WALL STREET BANKERS A PUBLIC NUISCANCE

Wednesday, January 30, 2008

  Wall Street puts lipstick on the pig again – the FBI and others are on the case.

A lawsuit instituted by The City of Cleveland, Ohio, claims hundred of millions of dollars damages against 32 mainly Wall Street Investment Banks. Among them are Goldman Sachs, Citigroup, Merrill Lynch etc and among the foreign contingent are Britain’s HSBC and Germany’s Deutsche Bank.  Cleveland’s statement of case is a revealing description of how the racket was run. 

 Key points from the City of Cleveland’s claim: Cleveland’s public nuiscance claim stems essentially from a racket of reckless lending to non creditworthy homebuyers. The loans were made  in order to create securities which, after applying Wall Street’s lipstick on a pig formula, would be sold at great profit. It’s claimed that the banks acted regardless of consequences as long as they could book gigantic fees and their staff could pocket gigantic bonuses.     

       Cleveland claims that ‘lending abuses’ by the distinguished list of Defendants have caused them (and other cities across the United States) hundred of millions of dollars of losses. They are a result of first flooding the market with sub prime mortgages then leaving Cleveland with the mess of mass foreclosures that include blighted neighbourhoods, demolition costs, vacant properties and the like.   Clause 5. of the claim reads: ‘Simply put, with respect to Cleveland, the purveyors of sub prime mortgages could have and should have foreseen (and in all likelihood actually did foresee) a foreclosure crisis as the inescapable consequence of their conduct. Forced to clean up the resulting mess the City has sustained hundreds of millions of dollars in damages…..’  

Cleveland’s clean up is the mirror image of when the banks ‘cleaned up.’  They were rewarded with ‘astronomical fees’ for what the City now alleges was as a racket. The FBI, now also on the sub prime case,  has called for information from 14 as yet unnamed financial institutions.  Cleveland list 32 perpetrators. Pigs look ugly without lipstick - expect more ugly revelations will emerge from the pipeline.

 

 

 

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