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O’Melveny’s Close Quoted in Bloomberg BNA Banking Report on Use of Eminent Domain to Fix MortgagesAugust 27, 2012
O’Melveny & Myers LLP Securities Litigation partner Matthew Close was quoted in the August 27, 2012, Bloomberg BNA Banking Report article “Chicago Seen Posing Next Near-Term Test On Use of Eminent Domain to Fix Mortgages.” The article discussed the upcoming September 12, 2012, meeting of the Chicago City Council where a proposal authored by advisory firm Mortgage Resolution Partners (MRP) in favor of using eminent domain to seize, refinance, and sell underwater mortgages in the city is likely to be on the agenda.
The article references a July 2012 16-page legal analysis regarding the MRP proposal authored by Close and fellow O’Melveny partners Walter Dellinger and Jonathan Hacker on behalf of the Securities Industry and Financial Markets Association (SIFMA), which expresses concern over the consequences eminent domain proposals will have on investors. BNA writes that according to the memo, the proposal “probably would not withstand a legal challenge based on attacks under the US Constitution and California law, and ‘is almost certain to be tied up for years’ in costly litigation that could mean further damage for municipal balance sheets that already are in shambles.”
Close explained to BNA that the actual implementation of such a proposal could be much more complex than the process used to launch it. “What’s most important is that this is very novel, and untested legally and politically," Close said. "It’s easy for an elected official to call for a hearing, but that’s much different from serious policy making and legal analysis.”