Bloomberg News reported today that three New York agencies sued Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and 23 more underwriters for allegedly helping Countrywide Financial Corp. to defraud investors.
New York's city and state comptrollers and their pension funds added the securities firms, two accounting firms and Countrywide officers and directors as defendants in a federal securities-fraud lawsuit filed against the home lender in August.
Falling home prices and rising defaults pushed Countrywide down 85 percent in the past year and Chief Executive Officer Angelo Mozilo has called the housing market the worse since the Great Depression. That view contrasts with his view during the previous three years that Countrywide's superior risk management disciplines set it apart from other lenders, according to the lawsuit.
The state and city pension funds' combined losses from Countrywide's declining stock price were as much as $100 million, City Comptroller William Thompson Jr. said Nov. 30. Countrywide's market value, which peaked at $25.9 billion last January, is now $3.5 billion.
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