The Role of the Economic Expert in the Banking and Investment Disputes Following the Subprime Crisis

John Davis contributed to the second issue of BRG Review.

Financial institutions sustained enormous losses when the home price bubble burst. The ensuing investor lawsuits raised the question: Who was responsible? The answer is complex given the scale and scope of financial investments and the plethora of entities involved. Fortunately, experts in economics and accounting can sort out key facts about the value of the financial instruments, the entities involved, and provide the courts with opinions addressing the “reasonableness” of alleged misrepresentations to investors. Given the rapidity of events during the subprime crisis, an expert may find that similar representations are “unreasonable” at one point in time, but “reasonable” at another point in time.