(MENAFN- Caribbean News Now) Richard Lawless is a former senior banker who has specialized in evaluating and granting debt for over 25 years. He has a Master's Degree in Finance from the University of San Diego and Bachelor's Degree from Pepperdine University. He actively writes for many finance publications
By Richard Lawless
Imagine, if you will, that a number of technically bankrupt companies were able to issue $70 billion dollars in bonds. Imagine that these companies were able to buy BBB+ ratings for these bonds. Imagine, for a moment, that a number of major banks knew these companies to be bankrupt but were willing to sell the bonds to their best clients.
In a perfect criminal world, no one would be the wiser. But we live in an imperfect world. In our world, these bankrupt companies couldn't pay the bond payments for very long. In our world, the companies eventually default on the $70 billion dollars.
What if in this imperfect world people found out that the $70 billion dollars was a complete fraud. What if the victims went to the Department of Justice and claimed that the companies were bankrupt when they issued these bonds? What if the major accounting firm for these agencies admitted under oath that they knew the companies were bankrupt?
What if the CPA firm prepared misleading financial statements for the companies anyway? What if under oath a number of people testified that the rating agencies and banks knew all this, but participated despite knowing about all this fraud? What if the bankrupt companies admitted that they did all this?
Well in a perfect world they would all be arrested and spend the rest of their lives in jail. However, we live in an imperfect world. So, imagine if you can that dozens, possibly hundreds of victims took this information to the Department of Justice and Securities and Exchange Commission and they did nothing.
Imagine if a certain senior politician were able to place political appointees within the Department of Justice and SEC who would make sure there were no investigations or prosecutions in exchange for hefty political donations. Further, imagine that most of our congressmen and senators finance much of their campaigns with money from these firms.
What if the dirty little secret was the congressmen and senators all knew this to be true and do nothing about it.
In a perfect world this article never gets written and if written never gets published. In an imperfect world you just read about the Puerto Rico Bond Default.
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