Defrauded Investors Out of Luck

By Robert Weiss

As the week closes, Washington tells us that we are days away from the final drafts of the government stimulus package. The Senate grudgingly agreed to give President Obama access to the second half of the bailout fund, but only after the president promised to impose tougher conditions and to devote at least $50 billion of the fund to reducing mortgage foreclosures. "Tougher conditions." This 'too little too late' measure has been the calling card of Capitol Hill this past year. In the midst of reports of a potential government/private-sector partnership to help ailing investment banks, there has been no mention of the true victims in this economic crisis. Yes, the poor failing banks are getting billions of dollars in bailout money yet the investors who were defrauded by these banks will likely get zero once again. Institutional investors such as pension funds invested millions of dollars into CDOs, which were touted as "safe investments" by banks such as UBS and Citigroup. CDOs emerged as one of the largest selling investment vehicles and with credit rating agencies stamping these investments as AAA and BBB, pension funds invested portions of their portfolio with confidence. Now, Americans around the country are out of work and are reviewing pages in their hemorrhaging pension portfolios. Will these pension fund members be able to retire with a safety net that they worked years to build? The only sure thing for these pension members is an uphill battle against these billion dollar corporation who now have government money to pay for their legal defenses. [more...]