Comments on: The law that was broken in the mortgage scandal

By: Derrida

Derrida — Sat, 16 Oct 2010 17:46:37 +0000

10b statute of limitations has probably run at this point. I’m not sure what state law these are typically governed by, but they might have something if it’s NY state, where it’s six years.

By: FelixSalmon

FelixSalmon — Sat, 16 Oct 2010 02:52:43 +0000

KD, the banks were certainly insiders, and they were certainly trading, and they certainly had nonpublic information, and it was certainly material. What am I missing here?

By: FelixSalmon

FelixSalmon — Sat, 16 Oct 2010 02:51:51 +0000

Sandrew, we know this fact to be true because they were selling securities, which can be, and were, traded in the secondary market. The price that the banks charge was therefore the going secondary-market price for such things.

By: KidDynamite

KidDynamite — Fri, 15 Oct 2010 19:50:40 +0000

100b5-1 applies to insider trading based on material nonpublic information, and is not applicable to this case. At least that’s what a top financial lawyer tells me – I am not a lawyer.

By: Sandrew

Sandrew — Fri, 15 Oct 2010 17:49:28 +0000

To be clear, Rule 10b5-1 hinges on the fact that any discounts the banks got from the originators as a result of the banks’ due diligence were not passed-through to the MBS buyers. Yes? If so, how do we know this fact to be true?

By: fred5407

fred5407 — Fri, 15 Oct 2010 17:45:24 +0000

I doubt any law was broken. What was broken was the trust we had in rating agencies and in the management of investment banks and large and small banks. They knew better!!! Any of them that reinvented themselves after the fiasco can kiss a profitable company life goodby. In business, like in a life of crime, you don’t suddenly expect good things after changing your ways. There are consequences to any bad thing. This is one aspect of business that is not being taught in our institutions of higher learning.

By: howard7

howard7 — Fri, 15 Oct 2010 02:18:57 +0000

i have believed since the crisis broke that what we have is a conspiracy to commit fraudulent conveyance, and i still think that could work.

By: hsvkitty

hsvkitty — Fri, 15 Oct 2010 00:09:10 +0000

Sorry. I wennt running off to look around… and didn’t see the second update. Section 17 surely sounds promising.

Why would the Dodd Franks bill have the fact it is not retroactive only at the very end…. when the date it was signed and enacted and date of enforcement should be in the indexes.

Thanks for this Felix. it gives one hope that there will be enforcement of law and ethics, which is WHY these were enacted in the first place. (to fend off the greedy money grubbers and protect the public … and to charge them if they don’t comply!)

By: hsvkitty

hsvkitty — Thu, 14 Oct 2010 23:48:50 +0000

It doesn’t say it is an “addendum”, alkali, it says it is amendment. I can’t read the original act because it froze twice on download.

It is on line anywhere so I can read it?

By: alkali

alkali — Thu, 14 Oct 2010 21:12:41 +0000

That subsection of Section 15E was added by the recent financial reform bill (specifically, section 932 of Dodd-Frank), and wasn’t in force during the time when these securities were issued. I don’t think it is retroactive in effect.

By: kmitchelson

kmitchelson — Thu, 14 Oct 2010 21:00:42 +0000

So ironic the name of the taste tester..

Check out http://en.wikipedia.org/wiki/Claytons

can be widely applied as in

“US government is a claytons government”

By: DavidMerkel

DavidMerkel — Thu, 14 Oct 2010 20:58:55 +0000

SEC. 15E. REGISTRATION OF NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS.

I’m no expert, Felix, but this seems like it would apply only to the reports of the rating agencies.

When I was a mortgage bond manager, it meant that we would get the rating agency presale reports, if there were any.

But I could be wrong. Anyone else have an opinion here?