The Impending Subprime Litigation Tsunami

Tomorrow I will be participating in a panel discussion hosted by Bloomberg News and Eversheds, one of the world's largest law firms. The conference is entitled "Sup-prime and global credit symposium: What will happen in 2008". Other participants include Matthew Allen, partner in the insurance and reinsurance group at Eversheds, Dr. Andrew Hilton, director of the Centre for the Study of Financial Innovation, Rolf Tolle, Franchise Performance Director at Lloyd's of London, Michael Fallon, MP for Sevenoaks and member of the Treasury Select Committee and Mark Gilbert, a Bloomberg news financial columnist.

I was asked to provide a view of the potential litigation. Here's what I will tell them:

The world is in for an unprecedented litigation tsunami. Subprime isn't the new dot-com, it's in a whole other class altogether. Wrongdoing is likely much more pervasive and egregious and claims will reach into the multi-billion dollar range. Already there are over 32 class actions filed against mortgage lenders, originators, and Wall Street brokerages alone and multiple civil and criminal probes.

There is one thing in common with the tech-bubble: investors were left holding the bag. I'll be posting my full remarks later this week.