And so the Abacus fallout is about to hit precisely where the culprit for it all resides: the Federal Reserve Bank of New York. Could there be justice in this world after all? From Bloomberg:
Barofsky says the question of whether the New York Fed engaged in a coverup will result in some sort of action.
“We’re either going to have criminal or civil charges against individuals or we’re going to have a report,” Barofsky says. “This is too important
for us not to share our findings.”
He won’t say whether the investigation is targeting Geithner personally.
In Senate Finance Committee testimony on April 20, Barofsky said SIGTARP
would investigate seven AIG-linked mortgage-related securities similar
to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group
Inc. that is at the center of a U.S. Securities and Exchange Commission
lawsuit filed against the investment bank on April 16.
“I’ve been in contact with the SEC,” he told the committee. “We’re going to
coordinate with them, but we’re going to lead the charge. We’re going
to review these transactions.”
Barofsky and Geithner’s offices have gone toe-to-toe over AIG, alleged lax oversight of TARP
funds and even over the question of whom Barofsky reports to.
The TARP watchdog has also criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc.
was saved from insolvency in 2008, when Geithner was head of the
Federal Reserve Bank of New York.
The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.
I have written extensively on this matter over the last 18 months and, in my opinion, such an outcome falls under the category of "it's about damn time!"
Then there's this:
Barofsky, a former federal prosecutor who was once the target of a kidnapping plot by Colombian drug traffickers, says he’s also looking into possible insider trading connected to TARP. He says his agency
would want to know if bankers bought stock in their companies before it
was made public that their institutions would get TARP money, for
“There was a time when, if you got that word the stock price would go up, and if you were to trade on that information prior to the public announcement, that would be classic insider trading,” Barofsky says.
That ought to be easy. Just subpoena yourself some trading records along with the emails and communications of bank executives. Bingo - I bet you find dozens of instances there.
“There’s a reason there are Tea Partiers out there, and when you look at it, anger at the bailout is one of the first things they talk about,” says Barofsky, referring to the anti- Obama political
movement. “This Treasury Department and the previous Treasury
Department bear some of the responsibility for not being
straightforward with the American people.”
The Tea Partiers (and the American people generally) are angry because of the rampant looting of the American public and taxpayer that has taken place over the last three years.
These institutions should have all been dismantled. If it was deemed to be "necessary" to keep the firms in existence then break 'em up, fire the entire executive suite and instead of six firms give
us sixty - break each into 10 pieces. Even better, split
off their depository functions and sell them to community and regional
banks that did not participate in the Wall Street games!
It appears that Barofsky is looking into the issues raised by my previous Ticker on Goldman and the synthetic CDO issue as well:
“It is securities fraud if you take securities and package them and knowingly pass them off with phony labels,” she says.
Barofsky says investigations related to the underwriting and sale of CDOs are ongoing.
You betcha it is.
WHOA: TARP Watchdog Says Criminal Charges May Be On the Table For New York Fed Over AIG Coverup
Woot, Woot.....go get em Barofsky! I really like this guy. Great post NAU!!!!!