william the wie
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- Nov 18, 2009
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- #21
I noticed a curious silence on this subject so I went to MSN.com and found one video reference to tranche lawsuits. It turns out that the courts put these lawsuits at the bottom of the list and it takes 25+% ownership in the pool to bring suit. If at all possible these cases are settled out of court. There is at least one case coming to trial already against some small fry securitizer I have never heard of.The fraudulent MBS tranches are probably a bigger problem than the foreclosure mess. My guess is that that will run 20 Trillion or higher to settle depending on whether RICO is triggered.
It is hard to say how many MBS are still unsettled. The Fed bought as many as possible to shield the banks from these kinds of risks......
This save the banks/screw the economy mentality is the MOST obscene corruption evidenced in the whole recession.
The only way I know of that this trial could even be on the docket is if a deep pocket law firm combined with a hedge fund back in at least 2006 and signed up enough retirement funds to shorten the waiting list for trial. Because it would be insanely reckless to sign up 25% with US retirement funds (A Canadian bank did this with a Wisconsin school board early on in the boom using a synthetic CDO CDS and the case flew through the courts with some criminal indictments so that crap stopped quick.) I suspect a hedge fund was also needed for funding no matter how rich the law firm was.
If there is a lawyer on the board feel free to correct my legal errors if any but I thought lawyers could not collect more than their clients in cases like this. If so preparations for this lawsuit would have had to begin in 2004 to get the capital needed to go forward and evidence of fraud would have had to be nearly overwhelming back then to get this much capital tied up for so long.
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