Judge Jed Rakoff Wakes Up Congress

Those of you who have followed the Judge Rakoff posts are keenly aware that Bank of America (“BOA”) is up shit creek. Not only did it lie in a certified proxy statement filed under SEC law, it looks a lot like BOA purposefully understated Merrill Lynch’s financial condition by $20 billion. All of this was done in connection with a request for federal bail out funds, used by BOA to purchase Merrill last year. None of this would probably matter if BOA wasn’t in court before Judge Jed S. Rakoff.

Judge Jed Rakoff, a great American judge, rejected a phony-assed settlement agreement BOA and the corrupt SEC tried to float by him last week, and told them he wanted names and dates of the fraudulent activities. BOA is scrambling to keep the information secret, claiming attorney-client privilege among other things. Bam Bam readers en garde! There is no privilege when an attorney assists someone in committing or planning to commit, fraud. See Rule of Evidence 502. Don’t ever let anyone tell you different.

Well now Jed Rakoff has thumped Congress out of its slumber, and shamed it into action.

A House panel called the Committee on Oversight and Government Reform has told BOA that it cannot use attorney-client privilege in refusing to answer questions about the BOA-Merrill deal. Chairman Edolphus Towns wants BOA to reveal information that could affect Judge Rakoff’s case and the New York AG’s investigations into the BOA scandal.

Towns, a New York Democrat, told BOA it must disclose when it became aware of the enormous losses at Merrill in connection with BOA’s receipt of a second bailout. Towns gave the bank until noon on Monday to provide answers and relevant legal documents. He said BOA was “hiding information.” BOA asked Towns to delay the request until after Tuesday, when they send a master bullshit artist named Anne Finucane, BOA’s chief strategy and marketing officer, to meet with Towns.

Folks, if you want to see your democracy in action, just watch how this thing plays out. BOA has now hired a high-powered lobbyist to assist. (The Podesta Group is run by Tony Podesta, a prominent Democratic lobbyist). Podesta’s people will contact Towns’ people and see what it will take to keep all this secret. If Towns’ track record is any indication, don’t count on any honesty here. Towns is one of many politicians who got sweetheart mortgages (bribes) from the notorious Angelo Mozilo, former head of the fraud factory known as Countrywide Mortgage. Towns joins a distingushed list of political pimps who were lavished with sweetheart mortgages by Mozilo, the son of a Bronx butcher turned corporate vampire: Senator Chris Dodd; Senator Kent Conrad; former Ambassador Richard Holbrooke; former HUD Secretary Alphonso Jackson; former HHS Secretary Donna Shalala.

Countrywide, a cess pool of interstate corporate corruption that operated for years without so much as a peep from the Bush administration, flamed out last year in the sub prime meltdown. Mozilo, evermore looking like “Angelo the Ant,” must have faced a hard career choice early on – join the Gambini family or maybe go into the interstate mortgage business.

Watch how Edolphus Towns reacts in the coming days. This is American democracy, now the same as third world, at its best. Foremost corporate vampire gets caught in SEC fraud. Congressional Chairman publicly declares he wants answers. Vampire hires big democratic lobbyist to cut a deal with Congressman. Let’s just you and me watch and see what happens.