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|Wednesday, January 26, 2011|
By Ben Jacklet
Oregon has filed two lawsuits against the infamous subprime mortgage lender Countrywide in an attempt to recover $14 million in losses to the state's pension and worker's comp funds.
The state bought and sold Countrywide shares on behalf of the public employees retirement fund and the SAIF worker's comp investment fund during the height of the subprime madness, between 2004 and 2008. But they didn't sell quickly enough. Attorney General John Kroger and State Treasurer Ted Wheeler argue that Countrywide misled investors about the high risk of its mortgages.
The state was due to receive $500,000 as part of a national class action settlement but Kroger and Wheeler elected to reject that settlement and to file their own lawsuits. Their complaints allege that Countrywide made "numerous statements of material facts in reporting its financial results" while aggressively selling risky products for short term gain. One high risk product that brought short term gains and long term disaster was the "pay-option" adjusted rate mortgage, which led frequently to negative amortization. The longer the borrower held the loan, the more he or she owed on it.
Not surprisingly, Countrywide went down in flames during the subprime meltdown. Bank of America bought up the remains in January 2008.
At least some of the resulting mayhem could have been avoided. The Oregon complaints, filed today in Multnomah County Court, offer numerous examples of Countrywide executives expressing deep concerns about big risks internally. The company's chief risk officer directly warned his colleagues about "high expected default rates and losses." But those concerns never made it out to investors until it was too late.
Ben Jacklet is managing editor of Oregon Business.
Friday, January 23, 2015
BY LINDA BAKER | OB EDITOR
The Northwest Environmental Business Council previews the 2015 legislative agenda as Hatch Oregon celebrates Oregon's new community crowdfunding rules.
Friday, February 20, 2015
BY AMY MILSHTEIN | OB CONTRIBUTOR
Don’t just sit there. For a healthy workplace, move up and down — and all around.
Tuesday, February 24, 2015
BY KIM MOORE | OB RESEARCH EDITOR
A partnership of a grassroots environmental organization and a youth group is striving to build community and business support for carbon price legislation.
Monday, February 23, 2015
Yeah, we know: Oregonians are way too cool for umbrellas. But today’s stylish, high-tech models will soften the resistance of the most rain hardened.
Thursday, January 29, 2015
BY JACOB PALMER | OB DIGITAL NEWS EDITOR
As the costs of college mount, and as employer demand for software developers soars, coding schools and classes are popping up everywhere.
Friday, February 27, 2015
BY OB STAFF
Oregon Business held its 22nd annual 100 Best Companies to Work For in Oregon celebration Thursday night in the Oregon Convention Center.
Monday, January 26, 2015
BY KIM MOORE
After more than a decade of wrangling, construction on a convention center hotel in Portland is slated to start this summer. But debate over project financing continues.
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