NYAG Eric Schneiderman's New Wall Street Fraud Target: Credit Suisse
At the beginning of October, we reported on the Residential Mortgage-Backed Securities' Group's first target, J.P. Morgan Chase. Started by President Obama and led by New York Attorney General Eric Schneiderman, the task force seeks to reprimand the culprits behind 2008's financial implosion. Aside from the enormous SEC settlement with Goldman Sachs, it's the most comprehensive action taken towards getting to the bottom of Wall Street's actions leading up to what we now know as The Great Bubble.
According to Attorney General Schneiderman's lawsuit, Credit Suisse deceived investors as to the care with which they evaluated the quality of mortgage loans packaged into residential mortgage-backed securities prior to 2008. RMBS sponsored and underwritten by Credit Suisse in 2006 and 2007 have suffered losses of approximately $11.2 billion.
Similar to the J.P. Morgan case, the accusation is based off New York State's Martin Act, which states that the government can sue a financial institution for deceiving a customer without proof. Also, the Act gives a five-year window to state officials to bring the accused to court over said charges. As you can see, Schneiderman has a ton of enforcement power on his hands and he's not afraid to use it (also, you can throw private equity companies onto that list, too).
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