Malfeasance on Wall Street is apparently nothing new to the country’s largest news outlets – none of which apparently saw fit to call out a U.S. private equity firm for an incredibly shady credit default swap that it paid another firm to trigger.
The news was broken by Bloomberg, but no other print or television media outlets found the deal worthy of coverage. This was despite the fact that similar actions by almost anyone other than a financial giant would net prison time.
Once again, satirist Jon Stewart at The Daily Show gave far more attention to the issue than the major networks and print outlets. Correspondent Samantha Bee even went so far as to interview a New York Times financial reporter as to why the story was unworthy of coverage. The reporter explained she was “drowning” in other material regarding Wall Street wrongdoings.
What’s more, the actions by the private equity firm, Blackstone, aren’t technically illegal, though as Stewart deftly pointed out, it’s a mystery as to why that is.
Stories like this illustrate the kind of forces homeowners are up against when they attempt to take these “too-big-to-fail” financial giants to task for wrongdoing through Miami foreclosure defense. It seems there is no limit as to what these firms can get away with.
Here’s what reportedly happened in this case: Blackstone, based in New York, purchased a credit default swap from Codere, a European company that primarily focused on gambling operations, such as betting and race tracks. That credit default swap allowed that if Codere paid late on another loan that it owed, Blackstone would be allowed to collect money from Codere’s insurer.
This in and of itself wouldn’t be headline news. It’s what happened next that is so unbelievable.
Blackstone then reportedly turned around and paid Codere $100 million to offer up its third-party debt to GSO Capital Partners LP two days too late. In doing so, the firm triggered the “failure to pay” credit event, and Blackstone was able to net nearly $16 million from Codere’s insurance company.
Stewart scoffs as he incredulously compares the deal to a plot line in the movie “Goodfellas,” in which mobsters take out an insurance policy on a restaurant, only to turn around and burn that same restaurant to the ground in order to collect the insurance money. Of course, in Goodfellas, such action was illegal. In Blackstone’s case, apparently, it’s completely above board.
As Bloomberg noted, the trade “shines a light on the opaque world of credit-default swaps,” where those in high-power positions have incredible influence to “stack the deck,” and impact whether a contract is triggered.
The fact that the media seems to be ignoring such matters means we can continue to expect more of the same bad behavior from Wall Street.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.
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‘The Daily Show’ Visits New York Times, BuzzFeed To Learn Why Media’s Ignoring Wall Street Scandal, Dec. 5, 2013, By Ross Luippold, The Huffington Post
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