Yves Smith at Naked Capitalism nails it again, full post here:
Even though more and more accounts like these are being reported daily, the denial in the industry remains high. I spoke to one expert who believes that the big white shoe law firms themselves do not understand how badly their clients failed to perform their contractual obligations. Thus lawyers may be offering their confident defenses based on ignorance of the relevant facts. (Before legally sophisticated readers point out that banks ought to tell their attorneys first about any legal problems, since the communication is confidential, remember, only a very few senior executives, plus members of the legal department, deal with outside counsel. An individual employee who was in a position to know what was really going on would be at a lower level. A general rule of corporate life is bearing news of serious problems is a career-limiting move).
But even allowing for the possibility of remarkable ignorance, the industry defenses are remarkably weak. Back to the Bloomberg story:
The American Securitization Forum trade group, JPMorgan Chase & Co. bond analysts and law firm SNR Denton have also dismissed such talk. In a commentary posted on its website, SNR Denton says that most attempts to question the validity of practices can be trumped by items such as the fact that all parties involved “clearly intended” for the trusts to take ownership.
We dismembered the SNR Denton article earlier this week, and the “intent” argument is laughable, particularly given the detailed, specific requirements of the pooling and servicing agreement. Consider: if you paid your estimated income taxes on time and filed for an extension, but then failed to send in your tax return, how sympathetic do you think the IRS would be if you argued you clearly intended to submit your return by the deadline?