A New Class of Exports – Class Action Goes International
Countries export when they have a surplus. Japan produces cars. France produces wine. America, well, America produces lawyers. In the last 12 years the number of countries that allow class actions (or some form of group litigation) has jumped from 3 to 25. Unsurprisingly major U.S. law firms have been instrumental in the spread and exploitation of the change. While legislatures are beginning to gradually limit the scope of class actions here in the U.S., American law firms are finding greener pastures (or at least deeper pockets) abroad. In January three U.S. firms won a $47 million settlement in a Dutch securities class action suit. The three firms pocketed over $9 million for their efforts. The largest fines and settlements are generally the result of class action suits and as group litigation spreads, expect international law firms to take the class action show on the road. Not sure how this helps America’s balance of trade issues.
Credit Unions Step up to the Plate
The not-for-profit cooperative financial institutions known as credit unions are anxious to join the big leagues, or at least the minor leagues of corporate lending. Legally restricted to holding no more than 12.25% of corporate loan assets in their portfolio, credit unions have long been viewed as simply personal lenders providing car and home loans. However Senator Mark Udall has introduced legislation called the Small Business Lending Enhancement Act that will increase that amount to 27.5% of a credit unions portfolio. While it will not put them in direct competition with banks it is thought the change will allow small businessmen seeking loans for sole proprietorships or small partnerships to go their credit union when they fall below the lending guidelines of their banks. In theory this could add some risk to credit union portfolios over time because of the higher concentrations, however the feeling is that they deserve a chance at bat.
This week I had the opportunity to present at the Federal Reserve in Boston. Couldn’t help notice they had a retail branch in the office. It appears that our bank regulators keep their personal money with…gasp…a credit union—regulated by the National Credit Union Administration—not the Fed. Now, to be fair, credit unions can be sometimes be cheaper for basic home and car loans because they are a cooperative, but even the fed employees get a chuckle out of the irony.