Credit Bubble, Toil and Trouble….

Yes, I promised myself not to blog during my vacation here in Australia. But two things have forced me to reconsider. First, it is clear that the housing lending crisis that I have been tracking has surfaced here, “down under” as well and throughout the world. We need to keep our eye on the global tidal wave of economic destruction it is creating.

More urgently, one of the websites, Mi-implode, that I have been referencing and that does a great job of tracking all the imploding lenders and criminal mortgage practices has come under attack from the industry. They are amazing whistle-blowers and deserve our support now that one of the financial companies they have been exposing tries to put them out of business with a malicious law suit. Here’s their release.

RELEASE: STOP THE ATTACK ON MI-IMPLODE: SUPPORT A FREE FINANCIAL PRESS;

One of the leading websites monitoring the mortgage loan crisis that is unhinging world financial markets is under attack in the courts by a lending agency, Loan Center of California, because an alleged claim in an anonymous email from whistle-blower charging that the company was collapsing, as well as a variety of impropriety charges. Although the general claims were reasonably supported by both public and private evidence available to ml-implode at the time, the lawsuit aims to silence the work of a widely-read, web-based independent financial news outlet, which is now scrambing to raise legal costs.

“This is akin to using the courts to shoot the messenger,” says Aaron Krowne, proprietor of the widely-known and valued ml-implode.com website. “This is an example of an attack on the free press and citizen-journalism in the digital age by a well-heeled lending company using deep pockets to undercut outside scrutiny by the public, cloud transparency in the financial markets, and potentially force the website out of business with unsubstantiated claims and mis-placed blame.”

Krowne explains that the web site is run on a shoestring, with the workload shouldered by him (in addition to a full-time job), a partner, and a free-lance contractor, all working part-time. In spite of this, reports contributed by the public (the majority) are only posted if there are multiple independent sources corroborating a claim. This was the case with the whistleblower’s tip on LCC.

Krowne says that in accordance with standard operating procedure, the post was marked as doubtful immediately after LCC complained. However, the company refused to send in a correction for unknown reasons, demanding the information be removed entirely. Krowne says ml-implode relented within a day, and removed the posting from the web page.

However, LCC surprised the site by filing a lawsuit a few weeks later, blaming Krowne and ml-implode for the loss of about $3.8 million in funding, and requesting damages of at least $50,000. LCC did not disclose whether the funding was restored, or explain why major investment banks Credit Suisse and Washington Mutual (the creditors) were not themselves responsible for any business injury LCC suffered. The suit implies the banks acted against solely based on information on the ml-implode site, despite the prominent disclaimers advising otherwise.

Krowne and ml-implode have thus far pursued an “anti-SLAPP” defense, which would provide for early dismissal of the suit and award the defendant legal costs. However, last Friday Judge Franklin Taft denied this motion in a ruling that casts doubt on the state’s ability to abide by its own anti-SLAPP statute. The ruling states that the site “is not an index” (even though this is clearly what it is) and that the submitted letter had been “transformed” (even though it was posted verbatim). The ruling did not address the issue of the site’s disclaimers, which amply explained the meaning of the “imploded” list and imperfect nature of the information on the site. The ruling also did not consider the defendent’s immediate flagging of the item as “doubtful” and its rapid removal within a day.

Krowne says the site is considering seeking an appeal of the anti-SLAPP denial decision. Failing that, the case would proceed to litigation, which Krowne is optimistic about, saying that the site acted reasonably and responsibly, within the best of its abilities. However, Krowne urges that the community’s support is needed to pay for the case.

MI-implode.com has had more than 4.5 million visits since January 1, 2007, according to the site meter on the web page. Currently 105 lending operations are listed as “imploded”.

http://ml-implode.com/

Please pass this release along to financial journalists and media freedom groups.

IN DEBT WE TRUST SCREENINGS

Paul Hyland wrote to me at Facebook: “Just watched In Debt We Trust in the US Capitol - it got a good reaction (or at least a reaction…a couple amens, a few wows, that sort of thing). Campaign for America’s Future sponsored the screening.”

Next screeinging I will be at is August 8 at 6 PM at Downtown Community TV at 87 Lafayette Street in Lower Manhtattan organized by NEDAP. There will also be a screening with Bob Manning in attendence at the American Socilogical Association Meeting at 8:30 am on Aug 12th.

MORE ON THE CREDIT BUBBLE

Comments to Dissector@mediachannel.org. Blog Resumes Aug 8. Medichannel seeking partners.