Friday, January 23, 2009

SEC Probes Whether Duke BOT Chair Misled Investors

Reuters reports - - -

U.S. regulators are probing former Wachovia Corp Chief Executive Robert Steel over comments he made on television about his bank the day before it started talks about a potential merger, the Wall Street Journal reported late on Friday.

Citing people familiar with the matter, the paper said the Securities and Exchange Commission has been probing whether Steel, a former Treasury Department official, misled investors in an appearance on CNBC's Mad Money show during the height of the financial panic last September.

"In an extremely challenging and volatile time, Mr. Steel always did his best to convey the position of Wachovia accurately. Should any questions arise, he is very comfortable addressing them," the Journal quoted a spokesman for Steel as saying, adding that the SEC declined to comment.

Wachovia shareholders approved the bank's takeover by rival Wells Fargo & Co (WFC.N) in late December, bringing one of the largest mergers stemming from the financial crisis near to completion.

Well Fargo could not be immediately reached for comment.

The SEC wants to ascertain whether Steel misled investors when he told CNBC's "Mad Money" program on Monday, September 15, that the company had a great future "as an independent company," as panic about the bankruptcy of Lehman Brothers roiled markets, the paper reported.


My comments:

If Steel, chair of Duke University’s board of trustees, misled investors that won’t surprise people familiar with the Duke lacrosse hoax, frame-up attempt and their ongoing cover-up.

Since March 2006 when a false accuser told self-contradicting lies about a gang rape and other crimes that never happened, Steel’s been misleading the Duke community and the broader public.

With Duke’s President Richard H. Brodhead, Steel put in place Duke’s disgraceful “throw the students under the bus” strategy which has stained the university’s reputation and embroiled it in multiple lawsuits, including one with one of its insurers.

Hat tip: An Anon commenter


No justice, no peace said...

If the goal is to redefine virtue then maybe we've achieved that end.

Stimulus Plan Repeals Big Tax Breaks for Banks

"...To address the financial industry meltdown, the Treasury Department last fall issued a new tax rule to make it more attractive for healthy banks to buy troubled ones hit hard by the mortgage crisis. It allowed healthy banks to avoid billions of dollars in taxes by offsetting their profits with the losses of the banks they acquire.

Before, the merged bank could write off only a limited amount of the losses. Removing much of the restrictions enabled the acquiring banks to make huge reductions in their tax liabilities.

In some cases, the tax breaks exceeded the cost of acquiring the troubled banks. Wells Fargo & Co. (WFC), for example, made a bid to acquire Wachovia Corp. (WB), just days after the change in tax rules was issued Sept. 30. Wells Fargo paid $14.8 billion in a stock deal to buy Wachovia, but stands to reap about $20 billion in additional tax savings from the transaction, according to analyses by private tax experts..."

There are several events that are disconcerting.

1. We know when Bob Steel was confirmed for his post within the Treasury Department, however we don't know the relationship between his consideration prior to the hearings and the lacrosse hoax actions on his part. Did his being considered for the Treasury post influence his action/inaction relative to the hoax?

2. We know Bob Steel, while at Treasury, was involved in the decision to open the discount window to non-bank institutions. That includes his former employer Goldman Sachs.

3. We know the Treasury created the tax deal mentioned in the article above. Did Mr. Steel have any authorship in that tax treatment ruling? It is important to understand that the tax rule was not Congressionally enabled.

4. We heard what Steel said about Wachovia on Mad Money with Jim Kramer.

5. We know that the toxic problems Wachovia acknowledged went up substantially within days of the airing of the Mad Money broadcast which is the basis for the SEC probe.

6. We know that Citi was dumped on by Wachovia and that Wachovia accepted a better deal from Wells Fargo. I seem to recollect that one basis for choosing Wells Fargo as a suitor was that WF did not require government support.

7. We know per the linked article above that the deal was wholly government supported based upon favorable tax treatment for Wells Fargo. WF received $20 billion in tax breaks to acquire Wachovia for $14.8 billion.

8. Ironically we know that Duke hired Jamie Gorelick to defend Duke. She of course, was an employee with Fannie Mae. While there Fannie Mae cooked their books and she received north of $25 million in bonus money. The fact that FNMA as a GSE strongly lobbied Congress NOT to institute reforms (multiple times) is appalling. The $1 trillion in FNMA sub-prime loans is the root cause of the failure of our system. Of course many of those toxic loans were originated by Wachovia (prior to Steel being named as CEO).