Goldberg Kohn Hosts Sub Prime Lending and Servicing Meeting

November 17, 2003

CHICAGO—In response to the Fairbanks Capital proposed settlement order announced on November 12 by the Federal Trade Commission (FTC), Goldberg Kohn today convened a meeting in Chicago of interested sub prime industry participants and regulators.  The overall objective for the meeting was to create an opportunity for the exchange of information and ideas on current issues of significance to the sub prime industry, including the terms of the proposed Fairbanks settlement.

Joel Winston, associate director of financial practices in the FTC's Bureau of Consumer Protection and lead counsel for the government on the Fairbanks matter, served as keynote speaker for the meeting.   Other speakers included Steven Fritts, associate director for risk management policy, Federal Deposit Insurance Corp.; David Berenbaum, senior vice president of policy and civil rights, The National Community Reinvestment Coalition; Scott Mason, associate director in structured finance ratings, Standard & Poor's; Tom Prior, partner, Morris, Schneider & Prior, L.L.C.; and Dennis Black, principal, Goldberg Kohn Bell Black Rosenbloom & Moritz, Ltd.   Dan Shapiro and David Chizewer, principals in the Class Action Defense Group at Goldberg Kohn, served as moderators.

Most significantly to the topic, Winston repeatedly pointed out that the Fairbanks settlement order does not give guidelines: "The order is not designed to say, 'This is the line we draw between legal and illegal behavior,'" he said.  "It's routine in FTC orders to go beyond what the law requires, and it's called 'fencing in relief" ... to [regulate] behavior that might not in itself be illegal but is part of the scheme by which the company engaged in violations."  Later, he continued: "This order does not necessarily set the standard for the entire industry.  Its guidance clearly is something you ought to look at, but it is not a hard-and-fast rule." 

The meeting included presentations by each speaker and a Q-and-A session with the speaker panel .