Abstract

http://ssrn.com/abstract=1096582
 
 

Citations (3)



 
 

Footnotes (95)



 


 



Legal and Economic Issues in Litigation Arising from the 2007-2008 Credit Crisis


Allen Ferrell


Harvard Law School; European Corporate Governance Institute (ECGI)

Jennifer E. Bethel


Babson College

Gang Hu


Babson College, Finance Division

November 17, 2008

PRUDENT LENDING RESTORED: SECURITIZATION AFTER THE MORTGAGE MELTDOWN, Chapter 5, pp. 163-235, Yasuyuki Fuchita, Richard Herring, and Robert Litan, eds., Brookings Institution Press, Washington DC, 2009
Harvard Law and Economics Discussion Paper No. 612
Harvard Law School Program on Risk Regulation Research Paper No. 08-5

Abstract:     
This paper explores the economic and legal causes and consequences of the 2007-2008 credit crisis. We provide basic descriptive statistics and institutional details on the mortgage origination process, mortgage-backed securities (MBS), and collateralized debt obligations (CDOs). We examine a number of aspects of these markets, including the identity of MBS and CDO sponsors, CDO trustees, CDO liquidations, MBS insured and registered amounts, the evolution of MBS tranche structure over time, mortgage originations, underwriting quality of mortgage originations, and writedowns of the commercial and investment banks. We discuss the financial difficulties faced by investment and commercial banks. In light of this discussion, the paper then addresses questions as to whether these difficulties might have been foreseen, and some of the main legal issues that will play an important role in the extensive litigation (summarized in the paper) that is underway, including the Rule 10b-5 class-action lawsuits that have already been filed against the banks, pending ERISA litigation, the causes-of-action available to MBS and CDO purchasers, and litigation against the rating agencies. In the course of this discussion, the paper discusses three principles that will likely prove central in the resolution of the securities class-action litigation: (1) "no fraud by hindsight"; (2) "truth on the market"; and (3) "loss causation."

Number of Pages in PDF File: 94

Keywords: Subprime, Litigation, Economic

JEL Classification: G18, G21, G28, E53, K22, K41

working papers series


Download This Paper

Date posted: March 3, 2008 ; Last revised: November 23, 2010

Suggested Citation

Ferrell, Allen and Bethel, Jennifer E. and Hu, Gang, Legal and Economic Issues in Litigation Arising from the 2007-2008 Credit Crisis (November 17, 2008). Harvard Law and Economics Discussion Paper No. 612; PRUDENT LENDING RESTORED: SECURITIZATION AFTER THE MORTGAGE MELTDOWN, Chapter 5, pp. 163-235, Yasuyuki Fuchita, Richard Herring, and Robert Litan, eds., Brookings Institution Press, Washington DC, 2009; Harvard Law and Economics Discussion Paper No. 612; Harvard Law School Program on Risk Regulation Research Paper No. 08-5. Available at SSRN: http://ssrn.com/abstract=1096582 or http://dx.doi.org/10.2139/ssrn.1096582

Contact Information

Allen Ferrell (Contact Author)
Harvard Law School ( email )
Griswold 303 1525 Massachusetts Avenue
Cambridge, MA 02138
United States
(617) 495-8961 (Phone)
(617) 495-1110 (Fax)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Jennifer Bethel
Babson College ( email )
Babson Park, MA 02457-0310
United States
781-239-5797 (Phone)
781-239-5004 (Fax)
HOME PAGE: http://faculty.babson.edu/bethel/
Gang Hu
Babson College, Finance Division ( email )
223 Tomasso Hall
Wellesley, MA 02457
United States
781-239-4946 (Phone)
HOME PAGE: http://faculty.babson.edu/ghu/
Feedback to SSRN


Paper statistics
Abstract Views: 19,689
Downloads: 5,074
Download Rank: 672
Citations:  3
Footnotes:  95

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.391 seconds