Tuesday, September 15, 2009

egret soup with a side of schadenfruede

I'll be the first to admit that governmental entities will often get caught in really, really awkward situations where you're not sure if an intellectual word like "capture" or a more emotional "pathos" is the most fitting. The reality is that the politics between branches of government, the law, crisis, the zeitgeist of the moment, relationships with varying levels of substance and history (to say nothing of both substance and history themselves), and of course both intent and idiocy make for some difficult to defend positions.

All of that may or may not directly apply to poor Bank of America and the Securities and Exchange Commission which together got a serious, nearly biblical beatdown from Jedidiah Saul Rakoff of the southern NY district court.

(I will confess that Jedidiah sounded more apt for a biblical beatdown so I added a few letters to Jed).

The opinion is well worth reading and has undoubtedly put not only the SEC and BoA in awkward positions but others as well. Perhaps even my traveling companion from yesterday's IAD-SFO flight who is one young and otherwise charming skateboarding technocrat.

A few things are clear - the SEC is, damn, in a tight spot. BoA does not want to have to go any further with this than they have already - it's not going to be good from a relationship management perspective with the government or from a shareholder lawsuit perspective (these undoubtedly are being furiously drafted as I type). Very much a damned if you do damned if you don't and just damn! for good measure sort of situation.

Of course, all of this is ultimately on Ken Lewis, who seemed to bet that catching the falling blade early wouldn't cost him too many fingers. We'll see if they take his head off for it in the end.


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