Bear Stearns Reportedly Emails Suggest Bank Sold Clients 'Sack Of Sh--': Report

A new lawsuit alleges fresh evidence of corruption at collapsed banking giant Bear Stearns.

The lawsuit -- filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JP Morgan -- was unsealed last week, the Atlantic reports. The suit alleges that Bear Stearns took extreme measures to defraud investors -- and that JP Morgan has been hiding the evidence since it was first filed in 2008.

The Atlantic neatly captures the nature of the game: "the lawsuit's supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a 'sack of shit.'"

According to the Atlantic, after selling the toxic mortgage securities, Bear Stearns traders would "then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds." Thus, allowing the traders to get paid twice on the deal.

Then, in 2008, when Bear Stearns collapsed and JPMorgan bought the remains, the bank covered up the fraud, allowing executives to reap "tens of millions of dollars in compensation" from the deal, the suit alleges.

In a separate lawusit insurance giants like TIAA-CREF and other investors are suing Bank of America's Countrywide division for "massive fraud" regarding its holding of mortgage-backed securities (MBS). Here's Bloomberg on the lawsuit:

"Countrywide was an enterprise driven by only one purpose -- to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide defendants without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates," according to the complaint.

Read the full piece at the Atlantic here.

Comments

[vippy]

12:39 PM on 01/27/2011

Do we really believe that is was only Bear Stearns or all of them.  My bet is on the latter. 

[Tom Dee]

12:00 AM on 01/27/2011

What a shock. The people of wallstreet would give their clients bad investments. This could not happen at any other brokerage house. None of them would cheat a customer. Well they have to clip a few customers to get that 45 billion bonus check to flow. The entire game is rigged and there is total corruption form the federal reserve to the bottom of the food chain. There is a reason why they are called broker. The more you deal with them the broker you get.

[VictoriaP]

11:43 PM on 01/26/2011

the bankers are powerful, dangerous psych0paths. imho, it is not a simple matter to prosecute the people at the top. i don't think it is possible, simply because so many people are involved and dirty, especially top politicians here, and probably leaders in other countries too.

[VictoriaP]

11:40 PM on 01/26/2011

how about the traders explain their strategy to a few million long term unemployed or foreclosed upon americans who have also lost their pensions.

[karen1p]

03:29 PM on 01/26/2011

http://www.businessinsider.com/ace-greenberg-2010-6

"Ace" Greenberg is named in this Ambac complaint. Listen to this guy talk about Madoff, when he was cooking the books at Bear Stearns. Hilarious in hindsight.

[karen1p]

02:59 PM on 01/26/2011

The Atlantic has released the names of these scvm-svcking Wall Street leeches. I have been having a blast this morning calling their NY residences and leaving them nice courteous messages to come home to.

By the way, one scvm-svcking leech was given a "Wall Street Young Leadership" award on Dec 16th byt the UJA Federation of NY. BTW, UJA gives back to the low-lifes that these Wall Street "leaders" have stolen from. The UJA "helps families who've lost their homes." So, they take contributions from the Wall Street "Young Leaders" who have stolen these family's homes and provide them with 3 Hots and a Cot. Nice.

[yetiwatcher]

12:51 PM on 01/26/2011

and the new white house chief of staff was just previously one of the top JP Morgan executives

[vippy]

12:43 PM on 01/27/2011

Yes, and that leads me to believe they are not finished fleecing us yet.  I don't see anything happening to improve the economy, nothing, not the watered down reform bills, where bankers can write their own reform, the healthcare industry wrote our healthcare, congress did not even read it, but one thing is for sure,
it will cost you and me, maybe too much.  And Obama then surrounds himself with more crooks.  And people are still enamored with him.

[cassie reinara]

12:37 PM on 01/26/2011

If there ever was a reason to keep Gitmo open, it's to house these sacks of you know what. Wall Street is not only a casino, but a full fledged den of thieves.

[uniquindividual]

09:04 AM on 01/26/2011

And the news is???

[Cougar29]

08:11 AM on 01/26/2011

They have the emails? Then you have their names. Prosecute them all!!!

[karen1p]

03:01 PM on 01/26/2011

The Atlantic has released the names. Now, you have the opportunity to look up their swanky Central Park addresses and send them "sacks of chiit."

[karen1p]

03:50 PM on 01/26/2011

"Mike Nierenberg, who ran the adjustable-rate mortgage trading desk at Bear and is now the head of mortgages and securitization for Bank of America, was a key player ensuring the defaulting loans Bear was buying would move off their books right after they bought them, with little concern for the firm's due diligence standards. He was joined in this scheme by Jeff Verschleiser, his peer and Senior Managing Director on the mortgage and asset-backed securities trading desk and head of whole loan trading. He is now an executive in Goldman Sachs' mortgage division.

Bear deal manager Nicolas Smith wrote an e-mail on August 11th, 2006 to Keith Lind, a Managing Director on the trading desk, referring to a particular bond, SACO 2006-8, as "SACK OF SHIT [2006-]8" and said, "I hope your [sic] making a lot of money off this trade." "

[lvdragonlady]

10:17 PM on 01/25/2011

Imagine that? Time for the FED to step up it's game and require an independent audit of GS, BofA and the rest of these bl00d sucking thugs.

[SeekingClarity]

08:27 PM on 01/25/2011

e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a 'sack of shit.'"

Then, in 2008, when Bear Stearns collapsed and JPMorgan bought the remains, the bank covered up the fraud,

Ah, the Invisible Sleight-of-Hand.

[johuyik]

08:18 PM on 01/25/2011

I don't know the source, but this old joke is particularly relevant here:

The Plan.
In the beginning, there was the Plan. And then came the Assumptions. And the Assumptions were without form, And the Plan was without substance. And darkness was upon the face of the Workers. And they spoke among themselves, saying, "It is a crock of shit and it stinketh."

And the Workers went into their Supervisors and said, "It is a pail of dung and none may abide the odor thereof." And the Supervisors went unto their Managers, saying, "It is a container of excrement and it is very strong, such that none may abide by it."

And the Managers went unto their Directors, saying, "It is a vessel of fertilizer and none may abide it's strength." And the Directors spoke amongst themselves, saying one to another, "It contains that which aids plant growth and it is very strong."

And the Directors went unto the Vice President, saying, "It promotes growth and it is very powerful." And the Vice Presidents went unto the President, saying, "This new Plan will actively promote the growth and vigor of the company with powerful effects."
And the President looked upon the Plan and saw that it was good. And the Plan became Policy.

This is how Shit Happens.

[Sirlarek]

01:50 AM on 01/26/2011

good to be reminded!

[ScaredAcademic]

08:17 PM on 01/25/2011

I guess we can now find out whether the Obama administration is pro-business or owned by business. A few perp walks and some criminal convictions would be pretty neat. In part, this is required to restore some confidence in American business and business should be all over thumping the criminals as it makes the lot of them look corrupt. We'll learn tons from whether business leaders call for prosecution or not; if not, it is an expression of their worry about being the next to be busted. If you believe in a level playing field for free market competition, give no quarter to the criminal.

[cassie reinara]

12:40 PM on 01/26/2011

Not going to happen. They already have met their quota of small fry they paraded. None of the big fish are going to even slapped on the wrist. In fact, I think an invitation to a special White House dinner party is in order now that JP Morgan guy is in the house!

[vippy]

12:45 PM on 01/27/2011

and you still have hope in this guy.  Amazing.  That Obama surrounded himself with more crooks does not bother you?

[ajax2]

07:53 PM on 01/25/2011

Many commentators here claim no fraud was committed based on the lack of convictions. To me that is like saying there is no crime because mobsters go to church. Many laws were written to protect both the innocent and guilty of white collar crimes. The higher the collar the less likely the prosecution.

"Countrywide was an enterprise driven by only one purpose -- to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide defendants without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates," according to the complaint."