Daily Archives: March 29, 2013


Why Billionaire Sheldon Solow’s $450 Million Libor Case Is Likely To Be Followed By More

Why Billionaire Sheldon Solow’s $450 Million Libor Case Is Likely To Be Followed By More

Billionaire developer Sheldon Solow, who built the tony Nine West 57th tower in New York City, appears to be the biggest individual loser in the Libor scandal in the U.S.—at least so far. He claims that bankers’ malfeasance in the scandal cost him half $1 billion.

But D.C. litigator Michael Hausfeld, who is representing investors in one of the leading Libor cases, says that Solow’s financial loss is just a hint of  what’s to come.

“It’s a drop in the bucket, unfortunately,” says the attorney, who is chairman of Hausfeld LLP. “You’re dealing in a market that’s in the hundreds of trillions.”

He expects more such suits–large money suits affecting high net worth people–to be filed. When asked if he knew of other cases like Solow’s, Hausfeld said “Not yet.”

“He lost half a billion. That’s real money,” says attorney Anthony Michael Sabino, of Sabino & Sabino in Mineola, New York. “I would think that if he’s out there, on the radar, there’s another nine affluent individuals or companies that had a similar problem, but did not sue because there was behind-the-scenes talks and settlements. There might have been threats.”

Solow sued Citibank, Bank of America, JP Morgan, and Credit Suisse in February, alleging that their manipulation of the Libor rate resulted in the wrongful seizure of his bond portfolio. His is the largest case affecting an individual plaintiff, and also the first Libor case to put an exact dollar figure on the financial losses.


Washington law firm sues bank regulator over foreclosure reviews

Washington law firm sues bank regulator over foreclosure reviews

WASHINGTON (Reuters) – A top Washington law firm is suing regulators to hand over information about how it selected consulting firms to participate in a multibillion-dollar review of banks’ past foreclosures.

The reviews, mandated by regulators in 2011 after widespread foreclosure shortcuts came to light, proved slow and expensive, and earlier this year 13 banks agreed to pay $9.3 billion to end them and compensate foreclosed borrowers.

But in a lawsuit in federal court in Washington, D.C., the law firm Williams & Connolly revisited the original reviews.

It is seeking documents explaining how the Office of the Comptroller of the Currency defined “independent” in its requirements for mortgage servicers to hire “independent consultants” to conduct the reviews.

The law firm declined to identify the client on behalf of which it filed the complaint.


Bank of America tops list of mortgage complaints by borrowers

Bank of America tops list of mortgage complaints by borrowers

The lender has accounted for 30% of complaints to the Consumer Financial Protection Bureau, with two-thirds of them involving modifications.

Bank of America Corp., which handles customer service on about 15% of U.S. home loans, has accounted for 30% of the mortgage complaints logged by the Consumer Financial Protection Bureau, according to a new database made public by the federal watchdog.

The level of customer discontent — far greater than at home-lending rivals Wells Fargo & Co. and JPMorgan Chase & Co. — reflects BofA’s struggles since its 2008 acquisition of Countrywide Financial Corp. in Calabasas. Countrywide had become the No. 1 mortgage firm by specializing in subprime and other high-risk loans.


Extraordinary filing shows banks are on the ropes in FHFA cases

Extraordinary filing shows banks are on the ropes in FHFA cases


There’s a cloud of desperation over most petitions for a writ of mandamus. These are, by definition, extraordinary filings, asserting that trial judges have committed such egregious abuses of discretion that their appellate overseers must immediately step in and undo the damage. Mandamus petitions are a last resort. They present the downside risk of inciting a trial judge who’s already ill disposed toward you and compromising your credibility at the appeals court. The upside, meanwhile, is remote. Appeals courts grant mandamus very, very rarely.

You can be sure that all of these considerations were taken into account by the 15 banks that filed a stunning joint mandamus petition late Tuesday night, asking the 2nd Circuit Court of Appeals to reverse “gravely prejudicial” pretrial discovery rulings by U.S. District Judge Denise Cote in the Federal Housing Finance Agency’s mortgage-backed securities litigation. It’s my understanding that the banks and their lawyers have been debating the pros and cons of a mandamus petition for months and have been honing the language of the filing for weeks. (Can you imagine the billable hours expended on the conference calls for this joint filing?) Certainly, the banks knew that the odds of succeeding with their petition only got longer in January, when the 2nd Circuit denied mandamus to Arab Bank, reiterating the appeals court’s “expressed reluctance to issue writs of mandamus to overturn discovery rulings” – which is exactly what the banks are asking the court to do in the FHFA cases.