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August 21, 2008 8:11:00 AM CDT

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Subprime Crisis Sparks a Spate of Legal Battles

Posted Sep 11, 07 11:24 AM CDT in US,  Business 

(Newser) – The troubles plaguing Countrywide and Bear Stearns’ hedge funds will move from the boardroom to the courtroom. Homeowners and banks are suing mortgage lenders, shareholders are suing funds, the SEC is investigating executives, and Congress may conduct hearings into credit agencies' practices. The current mess ensnares “an incredible range of parties,” one legal expert tells the Washington Post.

But he advises against drawing parallels to the legal battles that doomed Enron and WorldCom: “Everybody can point fingers at so many other people that you just don't know when it'll stop.” And legal precedent may complicate proceedings for investors and institutions trying to recoup their money. Credit raters, for instance, have argued successfully their evaluations are protected free speech.

Source Washington Post

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A foreclosure sign tops a sale sign outside an existing home on the market in northwest Denver on Wednesday, Aug. 29, 2007. The U.S. economy will slow sharply this year and fall behind growth rates in...   (Associated Press)
The logo for Bear Stearns is shown at its corporate headquarters in New York, Wednesday, July 18, 2007. Stocks retreated Wednesday after Bear Stearns Cos. told investors there was little value left in...   (Associated Press)
An employee of Countrywide walks into the Nortirdge branch in Los Angeles, Calif., Tuesday Aug. 22, 2007. Countrywide Financial Corp. said Bank of America Corp. made a $2 billion investment in the company...   (Associated Press)
Trader James Fanning takes a break on the floor of the New York Stock Exchange Tuesday Aug. 14, 2007. Wall Street pulled back sharply Tuesday on anxiety about the pace of consumer spending amid a disappointing...   (Associated Press)
Trader Paul Laregina takes a break on the floor of the New York Stock Exchange, Tuesday, Aug. 14, 2007. Wall Street pulled back sharply Tuesday on anxiety about the pace of consumer spending amid a disappointing...   (Associated Press)
ects of a spreading credit crunch. Financial markets in the United States and around the globe have been shaken by fears about spreading credit problems that started with home mortgages for those with...   (Associated Press)
Trader Peter Tuchman pushes back his hair as he works on the floor of the New York Stock Exchange, Thursday afternoon, Aug. 9, 2007. Wall Street plunged again Thursday after a French bank said it was...   (Associated Press)
80 points. (AP Photo/Richard Drew)   (Associated Press)
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lawsuit  • subprime mortgages  • Wall Street  • Bear Stearns  • hedge fund  • investors  • homeowners  • Countrywide  • Enron


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