Why British Taxpayers May Bail Out New Jersey Carpenters

Recently, we got an e-mail. "Subject: Do you know your toxic asset is being sued?"

Turned out the suit didn't involve our own Toxie, but one closely related to her — a bundle of subprime mortgages issued by Countrywide during the housing boom.

And it wasn't the asset itself that was being sued. It was the Royal Bank of Scotland, which bundled the loans into a mortgage-backed security and sold off pieces to investors.

The people doing the suing are New Jersey carpenters, whose union vacation fund spent $100,000 on the MBS. It's now worth $5,000.

On the podcast we'll be posting later today, Chana Joffe-Walt talks to a carpenter, and to the carpenters' lawyer. She also talks to a pub owner in London. That's because, if the carpenters win their lawsuit, British taxpayers — who bailed out RBS — will be on the hook to pay up.

So far, then, we've got Countrywide, RBS, New Jersey Carpenters and all the taxpayers in the U.K. — all for one toxic asset. As it turns out, Bank of America and U.S. Bank also figure in.

Here's a graphic that puts it all together:

toxic asset

For more, listen to Chana's story that aired today on Morning Edition.



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