Tuesday, 22 September 2009

Oh, So Now You Don't Want the Annual Pecan Sale Flier?

The arrogance of Wall Street throughout this financial meltdown and aftermath never ceases to amaze me. I know it shouldn't, but -- these are the kind of guys who, on the hangman's scaffold, would take a moment to harangue the executioner about the rope burns they're getting because the noose is too tight.

First they grumblingly took billions in bailout dollars from Paulson, then refused to say what they were doing with any of it. Then, after Geithner came up with a plan to buy up their toxic assets using generous federal backing, a plan that would have led to some overpaying in their favor, they decided they didn't want any part of that. And now they're looking forward to big bonuses again this year, as the rest of us watch unemployment creep into double digits.

Sometimes it just makes you want to laugh until you cry. You know, the tears of the world-wise clown. What put me in this mood was a story up at the Huffington Post revealing the tussle now taking shape between Bank of America and Congressional Democrat Edolphus Towns.

Bank of America of course closed a deal to buy Merrill Lynch on Jan. 1. What BOA shareholders who approved the deal didn't realize is that Merrill Lynch had authorized paying its employees almost $6 billion in bonuses ($3.6 billion was the final amount that went out the door). And, to top it all off, the investment bank turned out to have a lot of garbage assets on its books. So a very reasonable question being posed by irked shareholders: what did the top executives at the bank know about the Merrill bonuses and financial problems, and when did they know it?

Top-level Bank of America executives are, not surprisingly, hiding behind the skirts of their attorneys, citing attorney-client confidentiality. Towns, bless him, isn't settling for that. During an investigation, Congress can choose to override that attorney privilege. So the New York Democrat asked the bank some tough questions about the Merrill deal and about federal backing the bank has received, and requested that relevant documents be sent to him.

This is where the comedy starts. What would an arrogant bank do? Well, first carefully redact any useful information (which it did). Then, second, send the Congressman all manner of crap in its files, just to keep his staff busy. That it did too. Towns expressed his displeasure over this tactic in a letter to CEO Ken Lewis (it's embedded in the article linked above):
Many of the documents produced so far are clearly irrelevant to the Committee's investigation ... For example, you sent numerous copies of emails you received from your own employees expressing admiration for your "awesome" performance on 60 Minutes. You also included copies of emails alerting Bank of America employees to discounts at Wal-Mart, Target, and Costco; an announcement of the "Annual Pecan Sale," featuring "This Year's Crop of Mammoth Pecan Halves;" and an invitation to attend a conference on investment in East Asia, written in Chinese.
Towns' tone is restrained, but he knows what's going on. Bank of America is just waving its big fat middle finger at him. And why not? That strategy has worked well for the nation's big banks so far.