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Whalen continues:
“Now we in the community that watches this stuff had thought that eventually the New York courts were going to shoot down the class action lawsuits, and force all of the claimants to basically litigate on their own. That’s the tendency in America, that’s our federalist system. However, this time around we have bondholders in these classes and I think there is enough commonality in the claims that the court may actually let the class actions proceed, which is much more efficient for the plaintiffs obviously. This may force the banks to settle.
Now, if we settle at 50 cents on the dollar do the math, that becomes a very material hit not just for JP Morgan, but for all the top five, six banks that have home equity loan exposure that’s been reflected in securities act claims or just primary mortgage backed securities that have fraud claims....
Continue reading the Chris Whalen interview below...
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“There are all sorts of things mixed in here, you have Bear Stearns, WAMU and than JP Morgan’s own production. There are many others here, you have Merrill Lynch, Bank of America, there you’ve got $65 billion worth of claims just on Countrywide alone. ResCap is looking at about $20 billion.
So there’s still some significant claims out there. It’s not certain that the banks will lose, but I will tell you that once claims like this gets past preliminaries and they are actually going to trial, the plaintiffs have a good chance of winning.”
When asked about the enormous exposure US money market funds have to European banks Whalen stated, “Well the funds are out chasing yield like everybody else because the Fed low interest rate policies are starving the investment community to death. You see it with the banks, you see it with retirees in the US. We’re shifting hundreds of billions of dollars worth of income away from savers and corporations to finance and subsidize the banks.
So it’s just the end result, the funds have had to look globally for returns because it’s very hard for them to compete with the banks right now. People are so afraid that they would almost rather have their funds in a non-interest bearing account at a bank rather than the money market fund that has exposure to market volatility.”
The KWN audio interview with Chris Whalen will be available shortly and you can listen to it by CLICKING HERE.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
Whalen - $200 Billion in Claims Against JP Morgan & Banks
With a mountain of litigation claims against banks, today King World News interviewed the man Jim Rickards calls the best bank analyst in the country, Chris Whalen co-founder of Institutional Risk Analytics. When asked about JP Morgan’s exposure from litigation Whalen said, “The surviving 33 claims which are straight forward securities fraud claims, much like WorldCom, Enron and that sort of thing, those claims were settled at 50 cents on the dollar.
So today of the trillion dollars or so in class action claims that were filed right after the crisis started, there’s about $200 billion left that have survived motions to dismiss and other procedural efforts by the banks to knock this litigation out. JP Morgan has somewhere around $45 to $50 billion worth of current claims that look like they are going to go to trial.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
June 29, 2011
