Prepared by: Richard K. Traub Traub Lieberman Straus & Shrewsberry LLP.
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Transcript of Prepared by: Richard K. Traub Traub Lieberman Straus & Shrewsberry LLP.
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Prepared by:Richard K. Traub
Traub Lieberman Straus & Shrewsberry LLP
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![Page 3: Prepared by: Richard K. Traub Traub Lieberman Straus & Shrewsberry LLP.](https://reader038.fdocuments.net/reader038/viewer/2022102513/56649ef05503460f94c006da/html5/thumbnails/3.jpg)
![Page 4: Prepared by: Richard K. Traub Traub Lieberman Straus & Shrewsberry LLP.](https://reader038.fdocuments.net/reader038/viewer/2022102513/56649ef05503460f94c006da/html5/thumbnails/4.jpg)
What is the Government DoingRegulatory Reform Bill
Too Big Too Fail – No MoreAdvance Warning SystemTransparency and Accountability for Exotic
InstrumentsExecutive Compensation and Corporate
GovernanceEnforce Regulation Already on the BooksNew Consumer Financial Protection Watchdog
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Modernization of RegulationCurrent U.S. System – same since 1850’sRegulated by the States (51 jurisdictions)IAIS (International Association of Insurance
Supervisors):Financial and SolvencyCorporate GovernanceMarket Conduct
No National Level Regulator – How can we be deemed “equivalent” to Solvency.
Most Regulated Industry – but Ineffective.
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U.S. TORT SCHEME:Were There is Blame, There Will be a ClaimWhere are the Potential Claims?
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Fiduciary LiabilityERISA (Employee Retirement Income
Security Act)Claims against administrators of pension and
other benefit plans.Bad investments including investments with
Madoff.Intentionally misleading investors
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Directors and OfficersSecurities SuitsSecurities FraudGoldman SachsShareholder SuitsCorporate BankruptciesFailed Banks
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Errors and Omissions Claims Against Ratings Agencies
MoodysStandard & Poor’sFitch
Based on alleged inflated bond rating given to mortgage back securities.
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Sub-Prime Mortgage Claims
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Sub-Prime Mortgage Facts
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Type of LawsuitsHomeowners vs. LendersMortgage Lenders vs. Wall Street BankersWall Street Bankers vs. Loan SpecialistsInvestors vs. Everyone
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IssuesWhether lenders and investment banks
alerted borrowers to the risks imposed by subprime loans or the securities backed by them, and
How much were they legally obliged to disclose?
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LitigationPrimarily focused on loan origination – BUTThe number of cases has quadrupled this
year.43% - class actions22% - securities cases22% - Commercial contract disputes23% - bankruptcy, employment,
professional
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Anticipated Suits v. Every Participant in the ProcessMortgage Bankers and Loan Correspondents Mortgage BrokersLendersAppraisersTitle CompaniesUnderwriting FirmsBond InsurersMoney ManagersPublic Accounting FirmsD & O’sLawyersReal Estate Brokers - Fiduciary
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E & O InsuranceClaims v. Hedge Funds
Failure to disclose investment fund’s risk and exposure to toxic assets. Bear Stearn’s Citigroup UBS v. Global, Inc.
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CGL CoverageHousing Discrimination Claims
Targeting minorities with predatory lending practices.
Foreclosure Nuisance ClaimsCleveland v. mortgage lenders claiming that
foreclosure practices have led a public nuisance (blighted neighborhoods).
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Employer Liability CoverageClaims by Laid off Employees
Discrimination complaints
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Key Threats to InsurersSoft Market and RecessionPrice ErosionOverreaching Regulation Shortage of CapitalExploitation of Insurance as a Wealth
Distribution MechanismNationalization of Insurance System
CAT risks TARP money
Emerging Tort Threat and Reversal of Tort Reform