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.
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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