Spokesman for Board Says Members Had Enough. Chief Exec Granted $15,000,000 Exit Package and Lifetime Benefits.
In addition to subprime mortgages, Country Side lent billions on subprime properties. These instruments were bundled into tranches called CDOs. (Photo by David Wright).
The board of directors of the Bank of Magellan, the largest bank in the galaxy, announced today that it has fired CEO P. Percival Pussyfoot.
Mr. Pussyfoot was head of the bank for eleven years and led the institution through the contentious period from 2007-2010 when the bank was charged with defrauding investors by selling worthless collateralized debt obligations. During Mr. Pussyfoot’s tenure the bank bundled hundreds of thousands of subprime mortgages into tranches it claimed represented sound investments that offered high returns. The bank earned hundreds of billions of dollars selling the bundled mortgages known as CDOs.
When the value of the CDOs plummeted as mortgage defaults soared investors claimed they had been defrauded by the bank. Numerous lawsuits ensued.
Mr. Pussyfoot countered the lawsuits with the claim that the CDOs were rated AAA by Dushe $ Bagge, the prominent securities ratings agency that downgraded U.S. Treasuries along with Standard $ Poor. The lawsuits have noted however that Dushe $ Bagge has been accused of excepting cash payments in exchange for favorable ratings and must be held accountable for this unlawful behavior.
Also to his credit, Mr. Pussyfoot had the foresight to insure the CDOs with Credit Default Swaps. The CDSs were insurance policies that protected the bundled CDOs against failure. Mr. Pussyfoot was roundly criticized however when the insurance company that issued the CDSs that insured the CDOs declared bankruptcy. The insurance company was later bailed out by taxpayer funds compliments of the U.S. Government and Bank of Magellen received full value of the insured CDOs.
Mr. Pussyfoot was also instrumental in acquiring the assets of failed mortgage originator Country Side Homes. When mortgages issued by Country Side began to lapse in droves Bank of Magellan was saddled with responsibility for the instruments. The bank now faces additional lawsuits associated with the acquisition of the mortgage origination giant.
Recently however Mr. Pussyfoot has shied away from MBSs, or mortgaged backed securities, even though they have proven to be high profit instruments and their sale is permissible under the new bank regulations recently passed by Congress and endorsed by the White House. President Obama signed the regulations into law in a White House ceremony in July, 2010.
When Mr. Pussyfoot refused to pursue the risky investments the board made its decision to fire him.