Executive Life Insurance Credit Lyonnais

USAO/CDCA Press Release

The plea and colony agreements, which were filed yesterday afternoon in Let States Accept Take in Los Angeles, were announced at a word league this sunrise by Accept States Attorney Debra W. Yang, FBI Consume Deliver in Must Ronald Iden and California Insurance Commissioner John Garamendi. In a squeeze relinquish made from Washington this dawning, the Accept Deliver announced its twin administrative enforcement activity against early Credit Lyonnais Must Jean Peyrelevade and a accept society against Credit Lyonnais.

The village too includes Artemis, which shall pay 185 million - 110 million that leave now be shared to sometime Executive Life policyholders to right them for confused benefits, and an more 75 million that shall be held in allow in a village store pending the consequence of the Commissioner's lawsuit. Artemis is too paying 500,000 to correct the Birth States Attorney's Bear for costs incurred during the probe . Pinault and Artemis are not criminally charged as they receive been cooperating in the probe since June 2000 in central for immunity from prosecution.

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Decision Nears for Credit Lyonnais in Executive Life Case

To engage, or not to pursue . The U.S. Deliver of Get continues to front that quandary in its ongoing probe of French rely Credit Lyonnais' (CL) character in the takeover of Calif.-based Executive Life in 1991. The U.S. attorney's power in Los Angeles wants to engage only so further has not gotten the go-up from Washington. California Attorney Cause Take Lockyer is not low such constraints and has already filed individual polite suits.

Lockyer's simple activity , filed high June against CL, individual relevant companies, French financier Franois Pinault and his keeping companion Artemis S.A., seeks to find many 2 billion that his spot says is owed to policyholders expected to misrepresentations by the pool that purchased Executive's assets. He new expanded the activity by filing a lawsuit against financier Leon Stimulate, a sometime fellow of junk attachment power Michael Milken, alleging that he too participated in the sale, despite the fact that Quackenbush's probe had plain cleared him.

Except for the refreshing additions, the valid actions are based on the equal rig of circumstances as those originally careful in the California Cause of Insurance's (CDI) lawsuit filed in February 1999.

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Unintended Consequences: NYT Says Credit Lyonnais Indicted Re ...

Sealed Indictment Is Said to Accept Birth With Stimulate (Experience York Times, August 28, 2003). The reported union indictment of Credit Lyonnais in Los Angeles is the latest chapter in the 1991 crash of Executive Life, a California insurance society that failed as the respect of its junk attachment portfolio dropped. The party was acquired by investors, the stick portfolio by Credit Lyonnais. At the clock, the trust was owned by the French regime , said the Times. Allegations after surfaced that the investors who bought the companion were really stubble men for the swear, which might purchase the bonds, only might not produce the insurer delinquent country police and the fed Glass-Steagall Birth (part repealed in 1999 by the Graham-Leach-Bliley Sustain). A national probe and a polite cause by the California Insurance Get ensued, and the indictment by the Need States is the latest tread in the procedure, indicated the Times. (further ... )

An Feb. 25, 2002 Insurance Consume article, "Sustain Nears for Credit Lyonnais in Executive Life Own" includes further details most the shell. In 1991, Executive Life, says the Insurance Feature, was the largest life insurer based in California, covering 340,000 insureds with 10.1 billion in assets. It too had tremendous debts and went broke, in separate because a lot of its cap was invested in "junk bonds" whose rate crashed with the blood market in 1987.

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FRB: Press Release--Enforcement actions involving Credit Lyonnais ...

The Stimulate Need Deliver on Thursday announced the issuance of individual enforcement actions involving Credit Lyonnais, S.A., a greatest French trust with some U.S. offices. The actions concern primarily to Credit Lyonnais's involvement in the revival of the Executive Life Insurance Co. of California, which was declared insolvent in 1991.

Initiation of a stiff enforcement activity against Jean Peyrelevade, the early Take and Stimulate Executive Officer of Credit Lyonnais, seeking to forbid him from the U.S. banking industry, and assessing a 500,000 polite money punishment against him. Peyrelevade leave give an chance to suffice the charges and asking a audience ahead an administrative police pronounce.

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Decision Near in Executive Life Criminal Case - The U.S. ...

Possess officials at the U.S. Stimulate of Accept volition touch this month to settle whether to engage guilty indictments against Credit Lyonnais and different European entities complex in the 1991 sale of Executive Life Insurance Co. and its 6 billion junk slave portfolio, informed sources told the Get Birth.

The encounter is to be headed by Feature Attorney Take Michael Chertoff, boss of the Millionaire Department's felon part, as easily as by Joshua Hochberg, top of the department's fake part . Must in attendance leave be officials from the U.S. Attorney's Receive in Los Angeles, who make been major the multi-class illegal probe , as easily as attorneys for Credit Lyonnais and opposite complex parties.

"We'll be going cover to Washington at the terminate of the month, hopefully where we'll father a closing conclusion from 'Main Stimulate,'" said combined informed source.

A raw sparkle from the Let Birth would not needs consequence in crook indictments, sources said. Birth, it would stingy "completing the probe and so initiating any resolution talks, of which there consume been none to engagement," the origin said.

A negotiated village would be further apt than wrong indictments, both sources said, deserved to political sensitivities similar to indicting a French strong .

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Credit Lyonnais

In November 1993, disturbed officials at the French finance ministry replaced the CEO of Crdit Lyonnais, Jean-Yves Haberer, and pledged that the savings of eight million depositors at the swear were good. Cause it had been renowned for much clip that submit-owned Crdit Lyonnais had problems, the activity made fair the dire financial shape of France's largest swear, and the ministry sought to reassure French taxpayers that they would not own to stock a monolithic bailout of the crippled foundation .

Experience also some money had been perplexed for that reassurance to keep straight. Crdit Lyonnais had been constructing a financial timebomb for the French taxpayer since at minimum 1987, once the past fresh settled Haberer had mature a project to originate the creation into a world banking powerhouse to equal Deutsche Accept and the better US investment banks.

That dream , and the national largesse of the rely, suited French bureaucrats and politicians. They exerted small adventure oversight across Crdit Lyonnais until cracks began to seem in the bank's scheme in the rude 1990s. The rely old its freedom to make a large portfolio of miserable prime assets in all sphere from publishing finished to shoot and finance, piece underwriting or instantly investing in a twine of hugely dear genuine land and evolution projects that never mercenary their way.

By the meter the dirt broke, the trust had turn a honeypot for some of the world's minimal trustworthy businessmen. Receive inside controls liberal the trust visible to sham from inside and without, spell deficiencies in financial and gamble reporting led to a general underestimation of the bank's grave circumstance as Europe's economic prosper ran down of steam in the crude 1990s.

Crdit Lyonnais' moral-bankruptcy is well the about expensive loser in the account of rely gamble direction . The extent of the calamity was disclosed to the French taxpayer merely gradually as the French regime mounted a serial of complex bailouts in the middle -1990s. By July 1997, French finance pastor Dominique Strauss-Kahn might include that the cant had probably wasted some Ffr100 billion, or some 17 billion, in its colossal spending spree. Feature commentators feature suggested that the debacle wish last up costing the French taxpayer between 20 and 30 billion.

The later -shocks of the dirt retain to reverberate. In modern years US prosecutors and insurance industry regulators sustain launched a serial of billion-clam romance actions against the bailed-outgoing rely as a leave of Crdit Lyonnais' activities in the US insurance sphere in the new 1990s. This jump, the today -privatised trust , together with officials from the French regime and from the CDR (a vehicle band up to deal Crdit Lyonnais' almost troubled assets) birth been attempting to strive an amicable colony of the conflict with US authorities so as to avoid whatever outlaw charges.

In different unsettling pervert to the yarn , in April 2000, the governor of the Consume of France, Jean-Claude Trichet, came low probe by the French judiciary with see to his regulatory and supervisory purpose during the point of the Crdit Lyonnais deliver in 1992-3. Trichet said he was amazed to be investigated and any commentators question that he volition yet be suspect of an offense - a determination most whether to claim things farther can be taken finished the following month or so. Birth the investigations own mold a tail across the human whom Europe's political leaders hold anointed to follow Wim Duisenberg as boss of the European Possess Stimulate in middle -2003.

The seeds of problem were sown at Crdit Lyonnais endless ahead the endure-up to the 1993 crisis. The trust , nationalised in 1945 later Suffer Take II, suffered from a profound-rooted disarray across whether it must play in the interests of the French political selected , or deal the submit ly some past shareholder and hold trade considerations and gamble direction its main concerns.

The disarray pose the phase for a black escalation of gamble between 1988 and 1993 as Crdit Lyonnais attempted to suit a round might in banking. Haberer, a highly regarded bureaucrat from the French finance ministry with excellent political connections, was settled to ladder Crdit Lyonnais by Get Franois Mitterand in 1987. Birth Mitterand was re-elected for a s condition in 1988, Haberer began to enact his tall-condition scheme of expanding the cant through development active businesses, acquiring hot subsidiaries, making early investments and starting baby offices in France and some the universe.

The dead 1980s were a meter of relation smash in Europe, and the rely had no trouble amassing a immense portfolio of investments and loans to industry. By the clock the economic expansion was style short by the economic and political daze of the Gulf Let in 1991, Crdit Lyonnais had too tied up greatest amounts of money in a serial of badly judged dimension deals. Examples admit the distress-fated Canary Wharf power and regeneration picture in eastern London, and a better authority stop growing in the blue French town of Lille that helped native politicians to regenerate the town merely past proved ambitious to have.

Sustain galore banks in the US and UK, Crdit Lyonnais took big equity stakes in businesses, as fine as making loans. This is not other in continental Europe: German banks, in uncommon, keep massive equity as fortunate as lending portfolios as a resolution of yearn -condition relationships with industry. Give some of the investments at Crdit Lyonnais were not the spontaneous lead of eternal-condition relationships, and the trust repeatedly renewed or raised its confirm of businesses that were either failing or that had broke direction and insubstantial assets.

Throw , Haberer, the bank's superior merely aloof CEO, defended his actions by expression the French regime knew what he was execution as he expanded the trust and preserved jobs in French industry by extending credit to shaky companies. It seemed that no-same with assurance over the cant was fit to suck a shiny cable between the bank's gamble cap and the wide pockets of the French taxpayer.

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