What I’d like to know, as someone who isn’t a lawyer, is why the actions of BofA’s executives doesn’t constitute fraud. I didn’t see the word mentioned anywhere in the decision, and yet this certainly sounds like fraud to me.

I believe that Rakoff talked about the crime/fraud exception to attorney client privilege. So, not only “fraud” but also “crime” is on his mind

Did the Bush administration do to the SEC what they did to the Justice Department? And if so, might that not have had an impact into the beginning of this investigation?

I don’t KNOW for sure, but I think it’s a pretty safe bet.

Lurking in the background is the suggestion, affirmed by the Bank’s counsel at the August 10 hearing, that the highest executives of Bank of America, upon learning that Merrill’s loss was $20 billion more than had been represented at the time the merger was negotiated, were prepared to walk away from the merger until “coerced” by the Government into going through with it, following which the Government provided the Bank with an additional $20 billion in bail-out funds. But, quite aside from the fact that none of this appears to have been revealed to the shareholders prior to the merger, neither party suggests that any such coercion played any role in the alleged decision not to reveal the Merrill bonuses. The huge increase in Merrill’s losses, however, did arguably render the providing of the bonuses more material, as well as more inexplicable.

Okay, so it’s not hysterical if you’re not a lawyer. But actually it’s a novel argument. You could call it the “lemon socialism defense.” It translates into plain English. This seems to be the gist of the August 10 colloquy:

B of A: Why’re you coming after us? We didn’t even want to buy this … this Merrill dog. The feds made us!

Court: Sez who?

B of A: Says twenty billion samoleans! That’s who says who.

Court: No dice. It’s a free country.

B of A: Sez you! It’s the offer you can’t refuse. Ever buck the feds?

Court: All the time. As in right now. Anyway, why’d you go and pay six big ones to the dogs what killed the dog? I don’t get it.

B of A: Business decision. It’s a free country.

Court: Sounds like it’s a country with a lotta angles. Okay, so you sneak into your stash and dish out all this loot. But why din’t ya spill the beans to Mom and Pop? This deal stunk to high heaven for starters. So what’dya you? You make it stink all the way to the moon! And already it’s a big secret. So what’dya do about that? You go and make it a bigger secret. It don’t figure.

B of A: If we ratted on the execs we’da blew the whole caper.

Court: So?

B of A: So??? So they wuz gonna rub us out. Look what they did to Lehman!

Court: What, your mother never told you about this? Take it up with her!

B of A: We ain’t got no mother! We’re just a stinkin’ company. We ain’t even got a parent what ain’t human! We’re a stinkin’ holding company! Ya gotta let us off!

Court: No dice. It don’t add up. Ya went public. Ya got little people out there. Why’d ya go public?

B of A: They all did it! Why’re you singlin’ us out? It ain’t fair I tell ya! It ain’t fair!

Court: Life ain’t fair. Welcome back to life. Think of the alternative. One day you’ll thank me.

B of A: At least give us a chance to put it in Powerpoint.

Court: It won’t help.