Orrick's Financial Industry Week in Review - April 16, 2012


Financial Industry Developments


San Bernardino County Resolution Establishing Homeowner Protection Program via Eminent Domain

On April 10, the San Bernardino County Board of Supervisors adopted a resolution approving a Joint Exercise of Powers Agreement (JPA) between the County of San Bernardino, the City of Ontario, the City of Hesperia and the City of Fontana to establish a Homeowner Protection Program.  Under the JPA, the parties will establish a joint powers authority to take actions to assist homeowners, including acquiring underwater residential mortgage loans by voluntary purchase or eminent domain and restructuring the mortgage loans to allow homeowners to continue to own and occupy their homes.  Resolution and Supporting Materials.

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SEC Request for Comment on JOBS Act Rules

On April 11, the SEC requested comments from the public as it prepares to propose certain rules as required by the Jumpstart Our Business Startups (JOBS) Act.  SEC Release.

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MSRB Request for Comment on Underwriter Submission Requirements

On April 10, the MSRB requested comment on proposed changes to rules that would allow underwriters of municipality securities to satisfy their obligations to submit information about new issues with their data submission to the New Issue Information Dissemination Service, which is operated by the DTCC.  Comments must be submitted by May 8.  MSRB Release.  

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Recent Orrick Alerts


Public Finance Update: Voluntary Disclosure of Bank Loans (MSRB Notice 2012-18)

The use of bank loans by state and local governmental entities and conduit borrowers has increased in recent years.  While some entities have recently completed direct purchase transactions, others are in the early planning stages of strategizing to meet funding needs.  Whether the direct purchase transaction takes the form of a loan or a municipal security, these types of financings do not generally require the same level of disclosure as a public offering of municipal securities.    

On April 3, 2012, the Municipal Securities Rulemaking Board (MSRB) issued a release to encourage state and local governmental entities that issue municipal securities and conduit borrowers for whom municipal securities are issued to make information about their bank loan financings publicly available on the MSRB’s Electronic Municipal Market Access (EMMA) website.  By doing so, bondholders, potential investors and other market participants will have timely access to key information while making investment decisions.  To access MSRB Notice 2012-18 in its entirety, please click here

Orrick’s Public Finance Group seeks to keep our clients aware of emerging issues in the industry.   To discuss further the details of MSRB Notice 2012-18 and how it may apply to you and your policies and procedures,  please contact Eileen HeitzlerAlbert Simons and Alison Radecki.

To access a recording and materials for the Orrick webinar on developments on direct purchases, please click here

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RMBS Litigation


New York Attorney General Again Seeks to Intervene in $8.5 Billion Bank of America MBS Settlement

On April 10, 2012, New York Attorney General Eric Schneiderman filed an amended pleading in intervention in the Article 77 settlement approval proceeding concerning Countrywide RMBS that is currently pending New York state court. The Attorney General challenges the fairness and adequacy of Bank of America’s $8.5 billion proposed settlement addressing representation and warranty claims against Countrywide, claiming that the $8.5 billion settlement does not adequately cover investors’ losses, which are alleged to be $242 billion. The Attorney General also points out that only 22 investors directly participated in the settlement negotiations. The Attorney General’s earlier motion to intervene, filed last August, was determined to be moot when the case was removed to federal court.  Pleading.   

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New York State Appeals Court Affirms Denial of BofA’s Motion to Sever and Consolidate Successor Liability Claims

On April 5, 2012, a five-judge panel for the New York’s First Department intermediate appellate court affirmed a lower court’s ruling that denied Bank of America’s motion to sever successor liability claims brought against it from the primary claims in four separate actions brought by four monoline insurers. Bank of America had requested that, once severed from the underlying lawsuits, the successor liability claims should be consolidated into a separate proceeding for discovery purposes. The four insurers, Ambac Assurance Corp, Financial Guaranty Insurance Co, MBIA Inc, and Syncora Guarantee Inc., claim in their respective lawsuits that Countrywide ignored underwriting guidelines, resulting in loans that were riskier than had been represented to the insurers and thus subjecting the insurers to billions of dollars in insurance claims when the loans defaulted. They seek to hold Bank of America liable under theories of successor liability related to Bank of America’s acquisition of Countrywide. In affirming the denial of Bank of America’s motion, the appeals court reasoned that the four actions were at different stages of discovery and that consolidation would result in undue delay.  Order.  


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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