Greece Considering Legal Action Against U.S. Banks for Crisis

Discussion in 'Wall St. News' started by ASusilovic, May 16, 2010.

  1. May 16 (Bloomberg) -- Greece is considering taking legal action against U.S. investment banks that might have contributed to the country’s debt crisis, Prime Minister George Papandreou said.

    “I wouldn’t rule out that this may be a recourse,” Papandreou said, in response to questions about the role of U.S. banks in the crisis, in an interview on CNN’s “Fareed Zakaria GPS.” The program, scheduled for broadcast today, was taped on May 13. Neither Papandreou nor Zakaria mentioned any banks by name.

    U.S. stocks fell and the euro slumped on concern that Europe wouldn’t be able to contain the debt crisis stemming from Greece. The Standard & Poor’s 500 Index declined 1.9 percent May 14, while the euro fell below $1.24 for the first time since November 2008.

    Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the crisis.

    “Greece will look into the past and see how things went,” Papandreou said. “There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.”


    In the days leading up to the May 10 announcement of a loan package worth almost $1 trillion to halt the spread of Greece’s fiscal woes, European Union regulators were examining whether speculators manipulated the prices of bonds and equities and contributed to the crisis.

    The Committee of European Securities Regulators said on May 7 it was investigating “exceptional volatility” in the markets and would work with other regulators, including the U.S. Securities and Exchange Commission, as part of a coordinated clampdown.

    European Central Bank President Jean-Claude Trichet said May 6 that he was concerned about speculation in bond markets using credit default swaps. “By first buying the CDS and then trying to affect market sentiment by going short on the underlying bond, investors can make large profits,” he said.

    Credit-default swaps are derivatives that pay the buyer face value if a borrower -- a country or a company -- defaults. In exchange, the swap seller gets the underlying securities or the cash equivalent. Traders in naked credit-default swaps buy insurance on bonds they don’t own.

    In the CNN interview, Papandreou said many in the international community have engaged in “Greek bashing” and find it easy “to scapegoat Greece.” He said Greeks “are a hard-working people. We are a proud people.”

    “We have made our mistakes,” Papandreou said. “We are living up to this responsibility. But at the same time, give us a chance. We’ll show you.”

    He is not naming Goldman Sachs, or....?
  2. Oh man, this means we're gonna dump on Monday.
  3. He who lives in a grass house, shouldn't store thrones.
  4. bat1


    I'm sure Goldman Sachs was in on it......

    put the Goldmen traders on food stamps in Greece for
    a while:D
  5. Stok


    Guess futures should open down tonight.
  6. the1


    Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.,1518,676634,00.html

  7. Stok


    Just goes to show how Greece got themselves into their own debt by being an entitlement, socialist failed wants to blame others. The country will eventually collapse and the world will start to really wake up about guberment spending/debt and entitlement societies always will fail. The question many more countries/guberments/and states will fail before the system is fixed.
  8. How much will Greece sue USA banks for?. $100 billion, $200 Billion, $1 trillion.
  9. in a related story:

    Are Short Sellers to Blame for the Financial Crisis?
    By Bill Saporito Thursday, Sep. 18, 2008

    Read more:,8599,1842499,00.html#ixzz0o7WQDzSX

    ""It was sad to see Merrill go down as well," said the voice from inside Lehman Brothers this week as he pondered his own future. "But at least they screwed the shorts. That was good to see."

    It was also, at least in the minds of many angry investment bank CEOs, a long time coming. In the months leading up to the current market chaos, the short sellers have been on the prowl. But now the witch hunt has begun. The shorts nailed Lehman and Bear Stearns by betting that their shares would continue to fall. And now they have Morgan Stanley and Goldman Sachs in their sights, sparking speculation that the last two remaining go-it-alone investment banking giants may have to find a deep-pocketed commercial bank to partner up with. "What's happening out there? It's very clear to me — we're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down," fumed John Mack, CEO of Morgan Stanley, in a memo to employees. "You should know that the Management Committee and I are taking every step possible to stop this irresponsible action in the market. We have talked to Secretary [Hank] Paulson and the Treasury. We have talked to Chairman [Chris] Cox and the SEC." Cox is listening, and is reportedly proposing a temporary ban on short selling, subject to approval by the SEC's commissioners. If short sellers could be rounded up and roasted as heretics to the true bull market religion, there'd be a rush of people from Lehman and Merrill fighting to add wood to the fire. And Mack would bring the gasoline.

  10. 1. Greece is a prime example of an entitlement, socialist failed state.

    2. History is FULL of examples... including the Roman Empire.

    3. It's obvious that such a government and society is a bad deal. Why then, is Obama trying to cornhole America into the same thing? (rhetorical question)
    #10     May 16, 2010