Posted on 10/03/2008 2:40:02 AM PDT by TigerLikesRooster
Is Credit Default Swap Litigation the Next Big Thing?
Robin Sparkman
10-03-2008
It seems that hardly a day goes by anymore without someone predicting with utmost confidence that boom times for litigators are just over the horizon.
Thursday's prognostication, courtesy of a media lunch hosted Wednesday by Paul, Hastings, Janofsky & Walker: It's going to be all about the credit swaps.
Robert Claassen, chair of the firm's derivatives group, and Keith Miller, chair of the credit crisis group, told reporters that the banking industry's implosion means that banks with a piece of the $43 trillion market in these unregulated instruments are likely to sue to recoup their losses. And who are they going to sue? Other banks.
A credit default swap, for those of you who aren't versed in the obscurities of sophisticated financial instruments -- a group that until yesterday included us -- is a credit derivative contract in which the buyer makes regular payments to the seller in exchange for the right to a payoff if there is a default or "credit event." Basically, these are insurance contracts, which were widely sold as a hedge against declines in the markets for complex securities.
(Excerpt) Read more at law.com ...
Ping!
That would be just grand. Two groups the most Americans already don’t like very much making a public spectacle of them selves for a few years.
I don’t think the should have been allowed in the first place, but it is too late now.
This is the new scandal waiting just over the next hill. Paulson's cronies make billions and Americans eats the losses.
I heard tonight on Coast to Coast AM that one Senator begged Paulson to revise his bailout bill. The provision in question is buried in the now book-length legislation. It provides that foreign banks may dump toxic mortgages on bank branches here in the U.S.
An example would be Deutsche Bank in Los Angeles receiving bad CDOs. In that event, the U.S. Treasury agrees to take this debt at full book value. American taxpayers will get screwed for full book value of toxic debt worth about ten cents on the dollar !
A better way would be just taking over all 24 Wall Street banks for $ 800 Billion. That way Americans would get some tangible benefit for their tax money.
People need to wake up. This is a MASSIVE FRAUD on America.
The Human Face of Foreclosure . . .
is not a pretty picture. Ever wonder how people could afford over-priced homes together with the primo life style they were living? They did it by carrying massive debt. Seeing the American dream thrown in the dumpster is truly sad.
Watch Video: SoCal Foreclosure Alley
This situation will get WORSE when hundreds of thousands of adjustable rate mortgages reset in the next few months.
Maybe the states can then countersue all those companies selling insurance without a license?
I suggest the best way to disarm it is to reign it in with a simple rule.
If you are the insurer, all premiums must be held in escrow for the duration of the contract.
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