U.S. securities regulators are in preliminary discussions with several major Wall Street banks aimed at reaching settlements to resolve a broad investigation of their sales of mortgage-bond deals that helped unleash the financial crisis, according to people familiar with the matter.
The probe involves complex pools of mortgages and other loans called collateralized debt obligations, or CDOs, slices of which were sold to different investors.
Wall Street has come under intense fire from critics for its sale of the securities, seen as a central factor in the crisis. Settling the allegations would resolve one of the biggest law-enforcement threats hanging over leading banks.
So what it happening between the SCC and the CDO's?
ReplyDeleteWhat's at stake?
You've got these complex securities put together by Wall Street.....What the SCC is looking into is when hedge-fund clients actually had the banks put together really bad assets so they could bet against them, short them, and they could fall.
This brings about questions of the disclosure roll of the banks, if they were betting against their clients, etc. Earlier this year Goldman Sacks got into a $550,000,000 settlement related to that issue.
The question now is: What is going to happen to all the other banks?
Well the SCC is in preliminary talks to settle with other banks such as Citigroup, JP Morgan, etc. This is a good thing--this removes a cloud hanging over the banks because we all knew these deals were out there and were happening, but now that we know they are being brought to the public's eyes we can expect them to dissipate significantly if not completely.