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.