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Week in Review: Bank Suit Draws Fire Across Political Spectrum

WEEK IN VERSE Want to really clean up Wall Street? You know who you need to call. Happy Halloween from DealBook.

There is an old defense trotted out by journalists that their reporting must be fair if both Republicans and Democrats are upset with them. If that is the case, then government officials can take some pleasure from the bipartisan complaints of their disjointed efforts to clean up the mortgage mess.

On Wednesday, federal prosecutors in New York filed a civil suit seeking $1 billion from Bank of America for a flood of bad loans that began with its Countrywide Financial unit.

On one side, banks complained that the case was another example of a chaotic and redundant pattern of litigation. “The cases have come from a patchwork of federal agencies, state officials and shareholder suits, some of which have been resolved in multibillion-dollar settlements,” Ben Protess reported.

Some on Wall Stre et and Washington also expressed incredulity at the timing of the suit, which came less than two weeks before the presidential election. “Am I jaded enough to think this is just a campaign stunt?” asked one person who commented on DealBook.

The flip side of this anger comes from people upset that the civil cases against big banks do not go far enough. A number of readers complained that a $1 billion fine would not be a strong deterrent for a company that reported $20.66 billion in revenue in its latest quarterly earnings. They argued that nothing short of criminal complaints followed by jail terms for top Wall Street executives would prevent future financial fraud.

“Like a dozen lawyers buried up to their necks in sand… it's a start, but what I really want to see is handcuffs, walks-of-shame and bank execs crying themselves to sleep on striped ticking,” said John Warren of Delray Beach, Fla.

Prosecutors say the lawsuits should send a “clear mess age” that reckless lending will not be tolerated. So far, it appears that is not the message that is being received.

A look back on our reporting of the past week's highs and lows in finance.

Oshkosh Rejects Icahn and Builds Its Defenses | The truck maker rejected Carl Icahn's $3 billion unsolicited takeover bid, deeming it too low, Michael J. de la Merced reported. “It also adopted a poison pill to protect itself against further moves by the billionaire investor.” DealBook '

Deal Professor: Few Winners in Heated Cellphone Wars | Steven M. Davidoff says that American cellphone providers may be ruined by a rush of acquisitions, leaving consumers by the wayside. DealBook '

The rush to complete deals is an investment banker's dream.

But the hunt may lead these companies to not only overpay but acquire companies that are underperforming or otherwise don't fit well. Then they have to find a way to run them profitably.

BP Will Switch Russian Partners Through a Deal With Rosneft | After years of feuding with its longtime Russian partners, the British oil giant has formally filed for divorce and announced plans to move in with someone wealthier and more powerful, Andrew E. Kramer and Stanley Reed reported. DealBook '

China's Bid for Nexen May Survive a Rejection | “The rejection of a major energy industry takeover by Canadian government may not indicate that it is adopting a harder line on mergers involving foreign companies,” Ian Austen reported. DealBook '

K.K.R. Swings to a Profit for 3rd Quarter | The private equity industry has been the beneficiary of steady markets that have supported the value of its por tfolio companies, Mr. de la Merced reported. DealBook '

Farallon Capital's Founder to Step Down This Year | Thomas F. Steyer, who managed a $20 billion investment firm, is part of a group of hedge fund executives who started firms from scratch and are passing the baton to successors, Mr. de la Merced and Peter Lattman reported. DealBook '

Such moves have fueled speculation of a political career for Mr. Steyer, perhaps even a bid for governor of California.

In London, Nimble Start-Ups Offer Alternatives to Stodgy Banks | “As consumers' trust in banks deteriorates because of a series of recent scandals, young companies are pressing their newcomer advantage,” Mark Scott reported. DealBook '

“The whole idea of bank payments is broken,” said Mr. Takeuchi at the start-up's office in a dilapidated building on the outskirts of London's financial district. “There's an opportunity here, and we're looking to grab it .”

Citigroup Pays Fine and Fires Analysts Over Facebook I.P.O. | The bank paid a $2 million fine and fired a prominent employee after authorities accused a junior analyst of improperly leaking to the media unpublished information about YouTube and confidential research on Facebook‘s initial public offering, Mr. Protess reported. DealBook '

Man Claiming Facebook Ownership Arrested on Fraud Charges | Federal prosecutors say that Paul Ceglia filed a sham federal lawsuit claiming to have been promised a 50 percent share of Facebook, and then doctored, fabricated and destroyed evidence to support his allegations, Mr. Lattmn reported. DealBook '

Lawyer Denounces Wiretaps in Appeal of Galleon Case | Patricia A. Millett asked a panel of federal appeals court judges to set aside Raj Rajaratnam's conviction, arguing that the government had used deceptive methods to obtain permission to wiretap his cellphone, Mr. Lattman reported. DealBook '

    Ex-Goldman Director to Serve 2 Years in Insider Case | Rajat K. Gupta is the most prominent figure to face prison in the government's sweeping crackdown on insider trading. The court also ordered Mr. Gupta to pay a $5 million fine. DealBook '
  • Appeal in Insider Trading Case Centers on Wiretap | The request is considered a long shot, but a reversal would have broad implications. DealBook '

As a Benchmark Loses Status, Brazil Seeks Alternatives | “A system that has been in place for decades may soon change and force fund managers to dive into riskier investments in order to meet performance goals,” Dan Horch reported. DealBook '

U.S. Accuses Bank of America of a ‘Brazen' Mortgage Fraud | In a civil suit, federal prosecutors in New York seek to collect at least $1 billion in penalties from the bank, Mr. Protess reported. DealBook '

“They never know who's going to be coming after them next,” said Dan Hurson, a former federal prosecutor who now defends securities cases. “There's no central traffic cop.”

DealBook Column: Casting Dual Roles, at Treasury and the Fed | Andrew Ross Sorkin says Ben Bernanke has told close friends that he probably will not stay on for another term. So here is a field guide to handicapping the next Treasury secretary and Federal Reserve chairman. DealBook '

That would be a one-two punch, with two of the most important jobs in the nation up for grabs. And over the last couple of years, especially at the depth of the financial crisis, the relationship between the two people in those roles has been increasingly important. They are the equivalent of roles in a buddy movie.