Addison Wiggin

“This is half-baked justice at best,” US District Judge Jed Rakoff wrote in an opinion yesterday afternoon. The SEC sued Bank of America for lying to their shareholders over the company having been forced to buy Merrill Lynch.

In a move that smacks of some backroom deal you and I will never be privy to, the SEC sued for only $150 million. That’s 2.4% of the $3.6 billion in 11th-hour bonuses Merrill execs awarded themselves days before they merged with BofA. It’s an even smaller fraction of the $4.4 billion bonus pool Bank of America henchmen enjoyed last year.

Half-baked justice? Yeah. On a pure cost-benefit model, it’s more like incentive for execs from BoA and Merrill and the Treasury and whoever else to go out rape, pillage, lie and steal all over again. Contrary to our Unofficial, Unauthorized Darwin Awards, these companies and execs climb the food chain when they concoct corrupt insider schemes.

Good luck restoring confidence in the financial system while they’re still lounging in the corner office…rather than in a cell next to some fat guy with “Mom” tattooed on his arm. Oy.

Even more for the “Wall Street Ire” file this morning: It has now been confirmed that Goldman Sachs bet against the very subprime assets it sold to AIG, which ultimately caused the insurer’s collapse. Here’s the breakdown, per a Bloomberg report and documents recently released from the House Committee on Oversight and Government Reform:

  • Goldman Sachs underwrote $17.2 billion of CDOs for AIG, more than any other firm
  • Knowing precisely the garbage it had underwritten (our assertion), Goldman bought billions in credit default swaps that would rise in value as AIG stumbled (fact)
  • AIG ultimately paid Goldman – with taxpayer dollars confiscated by many former Goldmanites in the Treasury – the full value of their default contracts: $14 billion.

Of course, all this has been suspected for so long that it was assumed to be true…but now it’s in stone. How this isn’t securities fraud, we don’t know… It’s like selling a teenager napalm (that you made in your backyard) and buying fire insurance on his dad’s house.

Addison Wiggin

Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.

Recent Articles

A Simple Way to Navigate the Ugly Start to Fall Trading

Greg Guenthner

Yesterday wasn't a good day in the markets. Even the "August rally" in small caps was a distant memory, and nearly 80% of all stocks on major exchanges ending the day in the red. How are investors supposed to navigate all this craziness? Greg Guenthner offers one strategy that can help. Read on...


Addison Wiggin
Profit from Global Warming, Even if You Don’t Believe In It

Addison Wiggin

Global warming is one of the most debated subjects of the last few years. But regardless of whether you're a "true believer" or a merely an unconvinced skeptic, there are significant ways to make serious money from this controversial topic. Today, Addison Wiggin brings you three of them. Read on...


Mogambo Guru
How to Buy Your Own “Bread and Circuses”

Richard Daughty

The U.S. is in debt up to its eyeballs - both in the public and private sectors. And more than anything, this has to do with a "borrow and spend" mentality of which no one is willing to rid themselves. Luckily The Mogambo Guru is willing to point out these flaws... and offers an actionable way out of them. Read on...


How to Double Your Money in 5 Hours

Wayne Mulligan

Everyone loves to believe that stocks soar on IPO days. But statistically speaking, that's simply not the case. In fact, over the last decade the average first-day returns for IPOs was just 12.2%. Today, Wayne Mulligan shows you a way around that - and how to make twice as much as everyone else who's scrambling to get a piece of the IPO. Read on...


The Ancient Secret to Thriving in Any Environment

Chris Campbell

The world is full of self-help books and empowerment guides. But one ancient text beats them all. In fact, some early adopters call it "the definitive text on self-discipline, personal ethics, humility, self-actualization and strength." And according to Chris Campbell, it could be the only thing you need to thrive in today's chaotic world. Read on...