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  • Writer's pictureKirk Hartley

Reuters and Others Writing About a Litigation Trust for Bank of America

Reuters’ Unstructured Finance blog has now published thoughts/a fairly detailed article on using the asbestos trust solution for the toxic torts of the banks and other financial houses. See Bank of Asbestos. The publication is written by Matthew Goldstein, Jennifer Ablan, Daniel Wilchins, and Kristina Cooke. They trace their writing back to the zerohedge blog and it’s similar post here. Zerohedge also was paying attention back when GM used chapter 11 and issues were raised about the constitutionality of the trust.

The thought has made it at least as far as to the China Post; the article is here; the introduction to that article is pasted below.

"BofA may need litigation trust for lawsuits

Monday, September 12, 2011 Reuters

NEW YORK — It worked for asbestos, so why not for toxic mortgages?

When some analysts look at all of the litigation arising from Bank of America’s (BofA) big role in the U.S. mortgage mess, they start thinking of asbestos and how thousands of lawsuits arising from that cancer-causing product brought down many manufacturers more than a decade ago.

The solution back then to dealing with claims filed by more than 750,000 workers exposed to asbestos was the creation of dozens of “asbestos settlement trusts,” which have paid out tens of billions dollars in damages. Some of them are still going strong today.

The asbestos trusts were seen as an innovative approach to deal with seemingly endless litigation and provide a measure of compensation to sick workers and their families. The system for dealing with claims also allowed some of the hobbled manufacturers to emerge from bankruptcy largely free of the crushing weight of lawsuits.

Now some investors in soured mortgage-backed bonds sold by BofA and advocates for struggling homeowners are wondering whether a similar strategy can be used to deal with litigation claims that Wall Street analysts estimate could cost the nation’s biggest bank more than US$50 billion."

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