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Local News Story
State Attorney General: Outside lawyers should not have been hired
Raleigh, NC, 11.30.2008
AP
Attorney General Roy Cooper's office says that the state treasurer's office violated North Carolina law by hiring outside attorneys to advocate as part of a class-action lawsuit against mortgage giant Freddie Mac.
A spokeswoman for State Treasurer Richard Moore said his office disputed Cooper's legal interpretation and that Moore was only fulfilling his duty to work in the interest of pensioners.
The dispute between Cooper and Moore, two of the state Democratic Party's most respected names, has led to lengthy posturing on both sides. They're seeking position over a high-profile case that will likely put investor anger over the subprime crisis into the courtroom.
Moore, who oversees the state's multibillion-dollar pension fund, hired two outside law firms seeking to persuade a federal judge that North Carolina Retirement Systems be the lead plaintiff in the suit. Cooper's office said Moore failed pursue a competitive bidding process to hire attorneys and violated state law by not getting approval for such hiring from the attorney general and the governor.
``The treasurer's office violated the law and the attorney general has a duty to make sure the law is followed,'' Cooper spokeswoman Noelle Talley said in a statement.
Moore's spokeswoman, Sara Lang, said Moore had a duty to seek the best outcome for the people he represents.
``The Department of State Treasurer continues to hope that it can work with the Attorney General to protect the interests of pensioners,'' she said in a statement.
Last week a federal judge in New York denied Moore's request to allow North Carolina to lead the case because the judge was unsure whether Moore had the legal authority to act on behalf of the retirement system that he runs. Cooper had petitioned the court to argue that Moore lacked the power to take action.
North Carolina was in line to perhaps play a large role in the suit because the state had the largest financial stake some $18 million in losses.
Cooper insisted that the retirement system will still recover all the money to which it's entitled as it remains part of the suit. That contrasted with Moore's remark earlier this week that suggested the judge's decision was a blow to North Carolina's chances. He contends he needed to quickly sign on to the lawsuit or the state and the 820,000 state workers and retirees who rely on the fund could lose out on monetary damages.
``It is unfortunate that this decision means North Carolina cannot use every tool and resource available to get the largest recovery possible for our 820,000 pensioners,'' Moore said in a statement after the judge's ruling.
The lawsuit alleges Freddie Mac concealed and misrepresented the company's poor financial practices, which led to huge losses. The company is largely seen as a centerpiece of the subprime mortgage meltdown that has triggered broader financial turmoil across the nation and globe.
(Copyright 2008 by The Associated Press. All Rights Reserved.)
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