In an earlier post (here), I noted how the subprime related securities litigation wave has reached the bond insurance sector. The forces creating turmoil for the bond insurers have now reached another company in the credit enhancement business, leading to a further subprime-related litigation.
According to its December 7, 2007 press release (
As I have previously detailed (refer here), the subprime meltdown has led to a flood of new securities lawsuits. The extent to which many of these subprime-related lawsuits will withstand judicial scrutiny still remains to be seen. A recent opinion from the Central District of California — which is as far as I know
As I have previously noted (here), subprime risk may be found in some unexpected places. But since I first wrote about the dispersion of subprime risk, subprime contagion has spread to other parts of the credit marketplace. As a result, the credit meltdown story is no longer just about subprime.
On November 21, 2007, plaintiffs’ lawyers initiated separate securities class action lawsuits against the Federal Home Loan Mortgage Corporation (better known as Freddie Mac) and against bond insurer ACA Capital Holding. Both of these lawsuits reflect the deepening seriousness of the credit problems arising from the subprime lending meltdown, and the problems besetting
For those keen to cast blame for the subprime meltdown, the rating agencies have already emerged as a favored target. For example, when Citigroup recently announced (here) a significantly increased write-down of subprime mortgage assets, it attributed the action to recent rating agency asset downgrades.
The rating agencies’ own shareholders have already jumped
In the days following Citigroup’s November 4, 2007 announcement (here) that it would be writing off an additional $8 to $11 billion due to declines in values of U.S. subprime related debt exposures, as well as its announcement (here) of the departure of its Chairman and CEO Charles O. Prince,
If you are like me and you don’t feel fully briefed on Option-ARM mortgages, then you will want to read the September 2006 Business Week article entitled “Nightmare Mortgages” (here) describing the pitfalls of Option-ARM loans. Among other things, the article states: “The option adjustable rate mortgage (ARM) might be the riskiest and
Investors undoubtedly were angry after Merrill Lynch announced on October 24, 2007 (here) that the company’s 3rd quarter results included “write-downs of $7.9 billion across CDOs and subprime mortgages, which are significantly greater than the incremental $4.5 billion write-down Merrill Lynch disclosed at the time of its earnings pre-release.” The $3.4 billion write-down
As the subprime mortgage mess has unfolded, one of the contributing factors blamed for the meltdown has been the complicated investment instruments into which the subprime mortgage loans were packaged and then sold into the global financial marketplace. I have previously noted (most recently here) that the subprime mortgage meltdown has led to a
In a prior post (here), I noted that one of the scarier aspects of the subprime lending mess is the widespread dispersion of mortgage investment risk across the economy. While companies holding mortgage-backed assets might well want to avoid recognizing any diminution of these assets’ valuation, an audit industry group, the Center for