But here's a very real effect that it is going to have related to the current subprime mortgage crisis:
A Group Approach To Coping With The Subprime Mortgage Crisis
The Editor Interviews Joseph L. Buckley , Co-Chair, Litigation Department; Chair, Banking Litigation Practice Group, Sills Cummis & Gross P.C.
Editor: Let me ask about how you are involved in this?
Buckley: My own experience has been in representing banks. My clients find themselves in the dual role of plaintiffs and defendants in the current crisis. They are being hit by class action claims based on allegations by groups of home owners that they were misled. At the same time our bank clients are asserting claims against unscrupulous parties that helped put these packages together. Of course, many of the more unscrupulous parties that have caused these troubles are no longer to be found, having filed for bankruptcy or skipped town. It will be difficult to recover against many of the smaller title insurers and mortgage companies, because while they may have insurance, it almost certainly is not enough to cover substantial losses incurred by the banks.
Editor: Are cases being filed in both state and federal courts?
Buckley: So far we have been seeing more of them in the state courts. Securities claims are being filed in the federal courts. As time goes on, we are going to be seeing more RICO claims brought in federal court. Complex multi-party litigation often is brought in state court because it is sometimes difficult to achieve diversity of citizenship, particularly where there are multiple plaintiffs.
In the case of class actions, plaintiffs' counsel strive to keep the litigation in the state courts. We usually try to remove them to the federal courts in order to get the benefit of the Class Action Fairness Act (CAFA). Editor: You mentioned class actions. Tell us about the types of class actions that you are seeing.
Buckley: We are seeing class actions by clever plaintiffs' lawyers directed at attacking various aspects of the subprime lending operation, including claims that there was insufficient notice given the consumers about how the loans were priced. Ultimately we don't think that these claims have merit. More of them are being filed and my expectation is that the plaintiffs' lawyers believe that they have the right environment to have the claims given attention by the courts.
Class actions are being brought in state courts that would not otherwise survive in a federal court. We have been representing bank clients in such cases, not just in New Jersey but in other states as well. One of my partners, who was co-chairman of the ABA's Committee on Class Action Litigation, has been arguing in courts throughout the country.
http://www.metrocorpcounsel.com/current.php?artType=view&artMonth=March&artYear=2008&EntryNo=8001Maybe you want to put it in the unintended effects category. I'm not sure. But consumers and ordinary citizens did not ask for this bill to be proposed or passed. I know Madison was getting ridiculous but there were better ways to address the issue than this bill. I know Obama tried to fix it, and that says a lot, but the bottom line is this was, perhaps, a rookie mistake on his part.