As the credit crunch of the subprime meltdown continues, a recent question has been whether a government or private bailout of the troubled bond insurers is on the way. While early reactions were positive, recent events seem to indicate that a bailout by state and federal regulators or private industry is getting more unlikely by the day.
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Subprime/Credit Crisis Developments
Federal Court Dismisses Subprime Class Action Claims
By Troutman Pepper Locke on
Late last year, the United States District Court for the Central District of California dismissed a securities class action claim against IndyMac Financial, Inc. and several of its officers and directors because the plaintiffs failed to plead scienter.
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Recent Study Finds That Securities Class Actions Increased Significantly in 2007 Due to Subprime Crisis
A joint study conducted by the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research recently concluded that there were 166 securities class action lawsuits filed in federal courts nationwide last year. This is a 43% increase from 2006. …
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Bond Insurer’s Decision to Cede Control to Regulators Could Foreshadow Trouble For The Municipal Bond Market
By Troutman Pepper Locke on
In a move that could signal trouble for the municipal bond market, troubled bond insurer ACA Capital Holdings Inc. has agreed to cede some control of its bond insurance operations to Maryland Insurance Regulators. In exchange, the regulators have given ACA a thirty-day waiver from posting additional capital, which it was required to do after Standard & Poors cut its credit rating on December 19, 2007.
Barclays Sues Bear Stearns Over Subprime Hedge Fund Losses
By Troutman Pepper Locke on
Posted in Subprime/Credit Crisis Developments, United States
On December 19, 2007, Barclays, PLC, Britain’s third largest bank, filed a lawsuit against Bear Stearns in federal court over subprime losses from a failed Bear Stearns hedge fund. As we reported earlier this year, two hedge funds managed by Bear Stearns went bankrupt this summer because their investments were highly concentrated in the sub-prime market. …
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Government Moves to Prevent Foreclosures and Other Fallout from the Subprime Meltdown
Earlier this month, President Bush announced a voluntary five-year interest rate freeze plan for subprime borrowers facing large increases in their monthly mortgage payments due to rate resets.
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Bear Stearns Faces Arbitration Claims Over Hedge Fund Subprime Losses Following Administrative Action in Massachusetts
Several investors in a failed Bear Stearns Hedge Fund recently filed arbitration claims against two subsidiaries of Bear Stearns Companies, Inc. — Bear Stearns & Co., Inc. and Bear Stearns Securities Corp. The investors are represented by a group of four law firms with extensive arbitration experience against hedge funds. The fund at issue — the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage (Overseas) Fund — is one of two Bear Stearns hedge funds that filed for bankruptcy earlier this year after suffering heavy losses from their investments in subprime debt.
Indiana Charity Files Arbitration Claims Against Bond Fund Advisor Over Subprime Losses
Last week, an Indiana charity that “makes wishes come true” for children with life threatening illnesses filed arbitration claims over subprime related losses it allegedly suffered in a bond fund managed by Morgan Keegan & Co. The Indiana Children’s Wish Fund claims that it lost $48,000, or 22% of its $220,000 investment, in the Regions Morgan Keegan Select Intermediate Bond Fund. …
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U.S. House of Representatives Passes Subprime Legislation Targeting Wall Street Banks
As the number of home foreclosures continues to rise, the United States House of Representatives recently passed legislation directed at a range of players involved in the subprime crisis.
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Shareholders File Class Action and Derivative Suits Against Merrill Lynch Over $8.4 Billion Subprime Write-Down
A shareholder class action suit was filed against Merrill Lynch & Co. on October 30, 2007 following an announcement by Merrill Lynch that it would have to write-down $8.4 billion in connection with mortgage-related investments. The charge for that write-down is being taken in the third-quarter of 2007.