So sue me...

A law firm whose attorneys were at the forefront of epic legal battles that followed the downfall of infamous companies like Enron and Lincoln Savings & Loan is in the thick of the subprime mortgage lending debacle. The firm (take a deep breath) -- Lerach Coughlin Stoia Geller Rudman & Robbins LLP -- has wasted no time in filing a lawsuit seeking class-action status to represent investors in Beazer Homes USA Inc., the Atlanta-based homebuilder whose mortgage lending practices in North Carolina are being investigated by the Feds.

In the last two months, Lerach Coughlin has also filed separate complaints seeking to represent investors in New Century Financial Corp., NovaStar Financial Inc., and Accredited Home Lenders Holding Co.

If nothing else, these lawsuits and others are likely to keep an army of lawyers occupied for years. New Century said back in February that it was already facing 10 shareholder lawsuits.

But assuming investors are able to win judgments or settlements against these companies, how will they collect? Many subprime lenders don't have two dimes to rub together, let alone make more loans which would generate the income they'd need to pay up.

Attorneys at Lerach Coughlin attorneys were involved in a recent settlement in which three banks allegedly involved in the Enron scandal -- JPMorgan Chase & Co., Citigroup Inc. and Canadian Imperial Bank of Commerce -- agreed to cough up $6.6 billion. Add that to previous settlements by Bank of America, Lehman Brothers and Andersen Worldwide, and banks involved in the rise and fall of Enron have agreed to pay $7.3 billion in settlements. The firm says it will collect more when it takes banks that won't settle to trial.

Although many subprime lenders are going, going or gone, the investment firms that securitized and sold their loans are doing just fine, thank you, and they have very deep pockets.
--Matt Carter, Inman News

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