Wednesday, November 17, 2010

Will Mr Bernanke with $1T of MBS and the US Treasury owners of C stock support NYC's Mr Liu's excellent fiduciary example? Or do nada?

Yesterday NY City Comptroller John C. Liu, as trustee, custodian and investment adviser to NY City's Pension funds' investment holdings of near $2B of stock in certain bank, has placed a resolution subject to shareholders' approval requiring said banks (JPM, C, BAC, WF) to certify their mortgage securitizations, servicing, custody and foreclosure operations are up to snuff.

Excerpt here:

NEW YORK, NY - New York City Comptroller John C. Liu, on behalf of the trustees of the New York City Pension Funds, is calling on directors at Bank of America Corporation (NYSE: BAC), Wells Fargo & Company (NYSE: WFC), JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) to conduct an independent audit of their banks’ mortgage and foreclosure practices. The four banks are the largest mortgage servicers in the country representing 56 percent of the nation’s $10.64 trillion mortgage industry.

Comptroller Liu – the investment advisor, custodian and trustee of the New York City Pension Funds, collectively valued at $106 billion – made the request in a shareholder proposal filed at each of the four banks. The proposal calls for the Audit Committee of the Board of Directors at each bank to conduct an independent review of the bank’s internal controls related to loan modifications, foreclosures and securitizations and to report their findings to shareholders by September 30, 2011.

Will other similarly situated institutional investors follow Mr Liu's excellent example of prudence as "Fiduciary in thought and ACTION"?

See link here to his office press release.

In a post here October 3rd we asked whether the Fed's MBS holdings could be tinged by the tremors of Florida's Foreclosure news. And whether fault lines could extend to global creditors of the US as far away (or perhaps closer than we ever imagined) as China.

My office issued a Special FiduciaryALERT "A new STD you don't want; Near the end of Money" after reports that certain investors had initiated put back requests to Bank of America for faulty MBS. Prior to that a JP Morgan analyst estimated over $1T of MBS and related derivatives may face exposure.

HOW COULD THE FED SIT IDLY BY and do NOTHING - WHEN IT HAS OVER $1 T OF not publicly traded, MBS (RMBS, CMBS and related derivatives) O-N T-H-E B-O-O-K-S??? What part of ON does Mr Bernanke NOT get??? Which I remind readers that it allegedly paid 100 cents CASH (taken from the Taxpayers' wallet) TO banks largely in a certain Federal Reserve District east of the Hudson. Now Known as the Wall St Full Employment Act (including full salaries, full bonuses, full tax-free health care coverage and full and free vacations.)

Mr Liu get's it, alone among the nations' public fiduciaries should be appointed IMMEDIATELY to a newly created function as the Joint CHIEF FIDUCIARY OFFICER of both the US Treasury and the Federal Reserve. Since 2008, the Fed and the US Treasury are investors in private securities. Derivatives and MBS in the case of the Fed and common stock and other forms of stock and securities in the case of the US Treasury FOR AND ON BEHALF OF the US taxpayer; that means they must use a prudent fiduciary expert-level investment process as we wrote in September 2008 here and here in October.

Perhaps Congress, FOR AND ON BEHALF OF THE US TAXPAYER will wake, recognize the obvious - require the Fed to consider the fiduciary duty to use care, to deliberate AFTER investigating, the soundness of investments and strategies. Then to use skills possessed (or acquired) to evaluate same; to continue to investigate, perform expert-level due diligence and monitor periodically - failure to perform any of the above is a BFD (Breach of Fiduciary Duty) by the Fed officials upon the US Taxpayer aka US Treasury.

Soon the Fed et al may be faced with reflection.

Ending the siesta on the current and future US Taxpayer's and Domestic and Global Creditors' dime - one easy to read blog at a time.

No comments: