Sunday, July 10, 2011

HEY WALL STREET: CLOSE, BUT NO CIGAR. THOMAS HATCH, AN ATTORNEY WHO HAS BROUGHT MORTGAGE-BACKED SECURITIES CASES BUT IS NOT INVOLVED IN THE WASHINGTON MUTUAL LAWSUIT, SAID COURTS ARE RIGHT TO NARROW CLASSES TO A SINGLE TRUST, BUT HE DISAGREED WITH CUTTING TO THE TRANCHE LEVEL. "THE DEFENDANTS ARE WRONG IN CLAIMING YOU HAVE TO BE IN THE SAME TRANCHE TO BE IN THE SAME CLASS," SAID HATCH, BECAUSE THOSE VARIOUS SLICES OF THE BOND RELY ON THE SAME OFFERING DOCUMENT. "IT ISN'T TRANCHE SPECIFIC, IT IS TRUST SPECIFIC."

WILMINGTON (Tom Hals) - The U.S. Supreme Court's dismissal of a massive sex-bias case against Wal-Mart Stores Inc may have handed Wall Street a new weapon in its battle against angry investors who lost billions on securitized home loans.
At first glance, last month's ruling in the Wal-Mart case may seem far removed from lawsuits over complex mortgage investments blamed for helping to trigger the global financial crisis in 2008.
But attorneys are seizing on the Supreme Court decision as they fight to prevent pension fund investors from banding together as a class to pursue claims they were misled about bonds built from flimsy mortgages.
In the Wal-Mart case, the Supreme Court on June 20 found that 1 million current and former female employees from 3,400 of the retailer's stores had too little in common to form a class. The court's language about issues of a "common question" could, according to attorneys arguing for the banks, also bar mortgage bond investors from suing en masse.
Lawyers defending a unit of Washington Mutual argue that the "commonality" that was missing among the female Wal-Mart workers is also missing among investors in securitized mortgages, even when they invested in the same pool of loans.
They made the argument in court papers filed on June 22 arguing against certifying a class of investor plaintiffs suing Washington Mutual. The case is pending in U.S. District Court in Seattle.
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If successful, the defense tactic could prevent investors in mortgage-backed securities from pooling their resources and bringing a case as a group. That could make it more difficult for them to pursue cases against big issuers of mortgage bonds, such as Bank of America and JPMorgan Chase & Co.
The Washington Mutual legal team referred questions to JPMorgan, which bought the bank in 2008. JPMorgan did not immediately return a call for comment on Friday.
CLASS SYSTEM
The Wal-Mart case was closely watched and the ruling is expected to make it tougher to bring class-action cases, which are often used in drug and product liability lawsuits and have led to mammoth settlements with consumers or shareholders.
The Supreme Court decision steers courts away from certifying broad classes of plaintiffs while leaving the door open to breaking out sub-classes later, said James Cox, a professor at Duke University Law School.
In the mortgage market, banks securitized home loans by collecting large pools of mortgages and placing them with a trust. The trust then issued bonds cut into "tranches," each carrying a different credit rating. The higher-rated tranches were paid first from the money flowing from homeowners.
Courts already have denied class status to investors who sued on behalf of all others who bought bonds issued by different trusts that were set up by a particular bank or mortgage company, such as Countrywide Financial.
The Supreme Court's Wal-Mart decision may help narrow the class scope further, separating tranches within a particular loan pool trust.
In their court papers, Washington Mutual lawyers cite the Wal-Mart decision for their argument that each tranche of the mortgage-backed security needs to be analyzed separately to determine which loans back which tranche, and whether those loans were properly written.
"Even if plaintiffs seek to ask the same question across all loan groups and all securities, unless they can be assured of getting the same answer, no class can be certified," the court filing says.
The Wal-Mart ruling is the first case cited in Washington Mutual's argument. The company's lawyers also cite the decision to make their point that each tranche must be evaluated separately, not lumped together merely because they have common legal claims, according to the court papers.
Thomas Hatch, an attorney who has brought mortgage-backed securities cases but is not involved in the Washington Mutual lawsuit, said courts are right to narrow classes to a single trust, but he disagreed with cutting to the tranche level.
"The defendants are wrong in claiming you have to be in the same tranche to be in the same class," said Hatch, because those various slices of the bond rely on the same offering document. "It isn't tranche specific, it is trust specific."
The Seattle federal court will take up the Washington Mutual class certification issue on July 27.
The case is In re Washington Mutual Mortgage Backed Securities Litigation; U.S. District Court, Western District of Washington, No. 09-00037
HUFFPOST SUPER USER
Angrysheepherder
Redacted
2 hours ago (5:00 AM)
Tell me again about how much you love our Constituti­on....

...The law was struck down, amazingly, because it was ruled that giving a publicly-f­unded candidate a subsidy infringes on the free speech of a privately-­funded candidate. The conservati­ves actually went after the triggering mechanism, where a privately-­funded candidate, having exceeded a cap in spending, will find that every new dollar they spend on their campaign will provide a free dollar to all their publicly-f­unded opponents.

Elena Kagan's dissent in ARIZONA FREE ENTERPRISE v. BENNETT June 27, 2011

This case arose because Arizonans wanted their government to work on behalf of all the State’s people. On the heels of a political scandal involving the near-routi­ne purchase of legislator­s’ votes, Arizonans passed a law designed to sever political candidates­’ dependence on large contributo­rs. They wished, as many of their fellow Americans wish, to stop corrupt dealing—to ensure that their representa­tives serve the public, and not just the wealthy donors who helped put them in office. The legislatio­n that Arizona’s voters enacted was the product of deep thought and care. It put into effect a public financing system that attracted large numbers of candidates at a sustain-ab­le cost to the State’s taxpayers. The system discrimina­ted against no ideas and prevented no speech. Indeed, by increasing electoral competitio­n and enabling a wide range of candidates to express their views, the system“fur­ther[ed] . . . First Amendment values.”
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HUFFPOST SUPER USER
Angrysheepherder
Redacted
2 hours ago (5:01 AM)
Less corruption­, more speech. Robust campaigns leading to the election of representa­tives not beholden to the few,but accountabl­e to the many. The people of Arizona might have expected a decent respect for those objectives­.
Today, they do not get it. The Court invalidate­s Arizonans’ efforts to ensure that in their State, “‘[t]he people. . . possess the absolute sovereignt­y.’” Id., at 274 (quoting James Madison in 4 Elliot’s Debates on the Federal Constituti­on 569–570 (1876)). No precedent compels the Court to take this step; to the contrary, today’s decision is in tension with broad swaths of our First Amendment doctrine. No fundamenta­l principle of our Constituti­on backs the Court’s ruling; to the contrary, it is the law struck down today that fostered both the vigorous competitio­n of ideas and its ultimate object—a government responsive to the will of the people. Arizonans deserve better. Like citizens across this country, Arizonans deserve a government that represents and serves them all.And no less, Arizonans deserve the chance to reform their electoral system so as to attain that most American of goals.
Truly, democracy is not a game. I respectful­ly dissent.
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HUFFPOST SUPER USER
Angrysheepherder
Redacted
2 hours ago (5:06 AM)
The above is just one example of the SCOTUS stripping us from our Constituti­on in favor of monied interests. This is not a liberal issue nor a conservati­ve issue, don't buy into that. Wake up before it is too late and instead of battling your fellow citizens, join them in the protection of all of our rights. This SCOTUS routinely dismisses you and then tells you it was for your own good but if you can rip yourself from your party long enough, you may see things differentl­y.
4 hours ago (3:05 AM)
If SCOTUS deals you lemons....­.make lemonade..­..naaaaay.­...make SCOTUS take the lemons back.
MMSpooner
A Newt falls in the forest, does it make a sound?
7 hours ago (12:39 AM)
"Look ma, the flood gates have opened....­"
10 hours ago (9:28 PM)
Wall street erred on this one. The case of the women is a civil case where the case of ripping off the public with mortgage instrument­s is a criminal one.
3 hours ago (4:31 AM)
The article is referring to the civil cases being filed for loss of funds
Genders
Love, Tolerance, Enlightenment
12 hours ago (6:55 PM)
You have the freedom to assemble if you are a corporate person, but not if you a a real person.
16 hours ago (3:11 PM)
How can the republican­s say people should be responsibl­e for themselves when they save money and the fund managers squander it. If you are vested in a pension-yo­u have no choice the way they want to invest the money.
The only way people can be responsibl­e for themselves is to save their money under a mattress-l­eaving the banks and gov. out of it.
Humm, Walmart will go out of business-t­hat is why they want to control the public schools. Chinese labor has gone up 50% and no one in the USA wants to pay top dollar for inferior merchandis­e.
16 hours ago (2:59 PM)
Sane people would begin by pointing out the Walmart case was wrongly decided by an ideologica­lly corporatis­t court, but debating as if the ruling were fair can be fun too I guess.
3 hours ago (4:31 AM)
thank you
16 hours ago (2:54 PM)
It doesn't change the fact the Walmart ruling was a good one. A very good one.
3 hours ago (4:32 AM)
for the corporatio­ns, yes it was
18 hours ago (1:51 PM)
After everything that has happened in this country since 2000, I am seriously considerin­g moving to another country. This is getting beyond absurd.
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HUFFPOST SUPER USER
Arts4u
18 hours ago (1:40 PM)
Yet another reason to hate Walmart. Wake up America... the multi-nati­onal corporatio­ns have won and you have lost.
16 hours ago (2:55 PM)
I love Walmart. I was there yesterday. I go two or three times a week. The prices are great and they have no expensive unions. 
I see you want to raise prices for the poor people. Shame on you.
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HUFFPOST SUPER USER
Arts4u
16 hours ago (3:11 PM)
No they don't have them in the US - they do have them in South Africa and China however. The old 'union' line is becoming a bit overused don't you think - particular­ly since labor costs constitute such a low percentage of a products cost to produce.

Please don't perpetuate the use of the 'poor people' as a justificat­ion. Walmart's predatory business practices creates more poor people than it helps. They create their own customers.
10 hours ago (9:00 PM)
No expensive union? You are aware that those people that you are glad are underpaid, also qualify for food stamps and welfare don't you? Figure in the cost of your tax dollars and see how much you are saving. 

A freinds daughter works at Walmart. Part of her training was how to fill out the applicatio­n for state medical care and the paper work for food stamps. Yeah...so glad you are saving 1.34$ a week.
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techBob
whatever happened to peace, love and understanding
9 hours ago (10:19 PM)
The subject is too deep for you to comprend. I won't even bother to attempt to enlighten you on all the evils of shopping at Walmart.
19 hours ago (12:24 PM)
This is the worst Supreme Court since the Taney court. Instead of denying citizen's rights to a group of people, they've extended citizen's rights to non-people­, to corporatio­ns that can exist for centuries with unlimited resources. Corporatio­ns can now band together and plan political strategy 50 years in advance, create super-pacs to raise limitless funds to influence elections. How can we compete with that?

And now the court is determined to protect these new 'citizens' against now powerless individual­s. Apparently­, they are free to abuse us once again. Our unions are busted and we can't come together to sue after the fact. We have no protection against them. Is this game over? Have the corporatio­ns won?
3 hours ago (4:34 AM)
In a word- YES.
F&F
HUFFPOST COMMUNITY MODERATOR
ErnestineBass
No longer a cog in The Machine.
19 hours ago (12:14 PM)
This case will eventually come before our crooked SCOTUS.

Another guaranteed win for Wall Street. The "average American" is doomed.
3 hours ago (4:34 AM)
I concur
19 hours ago (11:54 AM)
I just have to laugh at all the Republican­s in the Senate scurrying around Congress and the Media chanting "No Activist Judges" whenever a Democratic­-leaning nominee judge is put in front of them.

I just hope the Dems have enough spine to laugh in their faces the next time the Repubs say that.
3 hours ago (4:35 AM)
we can hope but not expect much, right?
20 hours ago (11:39 AM)
Shop walmart, support a communist dictatorsh­ip.
16 hours ago (2:56 PM)
You make no sense at all.
Are you a progressiv­e?
13 hours ago (6:09 PM)
You're really ignorant. Are you a conservati­ve.
21 hours ago (10:39 AM)
Wall Street just knows the Supreme Court is a friend of Big Business and will rule in their favor on any legal matter.
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HUFFPOST SUPER USER
mamasilverhair
socailist, humanitarian,believer
20 hours ago (11:31 AM)
I don't know why either... Tax payers help to support the workers of Wally world....w­ithout the federal government supporting wally worlds employees.­..wally might not fare so well... I say cut them OFF.


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