Seeking A Smoking Gun In A Toxic Asset A toxic asset like one purchased by NPR's Planet Money is the subject of a lawsuit. A New Jersey carpenters union invested $100,000 in a mortgage-backed bond now worth $5,000. It wants payback.
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Seeking A Smoking Gun In A Toxic Asset

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Seeking A Smoking Gun In A Toxic Asset

Seeking A Smoking Gun In A Toxic Asset

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RENEE MONTAGNE, Host:

This is MORNING EDITION from NPR News. Good morning. I'm Renee Montagne. During the housing boom, investors spend billions on mortgage related investments that turned toxic. Many investors are now suing the creators of those toxic assets.

MONTAGNE: Do you know your toxic asset is being sued?

CHANA JOFFE: We just bought her and our baby toxi(ph) was being sued? Sort of. It was actually kind of hard to figure out. In one moment of confusion I actually thought maybe we were being sued. Turns out the lawsuit is against the creators of our toxic asset. And the man doing the suing has the largest hands I've ever seen.

GEORGE LAUFENBERG: George Laufenberg. I'm the administrative manager of the New Jersey Carpenters Funds. We provide retirement and health benefits for all the carpenters unions and their beneficiaries in the state of New Jersey.

JOFFE: Are you a carpenter?

LAUFENBERG: Yes, I am. And I've watched our funds grow from combined assets of $80 million to 2.4 billion. And then it shrank rather quickly.

JOFFE: How do you make sense of who screwed up?

LAUFENBERG: I don't know if you really make sense on who screwed up. I mean, personally I get a little angry over it because the system basically let everybody down, period.

JOFFE: George and the carpenters got a lawyer, and this is him - Joel Laitman.

JOEL LAITMAN: Pension funds all of a sudden were showing signs of dramatic collapse. The collapse was due to something amiss at the beginning. And that's what we started to investigate.

JOFFE: Okay. So maybe it's the seller. That was RBS. RBS bought mortgages from Countrywide, packaged them into complex securities, and they were the guys who sold them as super-safe investments to people like George the carpenter and his pension fund.

RBS: How many pages would you have to go through this to figure out who to sue?

LAITMAN: To find a misstatement or omission, that's the hard thing.

JOFFE: How many pages is that?

LAITMAN: You have to read the whole thing many times of these underwriting guidelines, that the perspective...

JOFFE: But where are the underwriting guidelines...

LAITMAN: All of this.

JOFFE: If you win, who pays you?

LAITMAN: It'll be the defendants who are in the case. So we're talking about...

JOFFE: RBS.

LAITMAN: RBS. RBS made significant money churning out these triple-A mortgage-backed securities, and they should be made to pay.

JOFFE: Tell me again what pub I'm calling. What pub is this?

CHRIS HAYES: Don't you know? The Marquis of Westminster.

JOFFE: The Marquis of Westminster in London?

HAYES: That's right.

JOFFE: You're the manager?

HAYES: I'm the owner. What else would you like to know?

JOFFE: And Chris, are you a British taxpayer?

HAYES: I am.

JOFFE: This s Chris Hayes, here to represent the entirety of the British taxpaying public for us. Chris, it turns out, followed the RBS bailout closely, as did a lot of people. He wasn't happy about it. I tell him about the carpenters in New Jersey, how they're suing RBS, which he partly owns, so he may end up paying those loses too. He gets thoughtful.

HAYES: When you buy something, I suppose you take the responsibility of what that company's done. So on one level it doesn't seem to be fair. But if it's a bunch of average men on the street trying to get their money back, I suppose I wouldn't mind so much. You know, if it's a bunch of carpenters, then good luck to them.

JOFFE: Whoever is at fault in this whole mess, it probably wasn't this guy. But then again, George the carpenter, an American taxpayer, has bailed out his share of banks too. I tell him about the pub in Britain. He kind of shrugs.

LAUFENBERG: If the taxpayers of Britain want to help us out of this, we welcome it. Thank you.

(SOUNDBITE OF LAUGHTER)

JOFFE: Chana Joffe-Walt, NPR News, New York.

MONTAGNE: And you can listen to more from our Planet Money team at the Planet Money podcast at NPR.org.

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