Friday, September 26, 2008

Another long weekend?

I cannot remember the last time I was off for a full weekend. It seemed like every weekend another company goes out of business, is forced to merge, or is taken over by the government. Last night the FDIC took control of Washington Mutual the largest thrift in the United States. This takeover was the largest bank failure in the history of the United States. FDIC sold the deposits to J. P. Morgan Chase and now is trying to figure out what to do with the rest of the assets.

Again, we find ourselves looking to the weekend to see what will happen to the United States and in turn the rest of the world. The Congress is debating what should be done to try to solve the liquidity crisis in American. I heard this morning that 90% of Americans are against the restructuring plan. Let me try to bring the problem to a level we can all understand.

A client of mine called me on Thursday the 18 and asked if I could help a friend of his with a problem. I called the friend she put in $350,000 in a money fund and as of last Thursday she can not get at any of this money and doesn’t know when she will get at her money and what value will it be to her when she can get at the money.

She is not a fat cat in Washington, she is not a Wall Street Executive, she is a nice woman who is scared to death that she will loose this money. She is one of the victims of the problem in the economy. She did not overspend for a house or car, did not take her credit cards to the limit, she is an average American affected by the crisis in America. There is plenty of blame to go around and millions have lost money. We need to have Congress focus on the problem and less time on blame. We can get to the blame later; let us deal with the issues today.

I guess her story was the tipping point for me. Millions of people have been angry at what has happen, including my clients, and me, who saw the value of their saving decline dramatically in the last 6 weeks. I wanted to do something or at least try to do something. I called my lawyer and said that I laid a significant portion of the failure on the credit rating agencies for not doing their job and I wanted to explore how or if I could sue them for their failures.

He put me in touch with a large law firm that specializes in securities litigation. I spent about two hours on the phone with them on Friday the 19 telling them my story as best I could. The firm said that they would look into my issues and call me back. On Wednesday when the Chairman of The Fed was speaking with Congress about the problem, he started his answer with the credit rating agencies and their poor performance. Shortly after that, the lawyers called and they did not have good news.

The researched the law and said while the rating agencies had some degree of guilt they could not see any in which I could sue them. They did say the Attorney General of Connecticut was looking into possible litigation of the credit rating agencies. I think the thing that hurt me the most was the comment by the lawyers, while the impact on my clients and me was significant we did not have enough losses to have standing in the courts. In other words, the losses suffered by institutions were much greater than ours were and bigger institution would represent us.

They did say that there are civil actions being filed and encouraged me to tell everyone to pay attention to mail for notification of actions in various securities. I am disappointed that I was not able to file the suit, but I feel good about looking after your interest to try to do something. I do not know that I could have faced you knowing that I did not at least try to do something for all of us. I will continue to follow the problems and keep you informed. The quote from the movie Network sums up how I feel. “I’m mad as hell and I’m not going to take it anymore” sums up how I feel.

Dan Perkins

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