Class Action Lawsuit filed against Countrywide Financial

[BR_Parkway]

http://biz.yahoo.com/pz/070814/125003.html
According to the complaint, during the Class Period, defendants made false and misleading statements regarding the changing quality of the Company's mortgage loan portfolio. As late as April of 2007, the Company stated that credit rating agency Moody's upgraded the rating of the Company's banking segment and announced that its home loans segment was also under review for possible upgrade. Then, on June 12, 2007, the Company boasted of its position as the number one mortgage originator in the United States. These reassuring announcements served to conceal the alarming growth of loan delinquencies and the increasing likelihood of impairment charges, with resulting adverse impacts on the quality of the Company's collateralized debt obligations (CDO's), earnings and profits.

On July 24, 2007, the Company finally announced the shocking news, of over $417 million in impairment charges and implementation of a $292.9 million loan loss provision. On the news, the price of Countrywide Financial stock tumbled 10.4%, closing at $30.50 per share. Following this, on August 9, 2007, within four days of reassuring statements that purported the reliability and availability of liquidity to meet short-term needs, the Company adopted a new risk disclosure, warning of short-term liquidity issues. As a result, on that day, the price of Countrywide Financial stock fell again, losing $1.00 or 3.4%, to close at $27.86 per share, on heavy volume of over 48.6 million shares.

So two months ago, they were still pumping themselves up to retain investor confidence - kind of sounds like the M$M lately, their job isn't to report the news but to make sure we all remain good little mindless consumers. Listening to the talking heads offer 8 million reasons why we shouldn't be alarmed about the "typical fluctuations" going on in the markets right now.

[Kagemusha]

1. Haven't the courts recently clamped down on lawsuits for such things?

Okay, maybe it was different stuff - this was a case involving something like Enron, maybe Enron itself or something related, but I thought I heard that the Roberts court has basically shut the door on private lawsuits over things that should be punished publicly by regulators, or something like that. (And I know lots of people who think it should be the other way around - fear of private lawsuits should be the main motive of companies to conduct themselves well. I guess it's not turning out that way.)

[SoCalDem]

2. Class action suits do not help the ordinary people..

We have "participated" in many over the years, and after years of frou-frou..we once got a check for $.98 (State Farm Class Action suit)..

They are little more than a way to line the pockets of some already-wealthy lawyers, and force the already bankrupt company to fork over what's left in the forms of fines & court costs...to the government..

Did the people at Enron or the investors ever get anything ??

It's not accidental that lawyers wrote the ground rules for all these companies, so that even their demise is covered..

There are many people who thought they had a good job (or at least A job), and they are the real losers.. they did nothing wrong, and now they are unemployed..

MILLIONS of people "bought" houses they could not afford, and they knew they could not afford it.. My own best friend will probably lose her house in a few years when their most recent re-fi 'resets'.. they are paying on an interest-only loan..with payments of almost $2200 a month... thanks to the whiz-bang financial smarts of her idiot husband.. but hey.. she signed on the line too, and they used their house for an ATM for years, so now they have no hope of selling it, and owe $346K on a house that would now appraise for $270K.. I am so pissed too, because she bought that house for $99K 15 years ago..with 27K down, and had a PITI payment of $544 a month..and then she met Charlie :grr:

[BR_Parkway]

3. I think my parents are in a similar boat as your friend, I'm worried

about where that is going to wind up as well. Whatever happened to a little financial common sense?

[Selatius]

4. Credit happened, and a little greed added into the mix made it worse

In the old days, you usually had to have a down payment on something big like a house or a car. Now, it's no money down, and banks push this in order to generate more money through fractional reserve banking. It's all gravy until people suddenly can't pay back the loans, and when the people who deposit money at the bank find the bank is insolvent because debtors can't pay back, the depositors are going to ask, "Where's my fucking money!?" The bank goes into bankruptcy proceedings, and the depositors are going to take a loss.

That's fine, though. Because Mr. CEO incorporated the bank as a corporation, which means his private assets and his accounts in the Caymans and Switzerland are off limits to the bankruptcy court (limited liability) and pissed off depositors like you and me.

[sandnsea]

6. And why wouldn't you get your deposit?

It's insured. Also, it was quite a different thing coming up with a $2,000 down payment in the 70's and a $20,000 down payment now. It's absolutely ludicrous to think someone who has paid rent for years suddenly won't pay a mortgage payment. The problem is people who can't get a new loan because they changed the rules, not because they did anything wrong.

[Selatius]

7. Up to 100,000, but people who've banked a long time can often have more than that.

One person I knew had over 250,000 in his savings account accumulated over the course of 15 years and an inheritance from his grandfather. I told him several years back to roll it into CDs to shield himself from inflation. Of course, I should've told him to bank in Euro CDs rather than the US, seeing the strength of the Euro now vs. the US Dollar.

[sandnsea]

8. They generally use separate banks n/t

[enid602]

9. Euro CD's?

I'm heavily into non-US Dollar international bond and equity mutual funds, but how does one invest in Euro CD's? All my savings are in an IRA, so I have to keep them there to avoid taxes and penalties.

[sandnsea]

5. That is just not true

If corporations didn't hate class actions, why'd they pressure congress into changing the laws to make them harder to file. The point of civil litigation is to punish companies, not to get rich. What's going to stop these people if not the concern over financial retribution. You want to just hand over your last refuge for accountability??

And just because your friend is an idiot, doesn't mean everybody else is. There are far far more people who are now homeowners who never would have been. 3-5% foreclosure rates does not indicate that everybody who got a subprime loan bankrupted on it.