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Greedy Themis

The U.S. financial crisis turned into gold rush for lawyers

 

Cross linked with lenta.ru

“For most of its activity — Wright turned into a battle for the preservation of the values of the American way of life.”

Lenta.ru (Russian: Лента.Ру; stylised as LƐNTA·RU) is a Moscow-based news website in Russian language, owned by Rambler Media Group which belongs to Prof-Media. It is considered one of the most popular Russian language online resources with over 600 thousand visitors daily.

Article translated from Russian

The financial crisis and its scandals have led to the fact that the news about the next multi-million dollar fine imposed on any U.S. bank — has not caused any reaction. In the mass consciousness Pays (Translation lost) was responsible for the collapse. This is true. But where it comes to justice, always meet a lawyer. Economic problems in the U.S. not only cooled the passion of Americans to litigious, but also brought it to a new level – in fact with the help of the court can not only get justice, but also to significantly improve their financial situation.

Precedents and examples Accepted in the United States case-law system allows and even encourages the government and independent organizations constantly develop new ways of interacting. Often this opposition wins, ordinary citizens, and especially – lawyers representing them. In 1999, the fee law firm Motley Rice, which helped prosecutors U.S. states sue tobacco companies amounted to about a billion dollars, and the loss of tobacco companies were estimated at 246 billion. However, not all trials in the United States devoted to such serious topics as compensation for smoking undermined people’s health. For Americans, legal litigation – is not only the administration of justice, but also a kind of social barometer. Any technological innovations immediately grows legally binding rules and precedents. After the introduction and spread of the Internet United States pioneered in the regulation of its activity. Sometimes, of course, and funny things happen. For example, the publication of The Huffington Post in mid-July, reported the claim of the former attorney Chris Sevier (Chris Sevier) to Apple. Computer company accused of selling devices without restrictions on access to pornography. The publication cites a claim Sevier describing his experience with the sites for adults who are “called out to his biological instincts as men and led to the dependence of the negative unintended consequences.” Apple reaction to the claims of the Sevier unknown. It is likely that Cupertino did not even smile, because the flippant attitude to justice is fraught with enormous costs and loss of reputation. Abroad was 1999, the year when General Motors was ordered to pay $ 4.9 billion of fines and compensation for the construction of fire-prone gas tank model Chevrolet Malibu. Corporation lawyers finally managed to convince the judge to reduce the payments to 1.2 billion, but the precedent was set. If in the early 2000s, the plaintiffs’ lawyers were considered a victory payment of several million dollars in the coming years due to go into hundreds of millions and even billions, and the end of the decade for the servants of Themis and all went gold. Accompanied the financial crisis of 2007-2009, the losses and confusion led to an increase in demand for legal support on the part of all concerned. Banks and mortgage agencies needed good lawyers to settle claims by the state and at the same time for the recovery of damages from former business partners. The new Democratic administration required the support of people tired of pandering to big business and individual borrowers – expert advice for interacting with mortgage institutions and the state.

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Thus, all the legal battles associated with mortgage-backed bankruptcy, compensation for excessively expensive and illegal investments, cheating customers, and so on, can be divided into several groups: claims adjuster for financial institutions, proceedings of credit institutions with each other and the confrontation of individual borrowers banking arbitrariness. In late August, experts Bloomberg reported that the six leading banks in the U.S. since 2008, spent 103 billion dollars in compensation and settlement of any claims. This amount also includes the payment of costs and expenses for lawyers. To better understand the scope of legal costs in the Bloomberg estimate that within five years, banks have paid dividends to its shareholders less than left to the courts. The study’s authors cautioned that the banks’ losses will likely not be limited to a hundred billion dollars, and lawsuits from disgruntled investors and the government can come back in a decade. Considering the deep-rooted tradition in the United States, there is every reason to believe that the totals will exceed the most pessimistic forecasts. United States v. JP Morgan According to Bloomberg, who suffered most from the legal costs the bank JP Morgan, which is spent on legal proceedings 21.3 billion and eight billion has been allocated to cover future legal costs. At the bank’s CEO Jamie Dimon (Jamie Dimon) have every reason to expect the worst. In late August, The Financial Times reported that the Federal Agency for Housing Finance (The Federal Housing Agency) intends to receive the credit institution to six billion dollars of compensation. JP Morgan accused of selling quasi-state mortgage companies Fannie Mae and Freddie Mac securities to $ 33 billion, which, contrary to the interest of the seller, had not been properly secured. As a result, after the collapse of the mortgage market in 2007, the securities are impaired, and fallen under state control of Fannie Mae and Freddie Mac have suffered substantial losses. The case against JP Morgan was instituted in 2011. Hardly a great comfort for the bank will be the fact that there are still under investigation 17 lending institutions. The claims of the authorities to JP Morgan can be considered a good illustration of the processes specific to the period of 2008-2013, when one of the numerous federal oversight agencies finds irregularities in transactions with mortgage-backed securities, and if the bank is trying not to contest the conclusion of the authorities, or at least reduce the inevitable fine. In their attempts to keep the profits lenders increasing the pressure on the most vulnerable members of the market – individual borrowers. The little man against the big bank As if anticipating such a scenario, the administration of Democrat Barack Obama in 2010 as part of wide-ranging reforms of the financial industry has created the Bureau of Consumer Protection Financial Services (The Consumer Financial Protection Bureau). The main objective of agencies – to protect the interests of end consumers of credit products, ordinary Americans. And they were quick to take the opportunity to complain to the banks and mortgage agencies. According to the Bureau, since the launch it has received more than 170,000 complaints. Approximately half of them are U.S. citizens claim to financial institutions over mortgage. Investing Answers edition in mid-December 2012 has asked the Bureau of the information on which banks often incur the wrath of U.S. citizens. In antireytinge were Bank of America (9,9 thousands of complaints), Wells Fargo (5,05 thousands of complaints) and JP Morgan (3,7 thousands of complaints). Complex legal system and the ambiguity of the transactions in the mortgage market has led to some borrowers and their allies — the lawyers tried to resist the financial giants in the courtroom. In particular, Bank of America had to face a former client of the mortgage company Countrywide — John Wright. Countrywide was taken over by the bank before the financial crisis in early 2008, and its liabilities transferred to the customer. Wright bought property in 2004 with the help of a loan from Countrywide with a fixed interest rate. The company then offered to change the fixed interest payments on floating rate on that Wright agreed. Once he realized that the new plan has led to an increase in the monthly payments, the borrower tried to go back to the previous version. But it was fraught with considerable difficulty – Wright argues that the mortgage company, and then the Bank of America delayed the paperwork, but a return to a fixed rate yielded savings of $ 61 — while the monthly payments reached $3,300. The confrontation with the bank so angered Wright, in 2010 he created an information resource Piggybankblog.com, exposing the schemes by which the largest U.S. financial institutions engaged in mortgage lending.

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fixed(Picture of Wright) — Activists block the street in New York City as a sign of protest against Bank of America. In 2011, Wright decided to support the law firm Brookstone Law. The company’s website states that the process is not yet complete, and Wright was joined by other customers dissatisfied with the actions of the bank. It is significant that Brookstone Law also does business against Wells Fargo and JP Morgan. For most of its activity — Wright turned into a battle for the preservation of the values of the American way of life. From this story, “I cannot help but conclude that as a direct result of my experiences and Bank of America’s potentially irregular, fraudulent and simply abusive home loan modification process, we are losing our ability and right to pursue the American dream of life, liberty and the pursuit of happiness,” John Wright said. “That’s why it gives me great pleasure to participate in this lawsuit, which I call “The American People vs. Bank of America.” — said Wright. Company Brookstone Law modestly silent on remuneration, which owed in the event of a successful outcome of the hearing for Wright. Victory for Wright is achievable. On the occasions when banks are forced to concede borrowers periodically according to U.S. media. In early 2012, NBC News Channel on its website cited an example of a married couple Miser (Miser), which is made by Bank of America to reduce monthly payments by 15 percent, and the termination of bankruptcy because of legal discrepancies in connection with the purchase of mortgage debt Miser. In addition, the Bank repaid all court costs. However, NBC News emphasizes that the success of the spouses was the result of access to competent legal counsel. Without it, the situation could take a very different turn..
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Battle of Equal Claims of the state to the banks and mortgage companies were commonplace as the confrontation with the powerful corporate borrowers. Against this background, lost the third and perhaps the most interesting aspect of the lawyers themselves to litigation, namely the conflict between the leading financial institutions themselves. As a model example, the proceedings in the court of Manhattan on the settlement of claims of the investors in the Bank of America for $ 8.5 billion. 22 institutional investors have agreed to give up their claims to the Countrywide and its successor. Media estimated losses from the activity of investors in Countrywide $ 100 billion. Not surprisingly, the amount of compensation did not work for the largest U.S. insurance company which is actively invested in mortgage-backed securities and derivatives – American International Group. On the side of the latter by the Federal Mortgage Bank of Boston, Chicago and Indianapolis. The situation is complicated by the fact that currently a trustee of companies that have agreed to compensation Bank of America, is another giant Wall Street bank BNY Mellon. AIG lawyers are trying to prove that their actions BNY Mellon guided by its business interests and relationships with Bank of America, and not the interests of the customers. AIG still vague prospects – at the end of August the case was still was in court.Legal superpowerWhile financial companies are trying to overcome the effects of the crisis, much less the public sphere of legal services is booming. According to The Wall Street Journal, the leading law firms increased their reward their employees by almost 7.5 percent from 2010 to 2012. In April of this year, the publication reported that the cost of an hour of the leading lawyers may exceed one thousand dollars. The largest American law firm Baker & McKenzie by revenue already can not compete with its customers. In 2012, the company reported the receipt of 2.42 billion dollars. It is unlikely that in 2013, Baker & McKenzie is waiting for a significant drop in profits. The United States, in addition to its status as a military and economic superpower, it can lay claim to the title and a leader in the field of jurisprudence. But such leadership in the long term risks to undo all the progress. Political scientist Francis Fukuyama in his book, “Confidence. The Social Virtues and the Creation of Prosperity, “published in 1995 (in Russian – in 2004), criticized the growing desire of Americans to sue each other. Mistrust in society and the destruction of social relationships negatively affect the economic prosperity, namely, it seems, is still the foundation of the American dream
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6576_1189500263049_1394630858_30558236_2152515_n27-150x150A greeting from John Wright below (not part of article.): Это твой последний шанс. После этого нет пути назад. Если вы берете на себя синюю таблетку история заканчивается, и вы просыпаетесь в своей постели и верим, что вы хотите верить. Однако – если вы берете красную таблетку (ежедневный блог Джона) – вы остаетесь в Piggybankblog.com и я покажу тебе, как глубока кроличья нора. Там не будет пути назад нет, как только вы сделали свой выбор. Помните – все, что я хочу дать вам .правда – не более того.
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Привет мир! Меня зовут Джон Райт! И я борюсь назад некоторые из крупнейших финансовых учреждений в мире!English Translation Here.
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Piggybankblog Courtroom Bailiff: “All rise! .The Honorable Judge John Wright has left the Courtroom of Public Opinion!”
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