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Italy Seizes Bank of America, Dexia Assets Amid Probe
[Quote:]
Italy’s financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia.
Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor’s office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.
So that’s the trick with banks and derivatives – you don’t bail them out, you seize their assets!
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Will this case finish with a sentence against the bank, many other will follow, since a lot of municipalities were involved in facts like these.
Milan itself, the richest city of Italy, lost million of euros in similar trades.
However, I can’t really blame the banks: people working in the financial department of such big cities administrations cannot be totally ignorant on the risks they are willingly taking.
A little like the mafia guy who makes a bet with a bookie, and when the bet loses, he tells the bookie that he wants his money back… or else.
How apropos – BofA was founded in San Francisco in 1904 as “Bank of Italy”.