the loan proccessor move the file. once the file is safe out of review then stick them with a new letter fro more financials. stringin them alon will start to break them they will leave. if they continue to fight when they do lose the paper work. shred it make it so it disapears realy play with their mind. then when they start to complain to the government entities we are in the clear. who can prove the file iwas moved or the package was destroyed …yes my good friend no one. when they realize that they cant prove anything we will put them in foreclosure an dthey will leave then
The SEC should have watch the Foreclosuregate is a Cancer Bloomberg video interview with Chris Whalen for an excellent explanation of how all of this debt was never securtized and should therefore be able to be extinguished in a bankrupcy.
Consider this: Where did the money go? (Possibly to secret accounts where some who are ‘investigating” are beneficiaries?)?) We need to get it back. This is apparently about an elaborate ponzi/money laundering scheme making Maddoff look VERY simplistic and basic.
Create bogus loans, concealed from the record, transfer the funds to secret offshore accounts, make sure those in places of power on in on the racket. ) AG’s, high powered lawyers, DA’s, judges,
Wipe out the US economy, and steal the retirement, assets, healthcare, security, of US citizens, blaming it all on the red herring of subprime loans, which originally were said to account for 40 BILLION not 14 TRILLION.
It is called WAR. and those within the system who wage war upon us, are also at the highest places within the Judicial system. Attorneys who are co-racketeers along with the pervs within the loan system (loan officers, MERS ‘members’ etc?) What about the Mortgage Bankers Association? Has every member been investigated? and cross referenced with every other database? AN INSIDE JOB. IMHO.
cocaine money the drug cartel removed their liquid money in 2008 so they wouldnt be investigated
Madoff was a distraction they used him to divert attention from the biggest Ponzi Scheme Swindle and Heist in history. Madoff said the whole country is a giant Ponzi sceme. CNBC agreed with that assessment. This Ponzi Scheme was more like the ENRON scheme. This PONZI SCHEME HEIST, THE GREAT STICK-UP OF AMERICA, THE BIG SWINDLE, it has many names and wore 2 faces, was all about gaining trust by means of massive deception, there was the set up to fail then, selling and gambling on speculation of the failure of these unsecure shit MBS’s and CDO’s. They also insured that failure for themselves with AIG and got the bailouts. They are still robbing America everyday up on Wall Street with the help of the Federal Reserve Bank.