That Time of Year

Merry Christmas friends.

The Democrats Last Omnibus Spending Bill

Peruse away at the last great gasp of Pork from the Dem Express:

Omnibus2010

(Courtesy of Hotair and Redstate)

Times Looks at the Derivatives Market

Its a good piece, the flaw is its failure to focus on the role politicians play in hooking municipalities into these deals As it is its worth a read.

More UBS Indictments in Muni-Bond Scandal

We already knew about Ghavami, the other two are new though.

WASHINGTON, Dec 9 (Reuters) - Three former UBS (UBSN.VX) executives were indicted on Thursday for rigging bids to invest municipal bond proceeds, marking the latest accusations in a fraud crackdown that has ensnared some of the world's largest banks.

The Justice Department said Peter Ghavami, Gary Heinz and Michael Welty will face six charges of rigging bids between 2001 and 2006.The Justice Department has been investigating allegations Bank of America (BAC.N), UBS and other banks and insurance companies decided in advance which investment house would win the auctions of guaranteed investment contracts, which cities and counties buy with the proceeds from municipal bond sales.

Often, there is a delay between when bonds are floated and when the money is actually paid out, allowing some time to invest it.Ghavami, a Belgian who lives in Moscow, was arrested last week at John F. Kennedy International Airport in New York. On Wednesday, a U.S. magistrate judge refused to allow Ghavami to return to Russia and ordered he be released on $10 million bail.

At least eight people have pleaded guilty in the conspiracy, most recently former JPMorgan Chase & Co. (JPM.N) vice president James Hertz.Thursday's indictment alleges that Ghavami, Heinz and Welty manipulated the bidding process for the contracts and certified bidding was competitive and in compliance with rules laid out by the Treasuries. In some cases they allegedly submitted bids they knew would lose.

The three also allegedly agreed to pay to and accept kickbacks from another firm, CDR Financial Products, which has been a prime focus of the investigation over the last year.

On Wednesday, the Justice Department filed a "superseding indictment" against CDR Financial Products and three of its current and former officials, expanding its case against the firm. Already two employees and one former employee of CDR, also known as Rubin/Chambers, Dunhill Insurance Services Inc., have pleaded guilty.

Heinz was also indicted for witness tampering in connection with the investigation.

Witness tampering? That is a new one in the muni-bond scandal.

BOA Settles in Muni-Bond Scandal

None of this should be a surprise considering BOA has been working with the investigation for some time now:

CHARLOTTE, N.C./WASHINGTON, D.C. (Reuters) - Bank of America Corp will pay $137 million to settle a municipal bond bid-rigging probe which is likely to result in more cases being filed in the coming weeks and months.

The investigation centers on whether large U.S. banks decided in advance which investment house would win the auctions of guaranteed investment contracts that cities and counties buy with the proceeds from municipal bond sales.

Often, there is a delay between when bonds are floated and when the money is paid out, allowing some time to invest it.

Christine Varney, head of the U.S. Justice Department's antitrust division, said on a conference call with reporters that she expects "a lot more activity in the coming weeks and months" on a sprawling industry probe that dates to 2007.She declined to say who else might be a subject of the Justice Department's probe.

Bank of America, the largest U.S. bank by assets, was first to report the bid-rigging problems within its Banc of America Securities unit to the Justice Department, before federal law enforcement began an industry-wide investigation.Bank of America was granted amnesty from any penalties because it reported the violations to regulators and cooperated with the investigation.

"Bank of America is pleased to put this matter behind it, and has already voluntarily undertaken numerous remediation efforts," a Bank of America spokesman said in a prepared statement.

UBS Employee Arrested as Part of Muni-Bond Scandal

Wow, the 8th conviction the other day and now another arrest. It seems things really are falling into place for the muni-bond scandal:

WASHINGTON — Peter Ghavami, a former managing director and co-head of municipal bond reinvestment at UBS, was arrested Wednesday night by the Federal Bureau of Investigation as he was entering the country. He was arraigned Thursday on one count of wire fraud in connection with a massive ongoing antitrust probe of the municipal bond market, the Justice Department announced late Thursday.

A Belgium national currently residing in Moscow, Ghavami was brought into custody after arriving on an international flight that landed at John F. Kennedy International Airport in New York, the department said in a press release. He was originally charged in a sealed complaint filed Sept. 16 that was unsealed Thursday

Ghavami also went by an alias Peter Ghavamilahidja, according to the Justice Department. He is the seventh individual to face criminal charges as part of the ongoing Justice Department inquiry into anticompetitive behavior in the muni derivatives and guaranteed investment contract markets.

As part of the probe, a federal grand jury has indicted CDR Financial Products, three current and former officials at the Beverly Hills-based firm, and three former financial services executives.

“Pernicious fraud schemes like the one alleged in this complaint undermine the public’s confidence and trust in the municipal bond and derivatives markets,” said Christine Varney, assistant attorney general in charge of the antitrust division. “This type of anticompetitive conduct will be prosecuted to the fullest extent.”

In all likelihood the guilt plea by Mark Zaino, a former colleague of Ghavami, provided evidence that led to yesterdays arrest.