Amid Turmoil, States Slash Jobs and Budgets

West Virginia's governor has asked his staff to research possible legal action after the state suffered deep losses in pension funds with holdings in Wall Street players like AIG, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and Washington Mutual.

"I want somebody to pay," Gov. Joe Manchin said. "It's outrageous. We should be looking at the people who walked away with the money."

New Jersey investment chief William Clark said the state pension board is considering legal action against Lehman Brothers after the state bought about $180 million of Lehman stock in June and sold it for a loss of about $100 million.

The attorneys general and Connecticut and other states are investigating investment banks for alleged misleading and deceptive statements regarding sales of mortgage-backed securities. Connecticut also sued three of the nation's leading credit rating firms, accusing them of giving artificially low ratings to cities and towns.

"The federal government has been asleep at the switch and my hope is that the SEC and other federal agencies will be more active and aggressive," Connecticut Attorney General Richard Blumenthal said.

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