There's a scandal brewing at the American Securitization Forum -- and sure to be a lot of schadenfreude to follow.
The trade association "fell into turmoil last week when most of the board resigned in a dispute with the group's executive director over governance and bonuses," Bloomberg News reported today, citing six unnamed people familiar with the matter. Members that quit include Bank of America Corp., JPMorgan Chase & Co., Deutsche Bank AG and Citigroup Inc.
The article said the resignations came after the board tried, but failed, to remove the forum's executive director, Tom Deutsch. Part of the dispute reportedly concerned bonuses he was paid. Deutsch didn't return phone calls. The forum lobbies and holds conferences for the securitization industry, which packages loans and other financial assets into securities.
Talk about a role reversal: Too-big-to-fail banks upset about somebody else's bonus for a change? (Next thing you know it will be snowing in the Cayman Islands.) And how about transparency? There's nothing on the forum's website about the resignations. Did the forum's staff and remaining board members think they could keep the story under wraps?
For those who have forgotten many of the details of the financial crisis, here's how Michael Lewis, author of "The Big Short," described a conference that the American Securitization Forum put on back in 2006:
"It was essentially a trade show for the subprime-mortgage business: the people who originated subprime mortgages, the Wall Street firms that packaged and sold subprime mortgages, the fund managers who invested in nothing but subprime-mortgage-backed bonds, the agencies that rated subprime-mortgage bonds, the lawyers who did whatever the lawyers did." It once was a cottage industry, "but the cottage had become a castle."
Keep your eyes on this story.