How much information does Cuomo have?

By Felix Salmon
May 13, 2010
Joe Weisenthal points out that we've diverged in unusual directions when it comes to the story about Andrew Cuomo investigating the banks over providing misleading information to the ratings agencies. He's normally the libertarian caveat-emptor guy, but thinks this could be a big deal:

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Joe Weisenthal points out that we’ve diverged in unusual directions when it comes to the story about Andrew Cuomo investigating the banks over providing misleading information to the ratings agencies. He’s normally the libertarian caveat-emptor guy, but thinks this could be a big deal:

This issue isn’t nothing, because if there’s a clear pattern of providing improper data to the raters — and again, this is just an early-stage investigation — then the banks begin to look like they were specifically trying to deceive customers on behalf of their own trading desks or special clients (like John Paulson).

I, on the other hand, suspect that this is more of a fishing expedition, thanks in part to a line in the NYT story about how the banks in question were “contacted after subpoenas were issued by Mr. Cuomo’s office late Wednesday night notifying the banks of his investigation”. (Weirdly, that line has now disappeared from the story.) I concluded from that that the investigation was just beginning, and that the NYT had been told about it even before the banks were.

That said, I’m no expert on the internal workings of the NY AG’s office. It’s entirely possible that Cuomo has already put together a colorable case against the banks, and is now issuing his subpoenas just to fill in the gaps, as it were. On the other hand, reading Story’s rather vague story, I get the feeling that there’s relatively little in the way of solid evidence as yet, and that, as Weisenthal notes, this investigation really is in its very early stages.

So, can someone help me out on this? When the subpoenas start flying, is that a sign that the AG has already got the goods, or that he’s only just beginning to look for them?


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As a former white collar prosecutor in New York, here are some thoughts and speculations.

It is very unlikely that the case against the banks is just a fishing expedition. It is more likely an outgrowth of an ongoing investigation into the ratings agencies. The ratings agencies investigation likely yielded documents or witnesses (or both) which pointed to the involvement of the banks. To make public the specifics of these findings would not only jeopardize the integrity of the investigation, but would also violate grand jury secrecy laws.

It is a very risky (and arguably illegal) strategy indeed to just issue subpoenas as part of a fishing expedition rather than as part of a developed case. I do not think Cuomo or his staff would take such a risk.

Posted by Glen_Farclas | Report as abusive

Subpoenas from Cuomo are no indication that the AG’s office has any information, or for that matter, real intention of actually bringing charges. Mr. Cuomo is master of the timely and masterful headline. Given his desire to be governor all press releases around any investigation or prosecution of those in the financial industry should be taken with a large grain of salt.

Posted by thetaobera | Report as abusive

The first 2 comments seem to contradict each other. Who’s right? Any more experts?

Posted by doctorjay317 | Report as abusive

Who is Cuomo’s boss, and the boss’s boss? This is all just theater.

He succeeded slick Henry Cisneros at HUD, and:

“In the August 5, 2008 issue of The Village Voice, Wayne Barrett argued that Andrew Cuomo made a series of decisions as Secretary of HUD between 1997 and 2001 that helped give birth to the country’s current credit crisis:
“He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded “kickbacks” to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.” o

The foxes are sitting in a jacuzzi on the roof of the henhouse, smoking cigars and laughin’, just laughin’.

But let’s pretend like there are only two explanations here, “fishing expedition,” or “serious investigation.”

This is worse than Fox news.

Posted by Uncle_Billy | Report as abusive

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