State attorney general Andrew Cuomo this morning reached to take the first post-TARP scalp, accusing former Bank of America CEO Ken Lewis of pulling a massive fraud on both taxpayers and shareholders.
“Egregious and reprehensible” were two of the kinder words Cuomo used in unveiling a civil lawsuit under the state’s Martin Act — the wide-ranging law that gives the AG power to probe financial crimes.
It’s the first charges brought against any of the major players involved in the massive 2008 federal banking bailout — a move that is sure to play well before political audiences everywhere other than Wall Street.
With federal TARP watchdog Neil Barofsky at his side during a morning telephone presser, Cuomo charged that Lewis and former CFO Joseph Price concealed massive losses at Merrill Lynch in December, 2008 in order to accommodate the B of A merger with the ailing investment firm.
According to Cuomo’s tick-tock of the alleged scheme, Lewis and Price first hid “disastrous actual losses” by Merrill Lynch of $16 billion in order to gull shareholders into approving the deal. They then doubled back and “threatened” federal officials that they could go belly up ala Lehman Brothers if they didn’t receive emergency federal aid. “As a result of their efforts, Bank of America received $20 billion in taxpayer aid,” charged Cuomo.
Lewis called the lawsuit “badly misguided.”
Asked why it’s a civil, not a criminal case, deputy AG David Markowitz left that door open. “We have an ongoing investigation, we are only announcing civil charges today.”
While tackling the bankers, Cuomo had to duck a couple of questions about mundane political matters, such as his pending candidacy for governor. A few hours before the presser, David Paterson — the current governor who would like to remain as such — told John Gambling on WOR that would-be candidate Cuomo was hiding, using the old “rose garden strategy” to avoid weighing in on tough questions. What did the AG think about that? asked the Daily News’ Glenn Blain.
Cuomo promptly hit tune G2 on the AG jukebox: “I am Attorney General of the State of New York. I was elected to do a job. I get paid to do that job. That is the job I am doing. I am confronting the issues. Today is a good example of this. This is tax dollars we are talking about..” etcetera.
The only one to squarely tag the elusive Cuomo was NY1’s Grace Rauh who asked a question squarely on his beat: Did he think the KSM terror trial should be moved? The AG responded with a slight dodge — “It’s a federal decision” — followed by an actual answer: “Security would be highly problematic. It is advisable to seek another venue.”
The race is on!