All the News...

Well, let's take a look at a few things that have been happening out there in the freak show called reality.

First, the Florida Supreme Court dealt mortgage borrowers an expected blow in  Bartram et al. v. U.S. Bank NA.  Florida is a judicial foreclosure state, so it does not have a lot of effect in Utah and Washington, but it is a good view of how things are going.  The court held that a prior case dismissed for a reason other than the merits of the issues has no issue preclusion effect on a later case.  Put another way, if the lender's first foreclosure claim was dismissed for procedural defect and not because the lender failed to state a claim, the lender can re-accelerate the note for later nonpayments and sue again.  Yet another blow to the "I can get you a free house" hucksters.

Second, the Supremes are reviewing the latest example of US courts trying to get jurisdiction over other countries (See here, here, and here.).  A US oil drilling company owned a subsidiary that was a Venezuelan corporation that it used for drilling there.  Venezuela got behind on payments, the company stopped drilling, and Venezuela seized the rigs to keep them operating.  The drilling company sued Venezuela in US court.  Ordinarily you can't sue a foreign sovereign in a US court, but both the DC District Court and the DC Circuit Court decided the "violation of international law" exception applies, and that's the issue before the Supremes.  The problem I see, and that Venezuela has raised all along, is that this isn't a matter of international law.  The rigs were seized from a Venezuelan corporation, not the US parent.  As far as I'm concerned, that ought to be the end of it.  But the courts are playing around with the political ramifications.  And that's the real problem.  Because every time our courts decide to reach out and touch someone overseas, it increases the justification for anyone who wants to do the same to us.  And that ought to scare you.

In a rare instance of bad news for banks, Bank of America, while not actually having to face the music for all the messes it has created, might at least have to hum a few bars.  The 1st Circuit in Boston has ruled that a fraud case against BOA can proceed.  In 2007 BOA was pushing auction-rate securities hard, marketing them as extremely liquid, practically cash substitutes.  The problem with that liquidity was that it depended on the dealers continuing to trade those securities.  In February 2008 they stopped, and all that lovely liquidity turned into solid lead.  BOA said, "Hey, we warned them in the prospectus what could happen if the market froze up."  The court, in a wonderful moment of lucidity rare in banking litigation, responded, "Yeah, but you just kept selling after it looks like you saw the market was headed south, and you changed your sales pitch not one bit."  Expect BOA to settle this dog soon and put a big gag clause on the settlement.

Finally, in the latest maneuver in the farce that is the prosecution of our last two AGs, John Swallow is trying to get a big chunk of the case thrown out.  He's making certain legal arguments, but in reality I think he figures that since Shurtleff skated, and since he was just doing what Shurtleff did, he should skate too.  Poor John.  He never learned the first rule of poker: When you sit down at the table, look around for the mark; if you don't see him, he's you.  You're the only one left they can turn into a sacrificial lamb, John.