New Economic Rights Alliance???The Big Case?

[Citizen X]

Hi Guys,

I've come across an email that makes for interesting reading! I can't confirm or deny it's authenticity. I would however like some form of clarity, information or comments on this email please........

"Up to a trillion rand could be refunded to South African customers by the banks. This is precisely the kind of cash injection that will help bring our country out of debt slavery and into a new age of prosperity.

Millions of South Africans who have loans or credit could see their monthly repayments reduced substantially. And tens of thousands of people who have had judgments against them over the past two decades may be eligible for compensation. Garnishee orders should be slashed and small businesses struggling with overdrafts should be released from the shackles of debt slavery.

In simple terms – it is very possible that your credit card, home loan, personal loan, vehicle loan or any form of credit you may have, has been settled in full by a third party, called a Special Purpose Vehicle (SPV). Because your loan has been settled in full (i.e.. The bank has been paid out for your loan), the bank cannot bring your case to court. Under these circumstances, the collections process undertaken by banks, and any judgments taken by the bank as a result, would be unlawful.

Once a loan has been securitised (this is the technical term for this process), the bank loses the legal right to the asset. Confirmation of this was given to the New Economic Rights Alliance in the form of the attached letter from the South African Reserve Bank (see page 5, para AD8).

Unfortunately the banks “neglect” to tell the customer that their loan has been settled thanks to securitisation. This is why The New Economic Rights Alliance, a non-profit organisation, was formed. We are here to educate the South African people, and take legal action if required.

An example of where a bank has admitted outright securitisation, and withdrawn their court case, is the case of ABSA vs Louis Louw. You can read about this case in our legal documents at www.thebigcase.co.za.

Several overseas court cases have also proven that what we are saying is correct. For example:

• A very recent case in Washington witnessed a huge victory that has opened the door for many future lawsuits of this nature (http://www.Reuters.com/article/2012/...88D1OF20120914).
• If that is not enough, an important case in Hawaii confirmed that a bank has no right to sue for an asset that has been securitised (http://stopforeclosurefraud.com/2012...k-of-standing/).
• There was also a massive US$37 billion settlement paid out by five major banks in the US under similar circumstances: (http://www.cbsnews.com/8301-500395_1...s-over-abuses/).
• And hot off the press, the banks have just lost a huge case in Australia over securitisation (also called Collateralised Debt Obligations – CDO’s). This time, it was the investors who took down the banks for misleading them. This court case effects people all over the world (http://www.ABC.net.au/news/2012-09-2...t-case/4273896).
• Even the Federal Deposit Insurance Corporation is suing the major banks in the US for securities fraud. (http://jhaines6.wordpress.com/2012/0...urities-fraud/)

There are many other cases too numerous to mention, but legal beavers who want to see for themselves should look up these cases:

• Wells Fargo Bank, N.A. V Farmer, 2008 NY
• Francis J. Bevilacqua, Third vs. Pablo Rodriguez, Oct. 18th, 2011
• FERREL L. AGARD Case No. 810-77338

Securitising loans behind the backs of the customer is a huge business for South African banks. According to the Banking Association of South Africa’s website, banks are securitising around R30billion per month (http://www.banking.org.za/Securitisation/detailed.php.) These numbers indicate that the banks are offloading private debt very quickly onto the public. This is leading to a kind of "financial cannibalism" where one person is forced to rely on another person's repayments in order to survive.

If you default on a loan, the debt to the SPV and its investors are covered by an insurance policy. This is provided for in the Securities Services Act. Insurance of this nature (usually called a credit default swap) nearly sent insurance giant AIG under in 2008. When insurance pays out, the debt is settled. So, quite simply, there can be no legal case against you because all parties have been settled. In law, this would be referred to as de minimis non curat lex.

Securitisation has yielded massive profits for the banks while the customer continually loses out. Because they did not disclose what they were doing to the customer and did not inform the customer that their debt had been settled, we believe that the bank profited unfairly. Is it time to bring the scales of justice into balance?

Feel free to have your lawyer or debt counsellor contact us for more information. Alternatively, stand by while we prepare for a class action lawsuit whereby all South Africans can join with NewERA and claim from the banks what is rightly theirs.

Please let all your friends, family members and colleagues know about this letter, and to join us at www.newera.org.za.THE NEW ECONOMIC RIGHTS ALLIANCE

PS. If you would like to demand answers from your bank right now, below is a list of questions that you can ask. If you are lucky enough to receive a response, read it carefully. You will notice that your questions will probably not be answered directly. Click here for a list of contact details.

1. Am I indebted to the bank right now? (Please answer yes or no).
2. Please confirm that the bank actually possessed the money they claim to have lent me, prior to my loan being granted. In other words, did the bank physically have the money they lent me, prior to the money appearing in my account?
3. Would the bank be prepared to amend the credit agreement as follows: “We, the bank, did in fact possess the money we loaned you, prior to the loan being approved.”
4. Was the loan funded by assets belonging to the bank at the time the loan was granted? Either way, please describe in detail the accounting process used to create my loan.
5. Did the bank record my promissory note / negotiable instrument as an asset on its books? If yes, how was my instrument used to create my loan, and where is my valuable promissory note / negotiable instrument now?
6. Does the bank participate in a securitisation scheme whereby debts / promissory notes are bundled and then sold-on to a third party/parties via special purpose vehicles, entities or alike processes?
7. Was my loan securitised? If so, please send me all details regarding the securitisation.
8. Does the bank have a legal right to collect money it claims I owe it? If so, then were does this legal right come from, assuming the loan has been securitised?
9. Has my loan with the bank been settled by a special purpose vehicle, insurance policy, or by any other party?
10. Regarding the security given to the bank by me, has this security been sold on or given as security to another party?"

[vieome]

http:think it is a hoax

Though there are cases against the banks http://www.newera.org.za/class-actio...nst-the-banks/

[Citizen X]

My question is simply this: If this was as big a story as it appears to be, then why is it not in the mainstream media? The media are vultures for just this sort of thing! Also, call me naive, but with the advent of the Companies Act 71 of 2008, section 21 no longer refers to the former non profit company as it was in section 21 of the 1973 Act. Now somewhere on there website is a reference to s 21???

[Blurock]

My question is simply this: If this was as big a story as it appears to be, then why is it not in the mainstream media? The media are vultures for just this sort of thing! Also, call me naive, but with the advent of the Companies Act 71 of 2008, section 21 no longer refers to the former non profit company as it was in section 21 of the 1973 Act. Now somewhere on there website is a reference to s 21???

It did make the headline news earlier in the year. The case was heard and rejected in the Pietermaritzburg court. This group are now garnering support and are trying in other provinces. It is funny that these kind of cases only goes to court when the s#!rt hits the fan. Why did they not complain before they defaulted on their bond repayments?

The arguments raised does not make sense at all. It is clear that they do not understand the economic system and they know nothing about banking. (See Dave's comments) An emotional appeal will never win in court. Unless you have your facts right, you have no chance.

[ScottyC]

Hi there, I have been asked by the Moderator to respond to questions. Please Google "the new economic rights alliance" and you will see many news items both locally and around the world come up.

The NPO is duly registered which you can confirm with CIPRO.

Thank you,

Scott

[Citizen X]

Hi there, I have been asked by the Moderator to respond to questions. Please Google "the new economic rights alliance" and you will see many news items both locally and around the world come up.

The NPO is duly registered which you can confirm with CIPRO.

Thank you,

Scott

Dear Scotty,
I don't doubt at all that you are duly registered. It’s noteworthy that we often refer to 'a section 21 company,' true to an extent; it should be a former section 21 registered company. I’m aware that all companies that registred as a certain form of ownership will retain their original registration. The only reason I raised this, is because I still hear , especially on radio stations, people referring to current non profit companies as section 21 companies. This only causes confusion from a practical perspective as section 21 of the repealed companies act of 1973 states“21. Incorporation of associations not for gain.

(1) Any association-
(a) formed or to be formed for any lawful purpose;
(b) having the main object of promoting religion, arts, sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests;
(c) which intends to apply its profits (if any) or other income in
promoting its said main object;
(d) which prohibits the payment of any dividend to its members;
and
(e) which complies with the requirements of this section in respect to its formation and registration, may be incorporated as a company limited by guarantee.
(2) The memorandum of such association shall comply with the requirements of this Act and shall, in addition, contain the following provisions:
(a) The income and property of the association whence soever derived shall be applied solely towards the promotion of its main object, and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend, bonus, or otherwise howsoever, to the members of the association or to its holding
company or subsidiary: Provided that nothing herein contained shall prevent the payment in good faith of reasonable remuneration to any officer or servant of the association or to any member thereof in return for any services actually rendered to the association.
(b) Upon its winding-up, deregistration or dissolution the assets of the association remaining after the satisfaction of all its liabilities shall be given or transferred to some other association or institution or associations or institutions having objects similar to its main object, to be determined by the
members of the association at or before the time of its dissolution or, failing such determination, by the Court.
(3) The provisions of section 49 (1) (c) of this Act shall not apply to any
such association.
(4) Existing associations incorporated under section 21 of the repealed Act shall be deemed to have been formed and incorporated under this section.”


BUT

Section 21 of the new Companies Act 71 of 2005 as amended states:-


“21. Pre-incorporation contracts

(1) A person may enter into a written agreement in the name of, or purport to act in the name of, or on behalf of, an entity that is contemplated to be incorporated in terms of this Act, but does not yet exist at the time.
(2) A person who does anything contemplated in subsection (1) is jointly and severally liable with any other such person for liabilities created as provided for in the pre-incorporation contract while so acting, if-
(a) the contemplated entity is not subsequently incorporated; or
(b) after being incorporated, the company rejects any part of such an agreement or action.
(3) If, after its incorporation, a company enters into an agreement on the same terms as, or in substitution for, an agreement contemplated in subsection (1), the liability of a person under subsection (2) in respect of the substituted agreement is discharged.
(4) Within three months after the date on which a company was incorporated the board of that company may completely, partially or conditionally ratify or reject any pre-incorporation contract or other action purported to have been made or done in its name or on its behalf, as contemplated in subsection (1).
(5) If, within three months after the date on which a company was incorporated, the board has neither ratified nor rejected a particular pre-incorporation contract, or other action purported to have been made or done in the name of the company, or on its behalf, as contemplated in subsection (1), the company will be regarded to have ratified that agreement or action.
(6) To the extent that a pre-incorporation contract or action has been ratified or regarded to have been ratified in terms of subsection (5)-
(a) the agreement is as enforceable against the company as if the company had been a party to the agreement when it was made; and
(b) the liability of a person under subsection (2) in respect of the ratified agreement or action is discharged.
(7) If a company rejects an agreement or action contemplated in subsection (1), a person who bears any liability in terms of subsection (2) for that rejected agreement or action may assert a claim against the company for any benefit it has received, or is entitled to receive, in terms of the agreement or action.”
As a member of the public though, I would like to enquire as to why it’s necessary to pay a subscription fee to your company for receiving newsletters, updates etc? Shouldn’t they donate as and whenever they want to as opposed to been debited every month? Just a question, that’s all!

Alot of people still believe, based on what they currently say, that going forward, all non profit companies are section 21 companies, as mentioned, this won't apply to you as you registred under the old act before the new act came into being, but according to the new act, a non profit company is no longer a section 21 company simply becuase section 21 states something completed different....food for thought really!

[Dave A]

As far as I know it isn't a hoax email, and the guy behind it has made mainstream media - although not the headline news.

Michael Tellinger's lawsuit actually came up on TFSA a few months ago, a Youtube video where Michael was long on hype and short on detail. A few of us had a dip in the following posts.

And the New Economics Rights Alliance website is for real too.

I do see fundamental flaws in the argument presented by the email.

For example, here's a quick question that you shouldn't have to ask your bank to figure out the answer - Does a bank lend its own money to borrowers, or does it actually act as an intermediary lending you money it has obtained from elsewhere, and manages and invests in loans on these funders' behalf?

If you're struggling with the answer, what do you think banks do with positive account balances - leave the cash to rot in their vaults?

At this point I have one other comment - has anyone taken a close look at their bond contract recently? There's some damn interesting stuff about the bank selling your debt on to third parties nowadays that I'd think would kill any claim by the debtor against the bank along the lines suggested above stone dead. What I don't know off the top of my head is whether that stuff has always been there or it's a recent addition.

[Citizen X]

As far as I know it isn't a hoax email, and the guy behind it has made mainstream media - although not the headline news.

Michael Tellinger's lawsuit actually came up on TFSA a few months ago, a Youtube video where Michael was long on hype and short on detail. A few of us had a dip in the following posts.

And the New Economics Rights Alliance website is for real too.

I do see fundamental flaws in the argument presented by the email.

For example, here's a quick question that you shouldn't have to ask your bank to figure out the answer - Does a bank lend its own money to borrowers, or does it actually act as an intermediary lending you money it has obtained from elsewhere, and manages and invests in loans on these funders' behalf?

If you're struggling with the answer, what do you think banks do with positive account balances - leave the cash to rot in their vaults?

At this point I hve one other comment - has anyone taken a close look at their bond contract recently? There's some damn interesting stuff about the bank selling your debt on to third parties nowadays that I'd think would kill any claim by the debtor against the bank along the lines suggested above stone dead. What I don't know off the top of my head is whether that stuff has always been there or it's a recent addition.

I can't help but agree with Dave! What does make sense to me is that is Bank abc, sells debtor D's to debt collector X on 4 October 2012; then in principle they ceded all rights and titles. In practice if bank ABC then goes ahead and applies for and obtains one form of judgment or another on debtor B on 2 November 2012, then they acting on a debt over which they have no rights. Ordinarlily this would be a problem, but bank ABC and debt collector X are in bed together and therefore have a nice cosy relationship. This is where the real problem arises, I assist Miss Q, to obtain extinctive prescription over this debt in December 2012, debt collector x, confirms in writing that this debt is prescribed and that they abandon their claim, then bank ABC contacts Q and demands payment citing default judgement. In principle one would argue that they sold the debt and all its rights BUT becuase XYZ and X are in bed, they happy to amend the sale date!! What is the practical and most lucrative way forward in such a circumstance?

[Dave A]

What does make sense to me is that is Bank abc, sells debtor D's to debt collector X on 4 October 2012; then in principle they ceded all rights and titles. In practice if bank ABC then goes ahead and applies for and obtains one form of judgment or another on debtor B on 2 November 2012, then they acting on a debt over which they have no rights. Ordinarlily this would be a problem, but bank ABC and debt collector X are in bed together and therefore have a nice cosy relationship.

I suspect when you get down to the nuts and bolts the debt is "sold" (securitised), but not the bank's duty to administrate payments and ensure performance of the debtor.

The other wrinkle I see in the NERA argument relates to the insurance side of this. If the banks (or SPV's) have been double dipping and fraudulently collecting from the debtor and claiming from insurance in the same matter, it is not the debtor that is being predjudiced but the insurance company.

If there is any money due to be refunded for double dipping, I suggest it'll be owed to the insurance company.

[ScottyC]

Now THIS is a very very good point. The SPV that trades the debt on the JSE or bond markets carries insurance in case of a default (you may have heard of a Credit Default Swap). Therefore, if someone defaults on the loan, insurance covers this. Therefore, the SPV gets paid out, the bank have been paid out so where does the money go after an auction takes place? This is the basis of our upcoming class action against the banks. Again I urge you to listen here: http://downloads.newera.org.za/Ray .