S.E.C. Accuses Countrywide's Ex-Chief Angelo Mozilo of Fraud
The New York Times reports that the S.E.C. is accusing former Countrywide chief Angelo Mozilo of fraud. Countrywide Financial was the nation’s largest mortgage lender until recently, and it was a major contributor to the subprime lending frenzy which has wrecked so much havoc for families in foreclosure and the economy at large.
Mozilo is being charged with securities fraud and insider trading. The suit is calling attention to the “two Countrywides”: the one which presented itself as underwriting safe prime loans, and the true Countrywide — hidden from shareholders — which was issuing dangerous loans Mozilo himself called “toxic.” Countrywide is now owned by Bank of America.
Mozilo has consistently showed up on lists of the financial crisis’s greatest villains, such as this one by TIME in February 2009.
For background on how abusive subprime lending led to massive foreclosures and widespread economic downturn, check out this “Reporter’s Guide to the Subprime Mortgage Crisis” AFFIL released way back in 2007 (PDF). It offers still relevant explanations of how securitization works and how people made money in the process (Mozilo made millions, for example). It also explores the impact of subprime lending on neighborhoods and communities – although this impact is still unfolding in far worse proportions than anyone predicted. Still, for the most part, the Guide was unfortunately all too prophetic.