by Tanta on 4/30/2007 07:02:00 AM
Monday, April 30, 2007
In case you missed this item in the comments over the weekend, here's Bloomberg on "Credit Suisse Sued Over Losses on Subprime-Loan Bonds (Update 3)":
April 27 (Bloomberg) -- Credit Suisse Group was sued by a Florida insurer that says it lost money on investment-grade bonds backed by subprime mortgages sold by the bank.
The suit, filed in Florida by Bankers Life Insurance Co., is ``one of three to five in the pipeline'' involving securitizations by Credit Suisse, Switzerland's second-largest bank, said Dale Ledbetter of Ledbetter & Associates P.A., one of two law firms representing the Bankers Financial Corp. unit.
``We suspect that once people understand what occurred here, there's going to be a lot more,'' Ledbetter said. A total of $302.6 million of bonds were originally issued in the deal.
Bankers Life, based in St. Petersburg, is seeking to recover about $1.3 million to make up for losses of principal, interest and market value on about $1.4 million of the 2001 bonds it bought in 2004, Ledbetter said. Other investors considering suits will probably seek between $500,000 and $3 million each, he said.
Credit Suisse units caused Bankers Life to lose money by overstating how much of losses after foreclosures on the loans insurance would cover; accepting ``shoddy, inferior'' loans; failing to buy back fraudulent ones; and covering up delinquencies, according to a complaint filed April 23 in Tampa. Payments were being advanced on borrowers' behalf to ``maintain the illusion'' defaults weren't occurring, Bankers Life claims. [Emphasis added]
There are days I actually wish I were an attorney with access to the right sort of legal filing; I'd love to read the complaint. And compare it to the servicing agreement attached to the prospectus of the bonds this outfit invested in.
However, I'm just a blogger, not a lawyer, so I will content myself with asking, so who is Bankers Financial Corp? Well, besides someone in need of a new web designer, it is a holding company with a group of businesses that includes:
Bonded Builders Risk Management provides warranties on new and remodeled homes through home builders and remodelers nationwide.
Bankers Surety Services markets and administers Bankers' bail bond product, providing coverage on bonds for the bail agents who write them.
van Wagenen Financial Services is a leader in property insurance and insurance compliance for nearly 75 years. They service millions of loan and lease accounts for clients in the US and Canada.
Gilchrist Executive Retreat & Conference Center is a private retreat located on the 23,000-acre Suwannee Lake Plantation in Florida. They are associated with Gilchrist Club, a private hunting club.
VAC Service Corp writes extended service contracts for manufacturers and retail dealers of electronics, furniture and other equipment.
There's a moral to a story lurking here somewhere, I think. Discuss. (And since you all were such cooperative little cats yesterday about staying on-topic, you are hereby given permission to discuss whatever you want to this morning. Don't say I'm unreasonable.)
Posted by Tanta on 4/30/2007 07:02:00 AM