Credit Crunch Digest -- March 2012


This digest collects and summarizes recent media reports regarding potential liability, government initiatives, litigation and regulatory actions arising from the subprime mortgage crisis and credit crunch, as well as the increasing number of reported cases of financial fraud. This issue focuses on the U.S. Department of Justice (DOJ) intent to bring criminal charges against banks and individuals with regard to mortgage-backed securities; the dismissal of Merrill Lynch from an auction rate securities action; settlement of the New York Mets’ Madoff case; the conviction of R. Allen Stanford; the result of the latest Federal Reserve stress tests; and resistance to the current funding proposal for the Office of Financial Research.

Litigation and Regulatory Investigations:

*Bank of America Challenges MBIA Discovery Tactics

*Department of Justice Signals Uptick in Financial Crisis Criminal Actions

*Federal Judge Finds ARS Disclosures Adequate; Dismisses Claims Against Merrill Lynch and Investment Adviser

Fraud and Ponzi Schemes

*Game Over – Mets Strike a Deal with Picard for $162 Million

*Stanford Found Guilty on Charges of Fraud and Conspiracy

Government and Regulatory Intervention

*Latest Stress Test on Big Banks Yields Mostly Positive Results

*Banks Oppose Funding New Regulatory Agency

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