Securitization law and the secondary market is complex array of law, securities, finance, lending, and primarily OPINIONS!  I have a LL.M. in Banking & Financial law and took an advanced class in securitization.  I have read, studied, published articles, presented at national conferences and to senior level “securitization players” including Sr. Managers from Fitch Ratings regarding risk in commercial mortgage backed securities.   From day one it became innately clear to me that after all the rating models, stress tests, quantified/qualified financial data - a ‘rating’ is just an opinion (and said as much in my published articles).   But who am I?

For the last 15 years when I conducted environmental (and financial) due diligence on CMBS loan originations and grappled with Rating Agencies over their hallowed opinions - I was continually rebuffed with a “take it of leave it” position from all 3 agencies (basically - how could I question their opinion?).   According to them, their ‘rating’ was not an opinion but rather just that, a rating.  Somehow it was not an opinion.   However, see the LaSalle National Bank v. Lehman Brothers Holding case 237 F.Supp.2d 618 (2001) - wherein rating agencies completely missed the environmental hazards associated with a $9MM loan - costing $11MM+ when the borrower defaulted and the property was found to be completely contaminated…

Ironically, now after a flurry of lawsuits including one filed by the Attorney General of CT - rating  agencies are claiming their ratings are in fact not only ’opinions’ but opinions that are so sacrosanct - that they are protected by the 1st Amendment!

As I have for 15+ years - when I conduct due diligence on loan originations - it is based upon education, experience and knowledge.  I have no problem acknowledging it is an opinion.  I also would not stand behind the 1st Amendment.  But again, who am I?

WSJ - foreclosures are ramping up (again).  Why is this new news?  Because banks that received TARP money or other Federal bailouts including Wells Fargo, Citigroup, J.P. Morgan, Fannie Mae - previously placed a voluntary moratorium on foreclosures are now enforcing them.  These banks are internally re-assessing which borrowers would qualify for loan modification; and those that don’t go into the foreclosure bin.   While the Treasury has provided assistance to homeowners and incentives to banks through acts like ”Making Homes Affordable” - the harsh reality is time is running down for previously “reprieved” homeowners… For such homeowners, quality legal assistance is necessary.

After much thought and inquiring with numerous fellow insurance brokers, insurance companies and risk managers - I still don’t have the straight answer to the following question:  If I am a manufacturer of a product (in this case electronic product) and export it to Europe where they have certain eco-compliance laws, and that product is ‘non-compliant’ (because it contains a prohibited chemical), what is the insurable interest?  I feel that it is a ’compliance’ issue akin to SOX and flows up to the Directors & Officers (D&O insurance).  Others believe it is akin to Products Liability and Product Recall.   I welcome your thoughts.