Do parallels exist between the savings and loan scandals of the early 1990s and the subprime mortgage and credit crisis of today?

Indeed, says Jeff Nielsen, managing director at Navigant Consulting. And while the firm originally published research about the similarities, particularly in litigation volume, earlier this year, the firm recently went back and recut the data to look specifically at the role of Global 500 companies in the current economic state.

What Navigant found was that while the subprime crisis at first look appears to be a U.S.-centric problem, it is, in fact, broader in scope.
“As the U.S. economy goes through a difficult period, there are clearly ramifications more globally,” Nielsen says, adding, “We sliced and diced the data any number of ways, and the global implications have continued to come into focus. It became an area of interest for us, and we went back to the data knowing that these filings had really been in U.S. courts to date, but our instincts and first-hand knowledge was that there was a global story here, and we were anxious to quantify that.”

And quantify that they did, Nielsen says, explaining Navigant determined that a little more than 10 percent of the total U.S. cases included a Global 500 company that was a non-U.S. firm. Additionally, a little more than 5 percent of the 251 active cases in U.S. courts include a United Kingdom firm as a defendant. Based on the data, “you’re only going to see that trend increase going forward,” Nielsen says.

As for the relationship between these cases and the cases of the S&L scandal, Nielsen points to one primary one: the viral nature of scandal through the entire financial industry. However, he says, there are differences, too. “That was in some ways a much simpler time,” he says, adding that much of the trouble originated through commercial mortgages then, as opposed to the various pain points rippling through the financial industry now. “This time around, it’s a much more complicated story,” he says.

What Nielsen says is most important is the sheer magnitude of the caseload, especially as filings continued to increase for 2008. It should be noted, Nielsen says, that there were 559 total S&L cases filed—and that was over a six-year span. Subprime cases are at the halfway mark, and have only been filed over the past year or so. “It looks like we’re on track to eclipse that S&L figure by the end of 2008,” he says.

Research like this, Nielsen says, helps Navigant steer its clients in the right direction. “I think it’s certainly enabled us to share with them and provide with them a more informed perspective,” Nielsen says.