Councils chase sub-prime losses

One local council in NSW has commenced legal proceedings against investment bank Lehmann Brothers whilst several other councils are currently investigating legal action over the sale of highly rated collateralised debt obligations by Lehmann subsidiary Grange Securities. Many councils, who are required to invest in only top rated securities bought into the "Federation" CDO delivering 8.29 per cent which was AAA rated by S&P. Federation, which represented sub-prime mortgages in the US, is now rated CCC.

Source: The Age