July 12, 2009
Last Blog Posting for Poverty Law Prof Blog: New Site is at http://maximinlaw.wordpress.com/
The editors of the Law Professor Blog Network have decided to eliminate less active blogs and, not being a blog with daily updates, the Poverty Law Prof Blog easily falls in this category and is therefore being eliminated from the Law Professor Blog Network. The Poverty Law Prof Blog is therefore being migrated to a standalone blog that can be found at http://maximinlaw.wordpress.com/. I am going to continue posting things as I see them or as they are sent to me, but the pace is going to continue to be about the same, though of course I welcome guest bloggers or any content suggestions. =) To reach the blog editor, email firstname.lastname@example.org.
July 11, 2009
Article of Interest: "The Case for Banning Subprime Mortgages"
Alan White, The Case for Banning Subprime Mortgages, 77 U. Cin. L. Rev. 617 (2008). The paper -- it may be an earlier draft -- is on SSRN here. The abstract is below:
July 3, 2009
Article of Interest: "Tainted Loans: The Value of a Mass Torts Approach in Subprime Mortgage Litigation"
First a somewhat related news story from last month: Vivian S. Toy, "Penetrating the Maze of Mortgage Relief," New York Times, June 12, 2009 (discussing the work of housing advocates).
Ray Brescia has posted "Tainted Loans: The Value of a Mass Torts Approach in Subprime Mortgage Litigation" (forthcoming in the Univ. of Cincinnati Law Review) to SSRN. The abstract is below:
A poison has entered the financial bloodstream. The subprime mortgage crisis and the wider financial crisis it has spawned have caused the erosion of trillions of dollars in wealth, the destruction of whole communities and the dislocation of millions of homeowners. Yet, unlike in other situations where toxic products have caused widespread harm, to date, we have not seen an avalanche of litigation, large jury awards, massive settlements compensating victims and financial ruin for the distributors of those products. Some of this is changing, however.
Litigation arising out of the present financial crisis is hitting the courts, including suits alleging discrimination in the proliferation of subprime mortgages, securities litigation, and claims under state unfair trade practices laws and common law fraud principles. Courts may soon be inundated with these cases and will need effective tools for handling them.
With some exceptions, the litigation presently underway is an incoherent collection of random cases, however. If we view the subprime mortgage crisis and the financial crisis that has followed as the result of the proliferation of toxic products, a mass tort approach to the subprime mortgage disaster would seem inevitable. Such an approach would include utilization of the following techniques: class actions; consolidation of related cases; global settlements; and aggregation of factual, liability and damages assessments. This article makes the case that subprime litigation should adopt the techniques utilized in mass torts cases to make the prosecution of such litigation more efficient, comprehensive and effective, while bringing those most responsible for the present financial crisis to justice. It is argued that these techniques are best suited to achieve what I identify as goals for a legal response to the financial crisis: reducing the number of foreclosures; correcting for past illegality in the mortgage market; uncovering and spreading information about the presence of such illegality; promoting the modification of outstanding mortgage loans; strengthening and expanding voluntary efforts to overcome past abuses in the market; preserving home values; and complementing legislative and regulatory efforts to improve oversight of financial markets. The article also concludes that a mass torts approach in the subprime litigation context is superior in terms of meeting these goals when compared to other potential legal responses:
i.e., individual litigation, individual bankruptcy, regulation, voluntary efforts and social insurance.