27/01/2008 London-The credit crunch and sub prime crisis is rippling right through the financial industry and add to the woes of two big players Barclays Capital and HSBC is a class action lawsuit. Friday 25th January saw the two named in an action brought over the huge collapse of the US biggest mortgage firm Countrywide Financial.
New York state officials are suing a total of 26 banks and two accounting firms that did business with Countrywide Financial Corp., saying the companies failed to ensure that the beleaguered mortgage company failed to be honest with investors.
The firms were added as defendants yesterday in a class-action lawsuit already pending against Countrywide in California.
Two of the lead plaintiffs, New York State comptroller Thomas DiNapoli and City comptroller William Thompson Jr., oversee several huge government pension funds that invested in Countrywide securities.
“Countrywide’s underwriters had a duty to investigate whether Countrywide was acting honestly,” DiNapoli said. “Investors lost millions, and New Yorkers lost their homes. We can’t sit idly by.”
Thompson and DiNapoli said they had also filed new complaints against several Countrywide officers and directors who hadn’t been named as defendants in the previous court action.
Last year saw New York State and city pension funds lose as much as $100m due to Countrywide’s decline stock price.
Other companies being sued are ABN, Amro, Citigroup, Deutsche Bank Goldman Sachs Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia
