collateralized debt obligations

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Banker Busted for Role in Financial Crisis

Ex-Credit Suisse exec faces extradition to US

(Newser) - A former Credit Suisse banker accused of contributing to the 2008 financial crisis in an effort to boost his bonus has been arrested in Britain and faces extradition to the US. Kareem Serageldin, who was arrested outside the US Embassy in London, allegedly inflated the values of mortgage-backed securities as... More »

Banker Uses Where's Waldo Defense at Trial

Lawyer shows picture from book in court, and it works

(Newser) - Before the jury began its deliberations yesterday in the fraud trial of ex-Citigroup banker Brian Stoker, it heard a decidedly colorful argument from his lawyer. "Most of the trial had nothing to with Brian Stoker," John Keker said in his closing, saying it reminded him of the Where'... More »

Feds to Charge Crooked Bond Traders

Ex-Credit Suisse traders accused of bonus-boosting fraud

(Newser) - Looks like it's payback week: Federal prosecutors are planning to file fraud charges against four former Credit Suisse traders accused of overstating the value of mortgage securities in order to boost their bonuses, the Wall Street Journal reports. The alleged fraud happened in early 2008 as problems with complex... More »

Wachovia to Be Charged in Mortgage CDO Scandal

SEC says bank, now owned by Wells Fargo, overpriced CDOs

(Newser) - The SEC is getting ready to bring civil charges against Wachovia for allegedly jacking up prices on its CDOs, even as the loans underlying them fell in value, sources tell the Wall Street Journal . The charges come out of a larger SEC probe into Wall Street’s shady CDO practices,... More »

How Banks' Fake Daisy-Chains Led to Meltdown

Self-dealing artificially propped up market for CDOs

(Newser) - An extensive ProPublica investigation reveals what it calls “one of the greatest episodes of self-dealing in financial history.” Banks, most notably Merrill Lynch, set the stage for the economic meltdown by rewarding themselves for said “self-dealing” during the final two years of the housing bubble. They created... More »

Morgan Stanley Hit With Criminal Investigation

Prosecutors looking into mortgage deals

(Newser) - Looks like Goldman Sachs might have some company. Federal prosecutors have launched a criminal investigation into some of Morgan Stanley's mortgage derivative deals, the Wall Street Journal reports. Morgan Stanley created several mortgage-backed CDOs that it then bet against. Some it marketed itself, while others were sold by Citigroup and... More »

Banks Probed for Betting Against Own Securities

Firms bundled bad debt then sold it short

(Newser) - Congress and financial regulators are probing several Wall Street firms for bundling bad debt, selling it to clients, and then profiting from betting that those same securities would fail, insiders say. Clients at Goldman Sachs and other firms lost billions of dollars on the mortgage-related securities as the housing market... More »

Banks Get Back to Risky Business as Usual

Plans to overhaul regulation losing momentum as banks return to health

(Newser) - Banks that teetered on the edge of extinction last year are returning to their old ways as the shock of the financial crisis fades, the Wall Street Journal reports. The banks are handing out hefty compensation packages again and dealing in the same risky financial instruments that caused last year's... More »

Finance Geeks Behind Crisis Hard at Work on a Fix

The inventors of the CDO turn their math minds to better valuations of assets

(Newser) - The finance-desk math wizards who created the securities behind the market meltdown are now betting they can think their way out of the mess, the Wall Street Journal reports, working to design new systems for pricing bad assets fairly so governments can buy them off of banks’ balance sheets. “... More »

New Bailout Plan Hinges on Private Investors

Treasury will set 'floor price' on distressed assets to lure buyers

(Newser) - The Treasury's latest plan to rescue the banking industry relies heavily on private-sector investors, the New York Times reports. The government will guarantee a floor price on the toxic assets weighing down banks’ balance sheets, encouraging hedge funds, private equity groups, and even insurers to buy them. The plan should... More »

Profits Were Fake, Bonuses All Too Real

How risky schemes left bankers flush, banks broke

(Newser) - Dow Kim was one of the leading bond traders at Merrill Lynch, and in 2006 he bundled together $500 million in loans into a huge CDO with the charming name Costa Bella. Since the subprime collapse, Costa Bella has cost Merrill millions—but Kim had already cashed out, awarded a... More »

Wall Street's Doom Years in the Making

Liar's Poker writer saw this coming long ago, and so did some contrarian money men

(Newser) - When he wrote Liar’s Poker in 1989, Michael Lewis figured the end of Wall Street was near. After all, it had hired him, a 24-year-old with neither experience nor interest in finance. “Sooner rather than later,” he writes in Portfolio, “someone was going to identify me,... More »

Merrill Aims to Raise $8.5B, Prune Bad Debt

Brokerage announces surprise stock sale, $5.7B writedown

(Newser) - Merrill Lynch announced a surprise stock offering today aimed at raising $8.5 billion for the brokerage, strapped by the mortgage and credit crises, the Financial Times reports. It also said it was writing down a further $5.7 billion in bad debt, and is selling collateralized debt obligations nominally... More »

BoA Writes Down $5.28B; 4Q Net Income Drops 95%

Writedowns had been estimated at $3B

(Newser) - Bank of America said today its net income plummeted 95% in the fourth quarter, and it wrote down $5.28 billion in collateralized debt obligation. Net income for the largest retail bank and credit-card issuer was $268 million, or 5 cents per share, compared to $5.26 billion, or $1.... More »

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