SEC to the Rescue?

Posted by kevin on March 29, 2014 under Foreclosure Blog | Comments are off for this article

Earlier this week, we commented on the DOJ audit relating to financial fraud and, more specifically, mortgage fraud. The report concluded that the DOJ dropped the ball on these issues. One of the excuses used by the DOJ was that mortgage fraud (notwithstanding the President’s task force included mortgage fraud) was not really within its purview, but should be considered securities fraud. This was kick the can over to the SEC.

Oddly enough, the SEC announced that it is investigating whether a recent Wall Street boom in complicated bond deals is opening up new opportunities for fraudulent behavior. My Goodness. Is there gambling going on at Rick’s Cafe Americain? Keeping with the Casablanca theme, the SEC is lining up the usual suspects-Barclay’s , Citigroup, Deutsche Bank, Goldman, Morgan Stanley, RBS and UBS.

Now, I am hoping that the investigation is more than a press release. After all, the SEC was rather slow on the uptake in their investigation of irregularities following the mortgage crash of 2008. But, maybe they learned something from the prior go around.

A WSJ article indicates that the SEC is referring to the securities as CLO’s (collateralized loan obligations). It is not clear whether the SEC is investigating deals involving consumer credit or CDO type deals. Irrespective, the SEC must investigate and aggressively go after wrongdoers. Wall Street was emboldened by the tepid response by regulating agencies, While making billions of dollars, Wall Street practically wrecked the economy, got bailed out, and there were scant criminal or regulatory repercussions. So, is the plan, lay low for a couple of years, and let the games begin anew. The SEC has an opportunity to prove that its priority is to protect the public as opposed to laying the groundwork for getting its higher ups great jobs at mega law firms or in investment banking houses. You will know the answer based on the results of this and other investigations. I am not optimistic.