Archive for May 14th, 2010

Crusader AG Andrew Cuomo Strikes Again !!

Friday, May 14th, 2010

New York attorney general Andrew Cuomo has launched an investigation of eight major banks to determine if they provided information to the rating agencies that was less than truthful concerning the components of various mortgage backed securities. The Las Vegas real estate market is ground zero for mortgages that should have never been originated, so we have more than a passing interest in this investigation. Personally, I really doubt that it was necessary to mislead the rating agencies about what they were evaluating to get a better credit risk score. The banks had a more powerful tool to get what they wanted than the manipulation of information, that’s for sure. The ratings agencies live off of fee income, and you get just one guess as to who provides that “fee cash flow”. When you combine this kind of financial leverage (over what is supposed to be an independent evaluative process) with the well developed network of bankers that used to work in the ratings business (and still have jealous friends there), the potential for chicanery of all kinds is clear and probable. No worries though, Andrew Cuomo is on it and the guy doesn’t hold back. With this kind of public interest tenacity in his belly, one could imagine Cuomo making a great Governor or Senator in the not too distant future. Come to think of it, wasn’t his dad a Governor at one time? Do you think Andrew might have given this some thought in his spare moments ??