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Friday, April 24, 2009

Will the US enforce the rule of law?

Mish has a great blog entry today commenting on the illegal activities by Treasury Secretary Hank Paulson and Ben Bernanke in the fall of 2008. During that time, Bank of America board and CEO was pressured to NOT do business with the shareholders interests. The government had it's own agenda, and that was to pawn off yet another bankrupt business, Meryl Lynch, into the private sector.

New York Attorney General Andrew Cuomo has written a letter to the SEC to this affect At heart is this issue:
The week after the shareholder vote -and days after Merrill Lynch set its bonuses Merrill Lynch quickly and quietly booked billions of dollars of additional losses. Merrill Lynch's fourth quarter 2008 losses turned out to be $7 billion worse than it had projected prior to the merger vote and finalizing its bonuses. These additional losses, some of which had become known to Bank of America executives prior to the merger vote, were not disclosed to shareholders until mid-January 2009, two weeks after the merger had closed on January 1, 2009.

This of course, places Secretary Paulson at the heart of a charge of securities fraud. Notice that Ben Bernanke was also involved in pressuring this deal to go through. If you think this is just CEO Lewis trying to squirm out of taking responsibility for a bad deal, read on:

In an interview with this Office, Secretary Paulson largely corroborated Lewis's account. On the issue of terminating management and the Board, Secretary Paulson indicated that he told Lewis that if Bank of America were to back out of the Merrill Lynch deal, the government either could or would remove the Board and management.

Now if this isn't a CLEAR CUT CASE that DEMANDS action by the SEC, I don't know what is. This will be a test of the US Government signalling that under Obama rule of law exists, or chinese menu of applying the law, like Mr. Bush did, continues.

To gain the world confidence, indictments must fly to show the world Obama will clean up the USA. The mass media will spin it as some sort of partisan issue. Don't believe it. This is simply enforcing the law.

I for one still remain a pessimist and think that the Bush years are here to stay, the law applies when it suits the administration. Let's hope I'm wrong.

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