New York authorities are suing 26 banks and two accounting firms that did business with Countrywide Financial Corp., saying the companies failed to ensure the beleaguered mortgage company was being honest with investors.
The banks and accounting firms were added as defendants Friday in a class action lawsuit already pending against Countrywide in California.
Two of the lead plaintiffs, New York State Comptroller Thomas P. DiNapoli and City Comptroller William C. Thompson Jr., oversee several huge government pension funds that invested in Countrywide securites.
The long list of new defendants in the case includes underwriters and accounting firms that participated in the marketing of Countrywide securities. The suit claims that the company made misstatements about its lending practices, artificially inflating the price of its 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.
A spokesman for Countrywide did not immediately respond to a phone message and an e-mail Friday.
California-based Countrywide rose to become the nation’s largest mortgage lender but has been struggling amid rising mortgage defaults, particularly subprime loans to borrowers with questionable credit histories.
Topics Lawsuits
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