Greek leader: Legal action against U.S. banks for role in debt crisis considered

story by the Hill
by Susan Crabtree

Greek Prime Minister George Papandreou said he is considering suing U.S. investment banks that might have contributed to his country’s debt crisis.

“I wouldn’t rule it out – this may be a recourse,” Papandreou said in an interview aired Sunday on CNN's "Fareed Zakaria GPS" in response to a question about whether he is considering taking legal action against U.S. banks. “But we need to let the due process proceed and we need to see the results of the investigations.”

Papandreou said the Greek parliament is investigating the role U.S. banks and other financial institutions played in the global financial crisis that has hit his country particularly hard in recent weeks and months.

“We are right now having a parliamentary investigation in Greece, which will look into the past and see how things went the wrong direction and what kinds of practices were negative practices,” he said. “There are similar investigations going on in other countries and in the United States…I hear words like fraud and lack of transparency. So yes, there is a great deal of responsibility here.”

U.S. prosecutors are already conducting broad criminal investigations of the six major Wall Street banks to determine if they misled investors in the run-up to the subprime mortgage meltdown.

The Greek crisis has shaken faith in euro-zone economies. The European Union and International Monetary Fund a week ago agreed to a bailout of Greece after that country’s bond spreads hit record highs and Greece was unable to manage its debts.

Papandreou has been forced to make drastic spending cuts and increase taxes in an attempt to reduce the country's massive deficit from roughly 13 percent of GDP to a target of 3 percent.

In the first quarter of this year, Papandreou said he has cut the country’s budget 40 percent from last year. The draconian cuts have led to violent protests in the Greek streets, but Papandreou said he is determined to re-establish fiscal order to the island country even if his political career suffers because of it.

“I’m doing what is best for my country…what happens to me is of less importance,” he said.