The indictment alleges the two deceived investors into believing the hedge funds, which held special mortgage bonds that were backed with now-toxic sub-prime home loans, were healthy when they knew clearly they were not. The end result was that well-heeled investors like the one described in the indictment, Major Investor #1, collectively lost more than $1.5 billion.
You've probably figured out that the victims aren't worried about losing their 1400 square foot house, that they're in entirely another league than anybody reading this blog. (or probably any blog) The FBI is looking at 19 others in the same kind of misdeeds. Rest assured, the Republican government is looking out for your interests, while you're living in a cardboard box the guys who swindled multi-millionaires might get punished while the economic damages get eaten by taxpayers and home owners. You might ask McCain's economic advisor Phil Graham if this is what he had in mind while he was writing deregulation and lately lobbying for an investment bank.
"Hedge fund investors, like all investors in our national markets, are entitled to rely on those to whom they entrust their investment dollars," Benton Campbell, U.S. attorney for the Eastern District of New York, said in announcing the charges. "Honesty and fair dealing are at the foundation of this relationship of trust and confidence. These defendants chose to breach that trust, and they will now be held to account."
Matt Tannin is innocent. He is being made a scapegoat for a widespread market crisis," Susan Brune, a defense attorney, said in a statement.
Cioffi's attorney said in a statement that the Federal Reserve and the Treasury Department were caught off guard by the sub-prime crisis, and his client was swept up in the same downturn that caught competitors and regulators by surprise.
"Ralph Cioffi's funds lost money in exactly the same way. Because his funds were the first to lose might make him an easy target but doesn't mean he did anything wrong," said attorney Ed Little.
So far do you feel represented? Do you think any of these lawyers actually believe what they're quoted as saying?
"The Bear Stearns indictments present a remarkable trail of emails regarding what the Bear Stearns managers knew, when they knew it, and what they told investors. The tale the alleged emails tell, if true, should make an investor's blood run cold," Kurt Eggert, a law professor at Chapman University in Orange, Calif., said in a written analysis of Thursday's indictment.
To be sure those wealthy people may have their "blood run cold," but there are a whole lot of people who'll just get damned cold this fall as the construction industry fueled economy tanks. BushCo may have presided over the worst natural disaster in Katrina in a failed manner but this one is gonna really suck and it won't be localized and it sure wasn't natural. You have to give McClatchy credit for sneaking this one into the story:
The savings and loan crisis of the 1980s had villains like banker Charles Keating, the collapse of energy giant Enron Corp. had the unsympathetic CEO Kenneth Lay, and now the sub-prime meltdown has Cioffi and Tannin.
Ask John McCain about his pal Chuck Keating and Phil Graham about the Enron loophole. Go ahead and Google that mess. Try and find a fairly recent financial disaster that doesn't have McCain's fingerprints somewhere on it. St Ronnie told you the problem was government and Johnny and Georgie have proved that it is, their Republican version is. Deregulation doesn't mean the Constitution and Bill of Rights don't get a mud hole stomped in them, it means the ultra wealthy get to rape the citizenry while the Government holds them in place for it. If you don't like it Uncle Sammy is watching...you thought this crap was about ourfreedomshatingIslamofundamentalistreligioterristicferriners? Sitemeters are wonderful things; this little two bit blog gets regular US Government attention. Really, no kidding, you readers are a part of it...