Investments by Catholic agencies including $8.9 million from the Society of St Vincent de Paul may be at risk as a result of the US subprime crisis. The Age reports hundreds of organisations across the country, including Boystown and other Catholic agencies, own subprime products with a collective exposure of up to $2 billion.
The exposure reflects the assets managed by Wall Street investment bank Lehman Brothers, the most prolific in selling risky "derivatives" such as collateralised debt obligations (CDOs).
The CDOs were marketed with traditional Australian names such as Federation, Tasman, Parkes, Flinders, Kokoda, Kiama and Torquay.
According to The Age, the St Vincent de Paul Society has $8.9 million in funds with Lehman, the bulk in CDOs.
The paper says it believes about 20 councils have signed up for a class action lawsuit against Lehman through law company Piper Alderman.The suit is yet to be filed in court, but they are preparing a claim for misleading and deceptive conduct and may join an existing action by Wingecarribee Council in the NSW southern highlands.
However, Lehman said it was not aware of the class action and declined to answer questions on the issue of CDOs and its clients.
"Lehman Brothers will vigorously defend any legal proceedings … where we do not feel there is merit," it said.
"Lehman Brothers denies the claims Wingecarribee Council has made in its statement of claim filed with the Federal Court."
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