BUSINESS
10/02/2012 07:55 am ET Updated Oct 02, 2012

I Survived The Financial Crisis And All I Got Was This Lousy Civil Lawsuit: Seven And A Half Things To Know

Thing One: A Little Late, A Little Short: I know revenge is a dish best served cold, but this is getting ridiculous.

New York Attorney General Eric Schneiderman last night sued Bear Stearns, now a unit of JPMorgan Chase, accusing it of stuffing mortgage bonds full of toxic garbage and then selling those bonds to investors knowing they were garbage. This suit was filed more than five years after the alleged fraud occurred and more than four years after Bear Stearns collapsed beneath the weight of the subprime garbage in its warehouse, requiring a government-encouraged shotgun rescue by JPMorgan. The lawsuit is the culmination of nearly a year's long work by a task force headed up by Schneiderman to bring charges against big players in the financial crisis.

So what sort of fruit has all this time and effort borne? Not a whole lot. We got a few more dumb Wall Street emails to laugh about. And this is, as Ben Hallman of The Huffington Post points out, the first suit of its kind, picking on not just one mortgage-backed security, but the firm's entire MBS operation before the crisis. So that is something. But the allegations are mostly re-hashed and warmed over from other civil suits, notes David Dayen of the Firedoglake blog. That puts the imprimatur of government legitimacy on those other private suits, notes The New York Times, but does make you wonder what the heck Schneiderman's task force has been doing all these months, if all it had to do was cut and paste from one legal document to another.

The timing of the case seems odd in another way: Apparently Schneiderman didn't bother to tell the other parties on his task force, including the Justice Department and the Federal Housing Finance Agency's inspector general, that he was filing the case last night. According to the Wall Street Journal, the plan had been for the three to walk arm-in-arm to a podium today to announce their big case. It's a minor point, but it makes you wonder what Schneiderman might have been thinking.

Apparently there could be more of these cases on the way, and the WSJ notes that they could be a big legal headache for the banks. But that seems like all they will be: A legal headache, the cost of which will be borne by the shareholders, while nobody goes to jail -- no individual is even named in Schneiderman's civil complaint against Bear Stearns. Not very satisfying justice, and certainly not much of a deterrent to future bad behavior.

Thing Two: QE Awesome For Banks, At Least: Meanwhile, the banking sector continues to be bailed out constantly, this time in the form of the Fed's latest quantitative easing program. The Financial Times points out that the Fed's latest effort to buy up mortgage-backed securities is already paying off big time for banks. Unfortunately, the banks aren't passing any of this profit on to you in the form of lower mortgage rates, the FT notes. The banks claim they're keeping rates high to fend off a flood of new borrowers, which they just don't have the capacity to handle. Thus the latest round of QE will probably do little or nothing for consumer spending, according to a Bloomberg survey of investors. But the banks will be fine, so everything's cool.

Thing Three: 'Nein Nein Nein' Plan Is Back: For the past couple of months, at least, markets have been waiting anxiously for Spain to confess to the European Central Bank that it needs a giant bailout. Reuters reports that it appears, finally, that Spain is ready to ask for that bailout, which would involve the ECB buying up Spain's sovereign debt, joining the Fed in pumping cash into the financial system. Hooray! But wait: As usual, there is a hangup in this awesome plan. Can you guess what it is? We'll give you a hint. Invaded Poland? Enjoys a good schnitzel now and then? Yes, Germany, which happens to have all of the money in Europe and really doesn't feel like doling any more out to anybody right now. So we wait. Meanwhile, Bloomberg writes, Spain's banks may need twice as much money as recent "stress tests" suggested they did. Good times.

Thing Four: Congress Tries To Avoid Cuts It Mandated: One of the biggest problems for the U.S. economy right now is the "fiscal cliff" of tax hikes and spending cuts scheduled to take effect next year, the legacy of Congress's ridiculous fight over the debt ceiling last year. The New York Times reports that a group of senators are working on trying to come up with a grand bargain for long-term debt reduction that will help us avoid the cliff. No word if this deal includes a payroll-tax-cut extension; if not, then most people are going to see a tax hike next year anyway. And Republicans are still refusing to raise any other taxes, while Democrats are still refusing to budge on doing away with tax cuts for the wealthy. Meanwhile, the House of Representatives continues to gnaw on human skulls or make giant feces sculptures or whatever that august body does. Not much reason for optimism just yet, in other words.

Thing Five: AmEx Customers Soon To Be $85 Million Richer: American Express has agreed to refund $85 million to customers and pay $27.5 million more in penalties and fines, after being accused of violating various consumer-protection laws, including misleading promotions and age discrimination, The New York Times writes. It's the latest scalp taken by the new Consumer Financial Protection Bureau, which, as we have noted, the financial industry absolutely hates. So it must be doing something right.

Thing Six: Patent Wars: The Samsung Strikes Back: Yesterday was a decent day for Samsung in its apparently never-ending court battle with rival device-maker Apple. First, a judge lifted a temporary ban that had kept Samsung from selling its Galaxy Tab 10.1 in the United States. The ban had been put in place ahead of a trial on a patent suit filed by Apple. Samsung mostly lost in that trial, but a judge decided the loss didn't apply to this particular device, so the ban was lifted. Meanwhile, Samsung launched a counterattack against Apple, claiming the iPhone 5 violated some of Samsung's patents. Ladies and gentlemen, this is your tech sector.

Thing Seven: High-Speed Traders: Stop Us Before We Wreck The Market Again: High-speed traders are apparently just as terrified of themselves as we are of them, the Wall Street Journal writes: "High-frequency trading firms, long resistant to tighter oversight of their businesses, are beginning to change their tune amid a spate of high-profile technology failures that have roiled financial markets." It will be interesting to see just how far their new-found sobriety extends. How much will they accept in the way of market curbs, which are ultimately profit curbs after all?

Thing Seven And One Half: The Infographic Is Strong In This One: Need a refresher course on the Star Wars saga stretching back to the sad prequels and all the way to the post-Return Of The Jedi mopping-up? Via BuzzFeed, here are a bunch of amazing infographics that sum it all up for you in visual form, suitable for framing.

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Calendar Du Jour:

Economic Data:

All Day: Auto and Truck Sales for September

Corporate Earnings:

Nothing very exciting.

Heard On The Tweets:

@TonyFratto: No reason for anyone to tweet things Schwarzenegger. Tweet other things.

@EddyElfenbein: Greek bonds were up 18.4% in the third quarter. Way ahead of second place Ireland at 7.9%.

@LaMonicaBuzz: Thinking of creating ETF of companies Peyton Manning is spokesman for. $PZZA $DTV $GM, etc. But can ETF have 2000 stocks in it? Good night.

@MattZeitlin: How I'm supposed to get work done on Adorable Puppy Day at IAC is not at all clear

@DannyZuker: Doing a home remodel. My cellar will become a rec room, my guest room will be an office & my bedroom will remain a disappointment chamber.

And you can follow me on Twitter, too: @markgongloff

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