“With Freedom comes Responsibility” – Eleanor Roosevelt

Plaintiffs

Those consumers who have lost money as a result of the existence of SISA (Stated Income, Stated Assets), SINA (Stated Income, No Assets) & NINA (No Income, No Assets) lax loan underwriting standards.

“Stated” means the borrower or loan officer could state a number, and the underwriter would not verify the number.

“No” means the borrower and loan officer provided no information whatsoever, and the borrower was still given a loan.

Defendants

All the Private Institutions which were granted the Freedom from Regulation with the Gramm-Leach-Bliley act and similar legislation. This includes the Federal Reserve Bank, all Major Banks, all the Investment banks, plus their officers and directors. We include everyone who profited from the lax loan standards.

I suggest the lead Defendant be Alan Greenspan. His repeated obfuscation in front of Congress before his retirement contrasts sharply with his ability to speak clearly in public AFTER his retirement leads one to conclude that he deliberately misrepresented Federal Reserve affairs in the hearings held by Congress.

Complaint

The major claim would be that those who promulgated, marketed, made loans, funded loans, packaged the loans or repackaged and resold packages of loans were all careless, negligent, etc. and failed to disclose the increased level of risk which arose from the failure to apply normal financial risk measurement tools including qualifications such as evaluating an applicant’s assets and income level.

This “relaxed standards” loan approval behavior helped to propel house prices to record highs because of increases in buyer demand DIRECTLY ATTRIBUTABLE to the ease of getting these loans. Buyers who would not have qualified under more careful guidelines bought homes.

In addition, aggressive (and maybe predatory) Home Equity loan marketing led to many homeowners ending up with loans based on inflated house values.

Many houses now have these “relaxed standards” loans registered, and when the time comes to renew their loan, homeowners are being crushed by the 1) a possible interest rate increase, and 2) because of the now declining values of houses and loans worth more than the current value of the house, are unable to get relief from these debts with subsequent damage to their finances (aka bad credit), including refinancing or selling the houses.

Penalties

All the individuals mentioned as defendants would have their assets attached in proportion to their percentage of total earnings from the “relaxed standards” loan activity that resulted in the losses suffered by the plaintiffs.

Institutions should be treated in a similar manner.

We expect because of the large claims made in this action to acquire through their bankruptcy (because of the large amount we’ll ask for as a judgment), and own nearly all the private institutions in the financial sector.

We expect to have judgments on a significant percentage of institutions and enterprises in the Financial Sector, and personally on the assets of the managers of these institutions.

Disbursing the Funds

We expect there will be a large amount of cash, and a huge number of corporations seized in bankruptcy, as the class would become debtor-in-possession of the corporations.

The cash would be disbursed to the class members and their attorneys.

The corporations would be placed in a trust, and their future earnings (dividends) would be paid to the trust for the benefit of the owners, and those proceeds would be disbursed to the class members and their attorneys.

Funding the lawsuit

This is expected to be a long drawn-out class action suit. A very, very large class action suit, with many defendants and many plaintiffs.

This may exceed the funding capabilities of attorneys taking this case on a contingency basis.

The funding proposal is to establish a web site for qualifying defendants, and taking a retainer from each defendant of $50.00 to become member of the class action. The payment could be made either on the web site, or by telephone, using a credit card.

The class will probably become a minimum of 100,000 people and could reach as many as 10,000,000 people. 100,000 people provide for a legal fund of $5,000,000. A class of 10,000,000 provides a legal fund of $500,000,000.

As the network news continually shows, a very large number of people are deeply upset that the misbehavior of a comparatively small number of people on Wall Street and in the banking sector is having a huge impact on ordinary people. For this reason, the number of members in the class action lawsuit is likely to be very large, providing a very significant war chest. The lawyers involved will not have to fund all the costs prior to settlement, and will not be reduced to eating hamburgers for lunch and dinner.

While funding is important, another reason to become involved in the lawsuit is that it will be a piece of legal work that is remembered for a VERY long time. Its outcome will provide a framework for judging the behavior of the financial community. It will also frame those whose legal talents and sense of justice worked to bring these results with reputations similar to those who wrote the US constitution, or the people who built the Magna Carta. It’s “legacy material.”

From both the funding and legacy viewpoints, this is a project which merits serious consideration.