- A $50 billion payday?
Everybody knows that the lawsuits are brewing – lots of them - because, well, someone has got to pony up for all the losses from this debt mess. "There are going to be claims, and some good claims, depending on the provenance of the loans," Fred T. Isquith, a top plaintiffs’ attorney, told Deal Journal. "Where institutions go under, you may see creditors take a shot at it." The question is how much of a case the hedge funds and insurance pools and Chinese banks have in claiming they were hoodwinked by those collateralized debt obligations. They are, after all, professional investors who supposedly understood the risks inherent with subprime investing. But win, lose or draw, the lawyers are likely to do well.
Let us take some of the roughest estimates possible. Some estimates have put total CDO issuance at around $1 trillion. Assuming that legal claims representing 5% of that total were successful, and the ballpark figure gets to around $50 billion. Whew.
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| 09:20 AM Aug 28, 2007 | Email the Daily Dragon | Email this Article | Post Comments |
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