The Obama administration’s wimpy SEC is calling white-knight New York Attorney General Andy Cuomo a liar.
In new court papers, the federal agency is relying on the shaky word of Ken Lewis, the discredited ex-CEO of Bank of America, rather than believing Cuomo’s scenario about how a big part of the Wall Street meltdown played out.
Earlier this month, Cuomo filed fraud charges against BofA, Lewis, and the bank’s former chief financial officer, Joseph Price, alleging that they duped shareholders and the government in order to complete BofA’s takeover of Merrill Lynch in late 2008.
Meanwhile, the SEC has been daintily reaching civil-case agreements with BofA, only to have federal judge Jed Rakoff harshly reject them.
Part of Cuomo’s argument (explained here) was that the bank “intentionally misled” its own general counsel, Timothy Mayopoulos, about the size and nature of Merrill’s disastrous condition. Cuomo says that when Mayopoulos confronted Price after the bank finagled shareholders into approving the purchase of Merrill, the lawyer was fired. Not so, the SEC says in a new filing. The bank didn’t mislead Mayopoulos, the SEC says in defense of BofA, and the firing had nothing to do with any hoodwinking of anybody. How does the SEC know? Ken Lewis told it so. From Tuesday’s court filing by the SEC: “According to the Bank’s then-Chief Executive Officer, Kenneth Lewis, Mayopoulos was terminated for reasons having no connection to his legal advice…” That directly contradicts Cuomo’s scenario.
No wonder Barack Obama’s administration hasn’t aggressively gone after the major schnooks behind the Wall Street meltdown.
Cuomo has taken stronger action against Bank of America over its questionable behavior during the meltdown than the SEC has. Rakoff has generally backed Cuomo’s play and made some strong moves of his own against the weak-kneed SEC. Last fall, the judge harshly rejected the SEC’s proposed sweetheart settlement deal with BofA and ordered the bank to ‘splain itself. When the SEC submitted a slightly less sweet deal earlier this month, Rakoff demanded more answers, and Cuomo filed fraud charges against BofA.