Back in January of this year the New York City Comptroller, William Thompson and the New York State Comptroller, Thomas P. DiNapoli and the New York City Pension Funds became lead plaintiffs in a class-action suit against Countrywide and certain officers (as well as a host of other related defendants) alleging that Countrywide misstated and omitted information regarding its lending practices and other business information, resulting in the artificial inflation of its stock price. Well, we all know what has happened to Countrywide and it's stock value. And a lot of us cheered.
But given the amount of information that is, was and has been out there about Countrywide’s predatory lending and servicing practices over the last several years, what on earth were Thompson and DiNapoli and their pension funds thinking?
Something tells this Judge that NY's participation in the suit should be thrown out under the doctrine of unclean hands; anyone who invested in Countrywide had to have been deliberately ignoring the enormous public outcry regarding subprime predatory lending. And the only possible reasons to have done that are either opportunistic gambling with NY pension funds in Countrywide’s routine abuse of borrower consumers or alternatively, gross ignorance and incompetence. There really can’t be any other position from which to complain, and either one means Thompson and DiNapoli should have nothing to do with managing anything more complex than a lemonade stand.
Any pension fund or investment manager that touches the stock of companies like Countrywide deserves whatever happens to them.
The Honorable Judge Roy Bean.
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