THANK GOD FOR REGULATORS

The purveyors of auction-rate securities basically told their customers to fuck-off and now they have to make good on their claims about the safety of the securities. So far, this only applies to the little folk, not the big institutional investors. Other large firms, like Bank of America, are expected to come to terms in the coming months.

2 Banks Will Buy Back $17 Billion in Securities
By ERIC DASH
Published: August 6, 2008
NY Times

Two Wall Street giants agreed on Thursday to buy back more than $17 billion of auction-rate securities that were improperly sold to retail customers, likely paving the way for other banks and brokerage firms to take similar actions.

Citigroup reached a settlement Thursday morning with state and federal regulators, agreeing to buy back about $7.3 billion of auction-rate securities that it sold to retail customers and pay a $100 million fine for its conduct.

Merrill Lynch said it would buy back about $10 billion in auction-rate investments that it sold to retail investors, a move that gets ahead of regulators investigating the company.