December 13, 2019

Bucks Blog: The Gaps in Mental Health Care and Coverage

In this weekend’s Your Money column, I have tried to conduct a survey of insurance coverage for mental health in the United States, with a focus on issues of primary concern to parents and their children.

While coverage is in many ways more widespread and potentially less costly than it was a few years ago, that may not make it any easier to persuade insurance companies or employers to cover certain treatments or find practitioners who take your insurance, have offices nearby and are not booked solid indefinitely.

If you have a child with a mental illness or who is on the autism spectrum, what’s the single biggest area of improvement (if any) that you’ve seen in recent years, and what’s the biggest challenge you still face?

Article source: http://bucks.blogs.nytimes.com/2012/12/21/the-gaps-in-mental-health-care-and-coverage/?partner=rss&emc=rss

Bucks Blog: Report Your Hurricane Sandy Home Insurance Claim Experience Here

In this weekend’s Your Money column, I offer a preview of the types of resistance that homeowner’s insurance companies may put up to the large claims they will be dealing with in the wake of Hurricane Sandy.

I’d like to use this post to round up the actual experience of policyholders in the coming weeks and months. Please let us know the extent of your damage and what sort of adjuster came out to take a look at it. How long is it taking to get a full estimate or settlement offer from the insurance company? Are you negotiating? Or are you using a public adjuster to represent you? Or did you get a big check fairly quickly and are happy with the result?

I plan to write more about this in the coming months and will answer questions in the comments section when I can.

Article source: http://bucks.blogs.nytimes.com/2012/11/09/report-your-hurricane-sandy-home-insurance-claim-experience-here/?partner=rss&emc=rss

Your Money: After the Storm: Managing Your Homeowner’s Claim

That period is about to end. Prices for roofers and construction materials will rise, disadvantageous parsing of policy language will commence and gangs of class-action lawyers will round up aggrieved clients who still have months of homelessness ahead of them. Many claims will take years to settle.

It happens every time, and so it will with this storm. That’s not to say that a majority of people with insurance claims won’t be satisfied with the check they receive or won’t get one quickly.

But when this many people have extensive damage to their most significant asset, billions of dollars are at stake for the companies that have the power to make them whole. So there is no reason for policyholders to be anything but wary until their own big check clears.

Many victims of Hurricane Sandy are novices when it comes to catastrophic insurance claims. So to see what sort of resistance they should expect shortly, I turned to the lawyers and adjusters-for-hire who do nothing but negotiate with insurance companies all day long. Some of them used to work for the companies, in fact.

Here are the things they warn people to watch out for:

THAT INDEPENDENT ADJUSTER Many people with damaged homes have started to meet with representatives who assessed their damaged homes to estimate repair costs. They may have introduced themselves as “independent adjusters,” but this is a misnomer. They represent the insurance company and are not neutral.

In storms like this, large numbers of these freelance claims adjusters parachute in from out of town. In the industry, they are known as storm troopers. They work 18-hour days for a while since no insurance company has enough of its own full-time staff to deploy after a storm like this one. Often, they make enough money not to work for months afterward.

“These guys have a lot of work to do, and it’s a thankless job,” said Matthew Tennenbaum, who used to be an independent adjuster but switched sides and now works for policyholders as a “public” adjuster in Cherry Hill, N.J.

Mr. Tennenbaum worries about the storm troopers’ thoroughness. “They’re going to see 10 properties a day and they’re quickly writing estimates,” he said. “If they spend an extra three or four hours properly writing one estimate, they could have written three more and made more money.”

Though many of them are former builders or contractors, they may not, if time is of the essence, always pull up every floor, explore every inch of the attic or look behind every wall. And they may not know much about your insurance company’s policy.

“The insurance companies hand them a manual, and they may not really understand the manual,” said J. Robert Hunter, the director of insurance for the Consumer Federation of America, who has worked for insurance companies and once ran the federal flood insurance program.  “It’s a crash course at that point.”

  The good news here is that these are not the people who make the final call on your claim. But many policyholders assume that their word is the final word.

WIND VERSUS FLOOD Back at headquarters, other adjusters have their eye on an exclusion that will be crucial for this storm, with its horrific storm surges but relatively mild winds: homeowner’s insurance generally does not cover floods.

Unfortunately, many people do not know this and many more have not purchased or renewed policies with the federal flood insurance program that covers up to $250,000 of flood damage. Researchers from the Wharton Risk Management and Decision Processes Center, working with colleagues at Florida State, the University of Miami and Columbia University, surveyed people in the storm’s path by telephone three days before it hit.

Among people within a block of a body of water, 46 percent had no flood insurance. In areas that had been evacuated in past storms or where the authorities advised people to leave, 58 percent did not have it. Moreover, 39 percent of all the people who thought they did have flood coverage mistakenly believed that their homeowner’s insurance covered it.

People without coverage but lots of damage from the storm surge might do one of a couple of things. A few stubborn ones will sue, arguing that if the wind drove the surge then it’s not really a flood. Judges haven’t taken kindly to this line of reasoning over the years, but that probably won’t keep people from trying again. The Federal Emergency Management Agency may also offer some assistance.

Article source: http://www.nytimes.com/2012/11/10/your-money/home-insurance/after-the-storm-managing-your-homeowners-claim.html?partner=rss&emc=rss

DealBook: Why A.I.G. May Not Be Able to Avoid the Volcker Rule

Robert H. Benmosche, chief of the American International Group.Yuri Gripas/ReutersRobert H. Benmosche, chief executive of the American International Group.

The American International Group, of all companies, wants to avoid a rule designed to stop risky trading.

A.I.G.’s chief executive, Robert H. Benmosche, said on CNBC on Tuesday afternoon that the company was thinking of taking steps that could shield it from the Volcker Rule. Part of the Dodd-Frank financial overhaul legislation, the rule is intended to stop speculative trading at financial firms that enjoy federal support.

Mr. Benmosche’s remarks came a day after the Treasury Department sold a large amount of shares to bring its stake in A.I.G. well below 50 percent. The sale was seen as an important milestone. The Treasury Department originally poured tens of billions of dollars into A.I.G. after its enormous speculative bets soured in 2008 and threatened the standing of the financial system.

At first glance, it might not seem right for a company that made cataclysmically dangerous trades to now elude curbs on risky wagers.

Mr. Benmosche has a reasonable sounding justification for not wanting A.I.G. to be subject to the rule. He says it does not really fit insurance companies, which take long-term positions in securities to match the long-term nature of their obligations to holders of their insurance policies. And Volcker may undermine A.I.G.’s ability to take such positions.

“The Volcker Rule, as a rule, doesn’t really work for insurance companies as it does for banks,” Mr. Benmosche said on CNBC. “Some of the investments they want to prohibit, an insurance company has to make because of long liabilities.”

In theory, A.I.G. can get out of the Volcker Rule simply by selling a small bank it owns. On Tuesday, Mr. Benmosche said A.I.G. was planning to do just that.

Only it is not so simple. Even if A.I.G. sells the bank, it could still be subject to Volcker-like limitations on proprietary trading.

Here is why: A.I.G., because of its large size and its activities, is almost certainly going to classified by regulators as a “systemically important” financial institution. It would then become subject to oversight by the Federal Reserve. And the Volcker section of Dodd-Frank clearly says that systemic firms could also be subject to curbs on proprietary trading – even if, like A.I.G., they are not banks or do not have bank subsidiaries.

That catchall feature of the Volcker Rule was recognized by MetLife in its latest quarterly filing of financial results with the Securities and Exchange Commission. MetLife also wants to sell its bank to sidestep the Volcker Rule. But in the filing it said the rule “nevertheless imposes additional capital requirements and quantitative limits” on trading done by nonbank firms deemed to be systemically important.

So why would a company go to the length of selling a bank to avoid the Volcker Rule if it would probably be subject to something very much like Volcker anyway?

One reason may be that it buys some time. MetLife’s filing says that it does not become subject to trading curbs until two years from the date at which it becomes designated as a systemically important firm. That designation could occur this year.

Another reason may be that selling a bank puts an insurance company in a position of relative strength when negotiating with a regulator over trading positions.

Regular banks simply have to comply with the Volcker Rule; there is no other option for them. But with a nonbank financial firm, regulators would first have to review the firm’s activities, and then make a decision on whether certain trading curbs have to be imposed.

This process might give the insurance company more opportunities to push back than if it were a bank. So if an insurer wanted to conduct proprietary trading under the guise of insurance activities, it might find it easier to shield that activity from regulators.

The fact is, A.I.G. already appears to be acting with more trading freedom than even Wall Street firms. This was seen in sales of toxic assets that used to belong to A.I.G.

The Federal Reserve Bank of New York this year sold all of the securities it acquired from A.I.G. in the bailout, through auctions facilitated by Wall Street banks.

Some of those banks said new bank regulations prevented them from holding the assets for a long period. A.I.G., by contrast, bought $7 billion of its old assets from the New York Fed and now holds them on its balance sheet, potentially for the long-term.

And taxpayers effectively helped finance those trades through the Treasury Department’s large infusion of equity funding into A.I.G.

On Tuesday, Mr. Benmosche said A.I.G. welcomed oversight by the Fed. He said regulation would show A.I.G.’s clients that “somebody’s watching over our shoulder making sure we don’t do what we did before and cause these problems.”

That sounds very noble. But by selling its bank, and trying to avoid the Volcker Rule, A.I.G. may actually end up making it harder for regulators to look over its shoulder.

Article source: http://dealbook.nytimes.com/2012/09/12/why-a-i-g-may-not-be-able-to-avoid-the-volcker-rule/?partner=rss&emc=rss

Berkshire Hathaway Reports Lower 3rd-Quarter Profit

That was nearly three times what Berkshire lost on the same instruments a year ago. Buffett has sharply criticized derivatives in general, but has said these particular contracts were safe and would ultimately be lucrative.

But Berkshire was hurt, like many other insurance companies in particular, by sharp declines in a broad range of market values. In a quarterly report to the Securities and Exchange Commission, Berkshire said the indexes covered by the contracts fell 11 to 23 percent in the quarter.

Berkshire reported a net profit of $2.28 billion, or $1,380 for each Class A share, compared with a year-earlier profit of $2.99 billion, or $1,814 a share.

Cash at the end of the quarter was $34.78 billion, down from $47.89 billion at the end of June. During the third quarter, Berkshire financed the purchase of the chemical maker Lubrizol and a $5 billion investment in Bank of America, which accounted for the decline.

Operating income rose across segments, except for the company’s finance business, where it fell slightly.

Profit in the insurance business rose as a rebound in reinsurance results offset sharp declines at the auto insurer Geico.

Earnings were also nearly 10 percent higher at Berkshire’s next-biggest unit, the Burlington Northern railroad, as revenue per car rose by more than 10 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=25cb51a2620013237b9df5f5536a1185

Bucks: Post Your Hurricane-Related Insurance Questions

Damage from Hurricane Irene in Washington's Capitol Hill neighborhood.Jacquelyn Martin/Associated PressDamage from Hurricane Irene in Washington’s Capitol Hill neighborhood.

Hurricane Irene may not have done as much damage as feared, but in many areas the storm still left plenty of flooded basements, damaged homes and downed trees. Cars crushed by trees are generally covered under the comprehensive portion of your auto insurance policy, according to this video from the Insurance Information Institute. The institute also has published a list of toll-free numbers for contacting insurance companies.

Do you have insurance questions as a result of the hurricane? Submit them in the comments below, and we’ll do our best to get them answered by industry experts.

Article source: http://feeds.nytimes.com/click.phdo?i=843180849162231eb814c9ab41ded47d

Contracts Cloud Who Has Exposure in Greek Crisis

No one seems to be sure, in large part because the world of derivatives is so murky, but the possibility that some company out there may have insured billions of dollars of European debt has added a new wrinkle to the sovereign default debate.

In years past, when financial crises in Argentina and Russia left those countries unable to make good on their government debts, they simply defaulted. But this time around, swaps and other sorts of contracts have become so common and so intertwined in the financial markets that there are fears among regulators and financial players about how a Greek default would play out among derivatives holders.

The looming question is whether these contracts — which insure against possibilities like a Greek default — are concentrated in the hands of a few companies, and if these companies will be able to pay out billions of dollars to cover losses during a default. If there were a single company standing behind many of these contracts, that company would be akin to the American International Group of the euro crisis. The American insurer needed a $182 billion federal bailout during the financial crisis because it had insured the performance of mortgage bonds through derivatives and couldn’t pay on all of them.

Even regulators seem unsure of whether a Greek default would reveal such concentrated risk in the hands of just a few companies. Spokeswomen for the central banks of both Europe and the United States would not say whether their researchers had studied holdings of such contracts among nonbank entities like insurance companies and hedge funds — and they would not say what would occur among large players if Greece or another European country defaulted.

Derivatives traders and analysts are debating just how much money is involved in these derivatives and what sort of threat they pose to markets in Europe and the United States. On the one hand, just over $5 billion is tied up in credit-default swap contracts that will pay out if Greece defaults, according to Markit, a financial data firm based in London. That’s less than 1 percent the size of Greece’s economy, but that is a conservative calculation that counts protections banks have in place offsetting their positions, and is called the net exposure. The less conservative figure, the gross exposure, is $78.7 billion for Greece, according to Markit. And there are many other types of contracts, like about $44 billion in other guarantees tied to Greece, according to the Bank of International Settlements.

The gross exposure of the five most financially pressed European Union countries — Portugal, Italy, Ireland, Greece and Spain — is about $616 billion. And the broader figure on all derivatives from those countries is unknown.

The pervasiveness of these opaque contracts has complicated negotiations for European officials, and it underscores calls for more transparency in the derivatives market.

The uncertainty, financial analysts say, has led European officials to push for a “voluntary” bond financing solution that may sidestep a default, rather than the forced deals of other eras. “There’s not any clarity here because people don’t know,” said Christopher Whalen, editor of The Institutional Risk Analyst. “This is why the Europeans came up with this ridiculous deal, because they don’t know what’s out there. They are afraid of a default. The industry is still refusing to provide the disclosure needed to understand this. They’re holding us hostage. The Street doesn’t want you to see what they’ve written.”

Regulators are aware of this problem. Financial reform packages on both sides of the Atlantic mandated many changes to the derivatives market, and regulators around the globe are drafting new rules for these contracts that are meant to add transparency as well as security. But they are far from finished and could take years to put into effect.

Darrell Duffie, a professor who has studied derivatives at the Graduate School of Business at Stanford University, said that he was concerned that regulators may not have adequately studied what contagion might occur among swaps holders, in the case of a Greek default.

Regulators, he said, “have access to everything they need to have. Whether they’ve collected all the information and analyzed it is different question. I worry because many of those leaders have said there’s no way we’re going to let Greece default. Does that mean they haven’t had conversations about what happens if Greece defaults? Is their commitment so severe that they haven’t had real discussions about it in the backrooms?”

Regulators aren’t saying much. When asked what data the Federal Reserve had collected on American financial companies and their swaps tied to European debt, Barbara Hagenbaugh, a spokeswoman, referred to a speech made by the Federal Reserve chairman, Ben S. Bernanke, in May in which he did not mention derivatives tied to Greece. And she said in a statement that the Fed had researched the “full range of exposures” at the companies it supervises — the banks — and is “monitoring the situation more broadly.”

At the European Central Bank, Eszter Miltenyi, a spokeswoman, said : “This is much too sensitive I think for us to have a conversation on this.”

On Wall Street, traders are debating whether the industry’s process for unwinding credit-default swaps would run smoothly if Greece defaulted. The process is tightly controlled by a small group of bankers who meet in an industry group called the International Swaps and Derivatives Association. .

The process is fairly well developed, but it has been little tested on the debt of countries. For the most part, Wall Street has cashed in on credit-default swaps tied to corporations’ debt.

Only one country has defaulted on its debt in the last few years — Ecuador at the end of 2009 — and its debt was so small and its economy so isolated that it was hardly a notable event.

Article source: http://feeds.nytimes.com/click.phdo?i=fc513885a4cc6c244d9b077cbfa05007

News Analysis: In Greece, Some See a New Lehman

Others, however, have argued that Greece’s debt of 330 billion euros, or $473 billion, while too large for the country to bear, is small enough to allow banks and other institutions to take a loss without bringing the world financial system to its knees.

But the comparisons between Greece and Lehman grew more frequent last week as global markets reeled, spurred in part by the view that Germany’s insistence that private investors participate in a second rescue package for Athens would overcome the objections of the European Central Bank.

“It is a valid concern,” said David Riley, head of sovereign ratings at Fitch. “The Rubicon would be crossed — we would have a sovereign default event and that can be quite a shock, not just for the peripheral countries but for Spain and beyond.”

The thinking goes like this: though banks and other investors have done much to pare their Greek holdings in the last year, if they are forced to take a loss, and the ratings agencies declare Greece in default, investors would start selling in a panic. And they would not sell just the bonds of countries struggling with debt — Portugal, Ireland, Spain and Italy. In a hasty retreat into cash, traders would unload more liquid assets as well, everything from high-grade corporate bonds to American and emerging market equities — as occurred in 2008 after Lehman failed.

To be sure, much has to be wrong for the European debt crisis to approximate what happened after Lehman failed in 2008. Not only did banks, hedge funds and insurance companies immediately seize up, but the effect on the broader global economy was also striking as trade flows nearly ground to a halt.

Analysts point out that the global financial system has survived sovereign defaults in the past, including Russia’s in 1998 and Argentina’s in 2001.

Also, since the prospect of a Greek default has been foreshadowed for so long, financial institutions have had sufficient opportunity to reduce their holdings of Greek debt. But in doing that, the private sector has passed much of the exposure to Greece and other troubled economies in Europe to public sector entities like the European Central Bank and the International Monetary Fund. That means that if a restructuring comes, the taxpayer — more than the private investor — will pay.

Lending weight to the fears of another Lehman crisis, regulators are warning that in such a situation, even super-safe money market funds may not provide the risk-free refuge they proclaim to offer.

According to a recent report by Fitch, as of February, 44.3 percent of prime money market funds in the United States were invested in the short-term debt of European banks. Some of those institutions, like Deutsche Bank and Barclays, do not have dangerous Greek exposure. But some of those funds also hold shares of French banks like Société Générale, Crédit Agricole and BNP Paribas, which do have significant Greek bond holdings — about 8.5 billion euros, or, in the case of BNP and Société Générale, about 10 percent of their Tier 1 capital.

This month, the president of the Federal Reserve Bank of Boston, Eric S. Rosengren, warned that the large share of European banks in American money market fund portfolios posed a Lehman-like risk if, in the wake of a default in Europe, panicky investors took their money out all at once.

“Money market mutual funds have the potential to be impacted should there be unexpected international financial problems emanating from Europe,” he said in a speech at Stanford.

The idea that European banks, not those in the United States, would take a hit if Greece defaulted, has sustained a view that such a crisis might be containable. But according to a recent analysis by The Street Light financial blog, this misses the point. It will be American banks and insurance companies that will have to make the lion’s share of default insurance payments to European institutions if Greece fails.

Citing recent data from the Bank for International Settlements, the blog points out that in the event of a Greek default, direct creditors would be on the hook for 70 percent of the losses, with credit default insurance picking up the rest. Thus, if one includes credit default exposure, American exposure to Greece increases from $7.3 billion to $41.4 billion.

Article source: http://www.nytimes.com/2011/06/13/business/global/13euro.html?partner=rss&emc=rss

You’re the Boss: After the Fire: Do Not Touch Anything

The adjuster's advice: Touch nothing.Courtesy of Southfork Kitchen.When can we reopen? Who knows?
Start-Up Chronicle

“I have three rules. Don’t walk into a courtroom without a lawyer. Don’t go on a date without Viagra. And never settle an insurance case without Littman.”

That’s Danny Lembo talking. As usual, he has a drink in his hand, a blonde on his arm and a story on his lips: cold, hot and hyperbolic. He’s an old friend who called himself Mr. Connected on “Survivor: Nicaragua” last year, but the guys call him Too Tan Dan. His biceps are the size and color of tawny lap dogs, and they receive just as much attention, exercise and health-enhancing treats. By profession, Too Tan Dan is a property builder and manager; by avocation, he is a fixer. He knows people. He knows people who know people. He knows Littman.

Jeffrey Littman wears a pinkie ring and speaks softly, politely, incessantly. He’s been a public adjuster for 32 years, which means he advocates for policyholders, appraises damage, assesses coverage and negotiates settlements with insurance companies. His son is a lawyer, by the way, who defends insurance companies. I wouldn’t wish those kinds of Oedipal issue on anyone. (Except maybe Laius.)

“Lembo says you’re a friend, so I will give you my lowest rate, and you know I will do good by you,” says Mr. Littman. “‘Cause if I don’t, Lembo will have my head.” I trust Mr. Littman, too, is prone to hyperbole.

First thing, he says, touch nothing. Leave everything smelly, sooty and living proof that we need a special task force to clean every fork and light fixture and square inch of wall. This is expensive. (Mr. Littman, whose name may or may not be ironic, gets a percentage of the final numbers we collect.)

“Touch the wrong thing, and the policy could be null and void,” explains Mr. Littman. “Let the experts come and take pictures and do their investigation before you move a single salt shaker.”

“We don’t have salt shakers.”

“What do you serve your salt in?”

“We don’t serve salt. But if someone asks for it, we have little copper pots.”

“I’m asking you to not touch the copper pots. All your salt is ruined. Everything is ruined. You can’t see it, but everything is covered with a fine layer of soot. Salt is just a symbol.” (Not since Gandhi has salt been such a symbol.)

Mr. Littman also needs the cost of the building, the cost of the contents of the building, a copy of the deed, all insurance policies, rental agreements, reservations, payroll, a list of every opened bottle, all product thrown out that night, since that night, and before we can reopen. When can we reopen? Who knows? The fire investigators need time, the insurance companies need time, the cleaners need time, city hall needs permits, the board of health needs to inspect, and the staff needs retraining and probably restocking; surely, some good people will find other work during this unplanned summer hiatus. Then we have to let the public know we have reopened.

With no track record, no archives to present to the insurance people, there will be a fair amount of dickering about the moneys lost. The chef, sous chefs and managers are gathering all the pertinent information. It is not their favorite activity.

The two people in a small town you don’t want to know too well are the pharmacist and the reconstruction guy at city hall. It means something is out of kilter and you are less than tip-top; they both need prescriptions of a sort to make you feel better. Sal the Pharmacist knows more about my bloodstream than Lembo and Littman and my phlebotomist combined. The recon guy at city hall sends my blood pressure skyward as he hands me the building permit application checklist.

I need five copies of the survey, three sets of plans, one copy of the house certificate occupancy, an estimate from a licensed general contractor with New York-approved workers’ compensation, a check for an unknown amount (based on work to be done), and a drawing of the septic system with the red stamp from the Suffolk County Board of Health.

“The septic system?”

“Yes, with the red stamp.”

“But you have that here, on file. That’s how we opened in the first place.”

“You have to resubmit all these forms in order to start construction.”

“How long will all this take?” I ask.

“The sooner you fill out the application and satisfy all the requests, the sooner we can get to work on it.”

“Today is Wednesday. I’ll be back Friday.”

“I wouldn’t come back Friday.”

“Why not?”

“It’s summertime.”

“I know. That’s why I’ll be back in two days.”

“Everyone who wants a swimming pool or a new fence or a guest house stops here on their way to their weekend abode. Fridays are crazy. You’ll be in line for hours. Forget Fridays.”

The next day, Thursday, seven people converged on the restaurant at 10 a.m. They handed me business cards and commenced firing questions — about money and staff and guests and firefighters and mortgages and partners and family. I finally ask these men if they are actually divorce lawyers who made a wrong turn back on Montauk Highway. What the heck is going on?

They are, in point of fact, fire investigators, cleaning experts and general contractors. They need to know everything. In duplicate. The restaurant business has one insurance company (Scottsdale) and the property has another (National Specialty). Mr. Littman says the two companies could end up in a turf war: was it a kitchen fire or damage to property? No matter now. The reps pop questions and scribble in their books or type into their laptops and reveal neither pleasure nor displeasure to any response. This could be a poker game. Mr. Littman hovers over every conversation, adding his 2 cents or removing mine. There is no bluffing.

Meanwhile, two guys not taking part in the inquisition snoop around the restaurant with cameras and tape recorders. Eventually, they invite me to sit down in a booth. They are in their late 20s or early 30s. Nice guys. There’s no telling which one has rank. They come at me willy-nilly.

Willy: “What time did you first become aware of the fire?”

Buschel: “Around 7 o’clock, Saturday night.”

Nilly: “How did you become aware?”

Buschel: “The chef called me into the kitchen to show me the smoke.”

Nilly: “What is your relationship with the chef?”

Buschel: “I’m not sure I understand the question.”

Willy: “Do you two get along?”

Buschel: “We get along fine.”

Willy: “Do you owe him money?”

Buschel: “No.”

Nilly: “Is he a partner or an employee?”

Buschel: “Wait a minute. You think the chef started the fire?”

Willy: “He isn’t here today, is he?”

Buschel: “Are you guys from CSI Bridgehampton?”

Willy: “Sorry. We have to ask these questions.”

Buschel: “Why?”

Nilly: “We are investigating a fire.”

Buschel: “You can ask anything you want, but don’t expect me to answer.”

Willy: “We are here for your benefit, and we have to cover all the angles.”

Buschel: “Here’s my angle, gentlemen. Before two hours ago, I never saw either of you. You could be from Al Qaeda for all I know. Or you could be the arsonists. So I take the Fifth on questions I don’t understand. Nothing personal. But I can’t answer half these questions without consulting Littman the adjuster and Sal the pharmacist and Joe the chef. By the way, if you were the arsonists, you should be ashamed — that was a really bad job.”

Next: tips about insurance. And how we finished renovation in record time and opened to record crowds. (I made up that last sentence. I’m trying the power of positive thinking. Can it hurt?)

Bruce Buschel owns Southfork Kitchen, a restaurant in Bridgehampton, N.Y.

Article source: http://feeds.nytimes.com/click.phdo?i=e4bdb592c6f4859cac5824eca7756481

New York Investigates Banks’ Role in Financial Crisis

Officials in Eric T. Schneiderman’s, office have also requested meetings with representatives from Bank of America, Goldman Sachs and Morgan Stanley, according to people briefed on the matter who were not authorized to speak publicly. The inquiry appears to be quite broad, with the attorney general’s requests for information covering many aspects of the banks’ loan pooling operations. They bundled thousands of home loans into securities that were then sold to investors such as pension funds, mutual funds and insurance companies.

It is unclear which parts of the byzantine securitization process Mr. Schneiderman is focusing on. His spokesman said the attorney general would not comment on the investigation, which is in its early stages.

Several civil suits have been filed by federal and state regulators since the financial crisis erupted in 2008, some of which have generated settlements and fines, most prominently a $550 million deal between Goldman Sachs and the Securities and Exchange Commission.

But even more questions have been raised in private lawsuits filed against the banks by investors and others who say they were victimized by questionable securitization practices. Some litigants have contended, for example, that the banks dumped loans they knew to be troubled into securities and then misled investors about the quality of those underlying mortgages when selling the investments.

The possibility has also been raised that the banks did not disclose to mortgage insurers the risks in the instruments they were agreeing to insure against default. Another potential area of inquiry — the billions of dollars in credit extended by Wall Street to aggressive mortgage lenders that allowed them to continue making questionable loans far longer than they otherwise could have done.

“Part of what prosecutors have the advantage of doing right now, here as elsewhere, is watching the civil suits play out as different parties fight over who bears the loss,” said Daniel C. Richman, a professor of law at Columbia. “That’s a very productive source of information.”

Officials at Bank of America and Goldman Sachs declined to comment about the investigation; Morgan Stanley did not respond to a request for comment.

During the mortgage boom, Wall Street firms bundled hundreds of billions of dollars in home loans into securities that they sold profitably to investors. After the real estate bubble burst, the perception took hold that the securitization process as performed by the major investment banks contributed to the losses generated in the crisis.

Critics contend that Wall Street’s securitization machine masked the existence of risky home loans and encouraged reckless lending because pooling the loans and selling them off allowed many participants to avoid responsibility for the losses that followed.

The requests for information by Mr. Schneiderman’s office also seem to confirm that the New York attorney general is operating independently of peers from other states who are negotiating a broad settlement with large banks over foreclosure practices.

By opening a new inquiry into bank practices, Mr. Schneiderman has indicated his unwillingness to accept one of the settlement’s terms proposed by financial institutions — that is, a broad agreement by regulators not to conduct additional investigations into the banks’ activities during the mortgage crisis. Mr. Schneiderman has said in recent weeks that signing such a release was unacceptable.

It is unclear whether Mr. Schneiderman’s investigation will be pursued as a criminal or civil matter. In the last few months, the office’s staff has been expanding. In March, Marc B. Minor, former head of the securities division for the New Jersey attorney general, was named bureau chief of the investor protection unit in the New York attorney general’s office.

Early in the financial crisis, Andrew M. Cuomo, the governor of New York who preceded Mr. Schneiderman as attorney general, began investigating Wall Street’s role in the debacle. But those inquiries did not result in any cases filed against the major banks. Nevertheless, some material turned over to Mr. Cuomo’s investigators may turn out to be helpful to Mr. Schneiderman’s inquiry.

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