Author Topic: Klarman Secretly Moved to Block BAC Settlement?  (Read 11248 times)

ubuy2wron

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bathtime

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #31 on: December 09, 2011, 03:54:40 PM »
JSArbritage - thanks, that makes sense. I got lost in the details.

mpauls

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #32 on: December 09, 2011, 09:16:56 PM »
"unethical" "sleazy"  You guys are joking right? 

Look, Countrywide engaged in seriously unethical and sleazy behavior that harmed people who basically could not defend themselves, shoved the crap out the door and repeated it.  Klarman, sharp elbowed yes, bought the paper from (supposedly) sophisticated investors, or at least investors who could pay for the education and is now sticking it to the successor company (read partner in crime, BAC).   A firm that on the face of it kept up the Countrywide traditions and seriously stretched (read broke) the laws repeatedly in foreclosure proceedings.  Proceeding that materially harmed many people who could not afford legal defense.

And you feel queasy?  I'm sorry this is business. On that premise you would never by anything in a bankruptcy case, where much turns on the fine print, sharp elbows and buying for pennies on the dollar.  (I should add that I'm not an Ayn Rand type, quite the opposite really.)

There may be more to the story, but if the facts are as stated, I totally agree with NetNet.

I repeat this is just business; it's totally legal.  it's not charity. and in this arena, all are sophisticated investors.  He isn't selling cigarettes, which though legal are highly immoral.  (No one seems to tut-tut about Loew's!)
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QLEAP

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #33 on: December 10, 2011, 12:11:56 AM »

"We have on occasion owned a small amount of default protection on Bank of America debt as part of our overall portfolio hedging strategy through which we hold credit default swaps on a diverse group of financial institutions and other corporate issuers," the memo said. "We currently have no long or short position in equity, corporate debt, or credit default swaps of Bank of America or MBIA."


http://newsandinsight.thomsonreuters.com/Legal/News/ViewNews.aspx?id=34462&terms=@ReutersTopicCodes+CONTAINS+%27ANV%27


ERICOPOLY

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #34 on: December 12, 2011, 02:32:33 PM »
Let's say Klarman's actions eventually force a trial decision that is "multiples of the original settlement".

First:
How long until that decision?

Second:
Assuming the bank then tries to take Countrywide into bankruptcy, no doubt a whole new trial will need to take place to contest the bankruptcy.  How long from today until they would eventually have to pay up if the court rules that Countrywide was not property "ring fenced"?


Kraven

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #35 on: December 12, 2011, 03:49:34 PM »
Let's say Klarman's actions eventually force a trial decision that is "multiples of the original settlement".

First:
How long until that decision?

Second:
Assuming the bank then tries to take Countrywide into bankruptcy, no doubt a whole new trial will need to take place to contest the bankruptcy.  How long from today until they would eventually have to pay up if the court rules that Countrywide was not property "ring fenced"?

I don't see how all of this isn't years of litigation.  BAC has no incentive to settle unless it is on their terms or they feel they derive some benefit from not litigating.  Litigation can be dragged on for a lot longer than people think.  Just for point of reference in situations that have nothing to do with this case or even remotely related.  There is still Exxon Valdez litigation that goes on over 20 years later.  There is still asbestos litigation that goes on from the original cases filed decades ago.  The Winklevoss twins still have litigation against Facebook after 7 or so years.  There is still plenty of Bear Stearns litigation ongoing.  It becomes a war of attrition.  At some point both sides will either agree to settle because the fight isn't worth it any longer, or they won't.  But look at the incentives.  BAC keeps pushing and all they owe is more legal fees.  The ones suing them have their returns diminishing every day it goes on and have their own legal fees to pay.  Not even Klarman can or will want to go on forever.
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onyx1

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #36 on: December 12, 2011, 03:58:14 PM »
Let's say Klarman's actions eventually force a trial decision that is "multiples of the original settlement".

First:
How long until that decision?

Second:
Assuming the bank then tries to take Countrywide into bankruptcy, no doubt a whole new trial will need to take place to contest the bankruptcy.  How long from today until they would eventually have to pay up if the court rules that Countrywide was not property "ring fenced"?

There are so many ways this can play out it's anyone guess, but itís hard to imagine a scenario where it doesnít go one for 5 years or more.   Walnut Place is only one of 44 parties who want to intervene in the settlement.  Some want more money, some want the option to opt out, and some want the distribution among parties to be different.  WP owns only a handful of the 530 covered trusts.

If, years from now, WP is successful, surely the other trusts will petition the trustee for an improved settlement.   But even if the trustee convinces BOA to up the settlement amount from $8.5bln, will it be over?  I say no.  State AGs other political interests will want their notoriety.  Other certificate holders will still want a different distribution among senior and junior classes, and still others will want even more in settlement amounts and may bring their own actions.  Since non-GSE claimants need a higher threshold to receive damages (they must show that the R&W breach caused them material harm) itís easy to see this turning into a decadeís long litigation nightmare. 

If BAC decides to fight it out in court the present value of the settlement will work in their favor.  Additionally, since BACs losses are a function of house prices on the put-back loans, BAC liability will drop over time as the housing market recovers.  The more time, the better chance their losses are minimized or even eliminated.

If they decide to file CFC in BK11, the litigation window may not be as long, but it could easily be 5-10 years because of the tens of thousands of unsecured claimants.

Iím pulling for the settlement to hold, but if it does not,  itís far far from game over for BAC.

Santayana

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Re: Klarman Secretly Moved to Block BAC Settlement?
« Reply #37 on: December 13, 2011, 12:21:39 PM »
Let's say Klarman's actions eventually force a trial decision that is "multiples of the original settlement".

First:
How long until that decision?

Second:
Assuming the bank then tries to take Countrywide into bankruptcy, no doubt a whole new trial will need to take place to contest the bankruptcy.  How long from today until they would eventually have to pay up if the court rules that Countrywide was not property "ring fenced"?

There are so many ways this can play out it's anyone guess, but itís hard to imagine a scenario where it doesnít go one for 5 years or more.   Walnut Place is only one of 44 parties who want to intervene in the settlement.  Some want more money, some want the option to opt out, and some want the distribution among parties to be different.  WP owns only a handful of the 530 covered trusts.

If, years from now, WP is successful, surely the other trusts will petition the trustee for an improved settlement.   But even if the trustee convinces BOA to up the settlement amount from $8.5bln, will it be over?  I say no.  State AGs other political interests will want their notoriety.  Other certificate holders will still want a different distribution among senior and junior classes, and still others will want even more in settlement amounts and may bring their own actions.  Since non-GSE claimants need a higher threshold to receive damages (they must show that the R&W breach caused them material harm) itís easy to see this turning into a decadeís long litigation nightmare. 

If BAC decides to fight it out in court the present value of the settlement will work in their favor.  Additionally, since BACs losses are a function of house prices on the put-back loans, BAC liability will drop over time as the housing market recovers.  The more time, the better chance their losses are minimized or even eliminated.

If they decide to file CFC in BK11, the litigation window may not be as long, but it could easily be 5-10 years because of the tens of thousands of unsecured claimants.

Iím pulling for the settlement to hold, but if it does not,  itís far far from game over for BAC.

this is true, especially now that Buffett has blessed the company and it's management. not only that, as the economy starts to improve, and slowly but surely bac numbers begin to improve, they will have even less incentive to settle on a bad deal for them. The Zerohedges of this world will sound like little Casandras and their influence will wane. The parasites will see that settling sooner rather than later will be wise.

You know the story of Cassandra is that she was always right?