Now it is hard to suggest that giant brokerage firm Merrill Lynch is being treated kindly by the press these days, given the deserved harsh scrutiny resulting from its staggering fourth quarter writeoffs. Nevetheless, we noted an oddity today.
The Journal is running a story, “Springfield, Mass., Takes Aim at Merrill Over Subprime Losses,” that looks as if it will be included in the page one article summaries. The gist of the story:
At issue is Springfield’s investment in a type of security known as collateralized debt obligations, which are pools of debt that include subprime mortgages. The city’s stake in three CDOs, valued at $13.9 million as recently as July, plunged in value and are now valued at $1.2 million, according to Merrill’s account statements.
The problem, Springfield officials say, is that Merrill fully informed them of the nature of the investment only months after the sales.
In terms of financial liability, this incident is trivial. Its main significance is if it turns out that other municipalities were defacto stuffees for Merrill CDOs. It appears that brokers in the firm’s Quincy, Massachusetts office may have sold similarly risk investment to unsuitable clients both in that state and in Maine.
So how could the reporting of this story possibly be doing a favor to Merrill? Because it broke January 4, more than two weeks ago. The Journal piece contains no meaningful additions to the initial report in the Boston Globe.
Thus, the Journal held back on the story until the Saturday of a holiday weekend, the deadest news day in the foreseeable future. Coincidence?
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Keep those stories going dude, this filth has to continue to be exposed and its great that the public is being educated at light speed, but do people read, do they understand?
OT: More filth: Wednesday, January 16, 2008
TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced that he is suspending the certificate of authority of Allstate Companies to write new insurance in Florida until they fully comply with the subpoenas served Oct. 16 by the Office of Insurance Regulation (Office).
“It continues to trouble me that Allstate has not complied with our subpoenas and is not willing to explain to us their relationships with rating agencies, modeling companies and trade groups and how these relationships might have influenced the huge rate increases they have requested. This clearly cannot be in the best interests of Florida consumers.”
This is the first time the Office has suspended a company for failure to “freely” provide documents as required by Florida law.