Subprime Crisis Sparks a Spate of Legal Battles

Investors, homeowners, banks head to court, but obstacles lie ahead
By Wesley Oliver,  Newser Staff
Posted Sep 11, 2007 11:24 AM CDT
Subprime Crisis Sparks a Spate of Legal Battles
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 most of the world, according to forecasts in a U.N. report released Wednesday, Sept. 5, 2007. Woes...   (Associated Press)

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. (More Countrywide stories.)

Get the news faster.
Tap to install our app.
X
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.

X