In just under a month of being in office, Michigan’s new Attorney General, Bill Schuette, a former Congressman and state Senator, has taken a firm stance on replenishing the losses incurred to the State of Michigan Retirement Systems (SMRS).
On Wednesday, Schuette and state Treasurer Andy Dillion, announced that the Michigan’s subprime securities lawsuit against Bear Stearn’s received a favorable ruling that would allow the case to “move on to the discovery phase and ultimately toward trial.”
The state said previously that Bear Stearns allegedly violated federal securities law by misleading investors and Michigan taxpayers. The SMRS lost about $62 million from its investments, officials state in the legal documents.
Today Dillion and Schuette, the Wolverine State’s 53rd Attorney General who replaced Mike Cox in January, revealed that Michigan has initiated legal action against Countrywide Financial Corp.
“Protecting the hard-earned dollars of Michigan taxpayers is one of my top priorities,” the Attorney General said Friday.
The suit is seeking about $65 million that the nearly $47.5 billion state retirement plan allegedly lost as a result of Countrywide’s participation “in a massive corporate fraud scheme.”
In summarizing the complaint, between March 12, 2004 and March 7, 2008, the state watchdog is alleging that the company’s subprime lending practice caused huge losses.
As a result, the Jan. 28 announcement lists that following the mortgage company’s disclosures that revealed its “lax mortgage underwriting guidelines, cascading mortgage defaults, and increase in use of pay option adjustable rate mortgages,” Countrywide’s stock dropped from $35, to $5 per share.
Bank of America (BofA), the financial services behemoth, previously bought out Countrywide in January 2008 for about $4 billion in an all stock transaction.
In its response today, BofA stated that it “is unfortunate that select investors chose to opt-out of a fair and equitable agreement to settle these issues.”
“We intend to vigorously defend these claims,” the statement said