New York’s Attorney General is investigating large banks in connection with their role in the financial crisis. Can you say “déjà vu”? (Or since it’s New York, the Yogi Berra version: “déjà vu all over again.”)
Perhaps Eric Schneiderman is the new Elliot Spitzer (well, hopefully not completely) or the ever-ambitious Andrew Cuomo, but if past is pattern, this latest effort at “cleaning up” Wall Street will not amount to much. A mere two years after the second-worst financial crisis in U.S. history, speculation is back, lobbying efforts by the financial services industry are in full swing, and money is still flowing to CEOs and other executives. Citigroup CEO Vikram Pandit recently received a $16.5 million retention bonus; this despite the company’s plummeting stock, which reached such lows ($4.00/share) that earlier this month the company “reverse-split” its stock. Essentially this entails combining every ten shares into one, changing nothing for the stockholder but artificially inflating the stock price tenfold. Just another day on Wall Street.
Gretchen Morgenson—a friend of the blog—highlighted Schneiderman’s efforts earlier this week. But even from her powerful pulpit, the industry is not likely to take notice or even care. They will simply cook up some newfangled synthetic toxic derivative 2.0 hedging the risk of global climate change (otherwise known as: hot air).
Hopefully, Schneiderman can prove me and probably countless other doubters wrong. Good luck, but Main Street, don’t hold your breath.
Assisted by David Martin
Berk Law is currently litigating multiple cases alleging certain banks aided and abetted Ponzi scheme operators. Read more about those and other current cases at www.berklawdc.com.