Why am I not at all surprised about this?

"The Federal Bureau of Investigation is probing subprime lender Countrywide Financial Corp. for possible securities fraud, according to law-enforcement officials and finance-industry executives.

The inquiry involves whether company officials made misrepresentations about the company’s financial position and the quality of its mortgage loans in securities filings, four people with knowledge of the matter said. It is at an early stage, they emphasized. . .

Fifteen other subprime companies also are under scrutiny by federal agents and prosecutors in a broad look at the subprime industry sparked by huge losses on residential mortgages and the securities used to fund them. The investigations are examining mortgage-origination fraud, conflicts of interest and undisclosed relationships within the industry, and the practices used to package mortgage-backed securities for sale to investors.

Countrywide issued more than $100 billion in mortgage-backed securities between 2004 and 2007, according to the newsletter Asset Backed Alert. More than two dozen Wall Street firms helped construct those deals, making it possible that some of them will also face law-enforcement scrutiny."

I suspect we shall be learning alot more about Angelo Mozilo’s stewardship, as well as those giant and well-timed stock sales. Someone is gonna be in a heckuva lot-o-trouble . . .

>


Source:
FBI Investigates Countrywide
U.S. Scrutinizes Filings  On Financial Strength, Loan Quality for Fraud
GLENN R. SIMPSON and EVAN PEREZ
WSJ, March 8, 2008; Page A3
http://online.wsj.com/article/SB120494626642521739.html

>

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Category: Credit, Derivatives, Legal, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

42 Responses to “FBI Investigating Countrywide”

  1. andrew says:

    I’m glad you’re not surprised; as bad as things are for the good old US of A, that must mean they aren’t as bad as I thought. We’ll see I guess.

  2. Dee Leverage says:

    It makes sense for the interests of the officers of a company to be aligned with the shareowners’ interests. (Note I say share OWNERS, because many newbie investors don’t seem to realize that stockholders are the OWNERS of the company…the CEO works for the stockholders!) This way the officers and managers of a company do the right thing and try to maximize shareholder value. That being said, the current system is out of whack. When the CEO and many officers own many more shares than the average shareholder ever dreams about, you have the same problem you tried to avoid – the managers of the company can run rampant without shareowners being able to stop them. The managers award themselves outrageous stock grants and sell out as soon as they vest, legally front-running the small owners. Only a shareowner like Icahn or Buffett can own enough to steer management. For example, a company, without naming names, can low-ball their IPO so they go public at a rock bottom valuation. Then they award themselves tons of options grants at these low prices. The stock becomes a juggernaut and those options soar in valuation. Nobody cares, as they are all making money and the stock trades at implied growth rates that will soon have it the size of the entire global economy. But as the insiders start selling relentlessly, the stock tanks. Then the bagholders will start crying foul. Great system!

  3. SR says:

    Bread and Circus for the Sheeple to be diverted from the reality of just how compromised they are.

    Show trial time….

    Re Just like Boeing supporters targeting McCain for the loss of the tanker contract. Of which the Boeing proposal did not even meet one of the five criterias that were benchmarks of the DOD contract. Boeing was lazy and were totally gamed by EADS/Northrop.

    As per Dostoevsky: Punish the innocent, promote the guilty…..

    Your mileage may vary……..

  4. blam says:

    A new national security bill has been sent down from the White House authorizing retroactive immunity for all mortgage originators, banks, etc who cooperated with the government’s efforts to privatize social security, establish credibility for the Bush tax cuts, pay for the Iraqi liberation, capture OBL, and put every American in a new home.

    The bill will be administered by the DOJ’s new FUCU (Federal Un-American Criminal Unit), by de-facto Atty General Addisson under the direction of Vice-president Dick Cheney. Cheney reports to no one that we are aware of since the VP office has been officially decalred “not part of the US Government”.

  5. D. says:

    I guess I’ll never cease to be amazed by human nature.

    I can’t believe the ultra excessive types actually think they can get away with their deeds. They just don’t know when to stop do they?

  6. Winston Munn says:

    In related news, MENSA is investigating Citigroup on claims of terminal stupdity.

  7. larster says:

    So it only took the Bush administration 12 months to go from “the subprime crisis is contained to an FBI investigation of the leader in subprime”. I guess high six figure ninja loans were difficult to analyze.

  8. Hmm, do they have tanning booths in Federal Prison’s? It would be scary to see the tan man lose his orangeness.

    A whiter shade of pornj (pink/orange).

  9. Marcus Aurelius says:

    Investigation? Yeah. Right.

    Here’s something to chew on: Patrick Fitzgerald, during his “investigation” of the outing of Valerie Plame, discovered that someone in the Bush administration had indeed committed treason by outing one of our covert agents. The actions of the Mystery Person were in direct violation of the letter and spirit of the law.

    How did Mr. Fitzgerald respond to his discovery? He looked the other way, ended his investigation, and moved on to other crimes committed by lesser people.

    And, for this, he was trumpeted as being a top-notch prosecutor.

    Investigation, my ass.

    The legitimazation of theft by deception – on a enterprise-wide scale – is what we will have in the end. Too bad our RICO laws are only applied against non-governmental criminal organizations.

  10. kents says:

    If Angelo is no longer rich, then he is eligible for “Law Enforcement” action (see OJ Simpson), like all Little People.

    Snoop was right. Justice = Just Us. The Elite.

    k

  11. Ross says:

    You got something there, Marcus.

    By using the RICO statutes, you have the ability to seize or freeze the money…..

    Watch the bankers squeal when they can’t get lunch money out of their ATM’s.

  12. Greg0658 says:

    watchin PowerLunch yesterday with Dennis and Erin spare’g on the Senate hearings look into

    Senator(R) – if your looking for criminals at this table of giants, I don’t see anything but stellar Capitalists

    Dennis – anytime government gets into it they’ll be after my account next

    Erin – but why do only common shareholders loose the boat of money

    imo – We DO have a problem and mission control is clueless how to close the lid on pandoras box.

    How do you regulate? My pee brain was wondering this – anytime shareholder equity is withdrawn as cash by owner/managers that all shareholders are issued cash (ratio) at that moment in time. CEOs work for a salary and/or for a ratio of shareholder equity.

  13. scorpio says:

    BAC and Ken Lewis wont be far behind. there’s a reason they bot CFC. they both want to be on the hit new Wall St TV show “It takes a predator…”

  14. Greg0658 says:

    and SR – “Boeing proposal did not even meet one of the five criterias”

    I’m calling you on that statement, as shallow and shortsighted or just a lie.

    I was watchin CSpan on that hearing early yesterday morn. Top notch politics in action for a change – its funny how the struggle for cash puts it all into perspective. (R) & (D) can work together.

    I actually said as I became bored and turned the channel, Larry Kudlow is right “Freemarket Capitalism is the best path to prosperity.”

    JC Creed (one line) – “that economic justice can best be won by free men through free enterprise”

    But in keeping with my last comment above – Are we in a uncorrupt free system here in America? Hell – Are we in a uncorrupt free system here on Earth? We’ve gone global thanks to the Bush Clinton dynastys.

  15. Jay Weinstein says:

    True story–I have been in this biz for almost 21 years [no wonder my therapy bills are so high.]

    In my first or second year, I was at a conference where Angelo Mozilo was speaking. Though still a neophyte, I still remember thinking: “There is no way I will ever invest in a company where the CEO is this tan.”

    Over the years as Countrywide grew, I had moments of regret. But that instinct was sure correct! LOL

  16. SR says:

    Posted by: Greg0658 | Mar 8, 2008 11:04:56 AM

    “I’mcalling you on that statement, as shallow and shortsighted, or just a lie.”

    ___________

    Boiled down to the basics, the Airbus is bigger, flies further, carries more fuel (and freight, its initial design) ect.

    The 767 is a dated (and dying) platform to base a tanker upon.

    Re: Business & Commerical Aviation, Aviation Week & Space Technology publications

    Position: I have flown neither so no attachement to either platform.

    From the flightdeck……

  17. lurker says:

    Mozila can afford a lot of lawyers now that he sold all that stock…so we can say what we wish but he still has his job and a ton of money to hide behind. a mountain actually.

  18. AGG says:

    What do you call a Bengal Tiger babysitting a kindergarden ?
    American Capitalism.
    Not only does it take a few broken eggs to make an omlete, you also need good advertising to keep the chickens laying those eggs.
    Marlon Brando was right.

  19. AGG says:

    Help is on the way for our system. however, I don’t think it’s going to come from law enforcement. That route makes a pretzel look like a straight line. No, the greed that built up this predatory celebration is culminating in a massive shit storm of ‘betrayal’ from people no longer on the take. Money drives corruption. No money, no cover up. Granted, the powerful fully believe in the buy ‘em or bop ‘em discipline, but bop ‘em doesn’t work when you can’t pay the boppers to do the bopping. So enjoy the show folks.

  20. Rich Shinnick says:

    Does BAC still buy Countrywide? Anyone…

  21. ECONOMISTA NON GRATA says:

    “I suspect we shall be learning alot more about Angelo Mozilo’s stewardship, as well as those giant and well-timed stock sales. Someone is gonna be in a heckuva lot-o-trouble . . .”

    OH MY GOSH…..!

    I can’t believe it, he seems like such a nice young man….. I saw him testifying before Congress yesterday…. Such a lovely man…. I just can’t believe it, his poor mother…..

    Econolicious

  22. Conspiracy X says:

    Mozilo was a godfather of the entire housing bubble swindle. Bear Sterns and Goldman were the co-conspirators. The rating agencies acted as accessories to crime. Chuck Prince was a sucker. All the players have made billions of dollars but we (the taxpayers) are paying for this housing bubble fraud now.

    Mozilo was giving mortgages to anybody; even Jack (my dog) was able to get a mortgage with zero down to buy a multimillion-dollar house in Southern California. Bear Sterns and Goldman took these garbage mortgages (they knew that Jack had no money but it did not matter for them) and repackaged these mortgages into G-rated (g stands for garbage) paper. Then the rating agencies (Fitch, Moody, and S&P) and the monoliners transformed G-rated paper into AAA-rated paper. Chuck was the bubble feeder, could not get enough of it, and has leveraged his bank x1000 to buy most of this AAA junk.

    Everyone in the chain (Jack the Dog => Mozilo => Goldman => Monoliners => Fitch, Moody, and S&P => Chuck the Sucker) made mother lode of money until… (to be continued…)

  23. Stephen says:

    “Then the rating agencies (Fitch, Moody, and S&P) and the monoliners transformed G-rated paper into AAA-rated paper.”

    There was no transformation. They took junk and painted it with AAA paint (but it was still junk under the paint).

  24. VennData says:

    Congressional investigations, now this? I mean It’s not like the tan man took the juice or anything. I’m not going to worry ’til I hear Stacy Keach’s is rehearsing RE finance terminology for CNBC’s ‘American Greed’

  25. Big E says:

    SR: Boiled down to the basics, the Airbus is bigger, flies further, carries more fuel (and freight, its initial design) ect.

    The 767 is a dated (and dying) platform to base a tanker upon.

    I thought I read that the “requirements” were changed towards the end of the process, and that if Boeing had time (or perhaps they were just lazy), that they would have submitted a proposal using the 777 instead..?

    If this is the case, they should be allowed to re-submit a proposal with the 777…

    I’m ALL for making the RIGHT option (for the govt) regardless of country affiliation, etc. but it sounds like we didn’t get an apples to apples comparison..?

  26. TempusFugit says:

    OMG!! Mortgage mills are shady!! Shocked!! I’m COMPLETELY shocked!! Whatever happened to caveat emptor?

  27. I don’t think any should really be to surprised. When you collect dog piles then package and sell it as caviar what do you think is going to happen? Everyone is looking for a scapegoat to blame this on, so it doesn’t stick to them.

    The fact is there are multiple layers of blame. Everyone involved was trying to profit from a pyramid scam with the government openly promoting the scam. Now it blame time.

  28. rickrude says:

    put them in jail, along with greenspan

  29. VJ says:

    A jumpsuit to match his tan ?

    How gauche.
    .

  30. Greg0658 says:

    ie: Air Tanker Deal

    The point that I want to highlight is the bid request asked for the replacement tobe like the previous smaller version and then switched to favor a larger design. Thats just 1 point tho. Boeing is tested in fuel hauling. Add the subsidy effect of health care and its gets messy.

    Bigger isn’t always better. Heavier on the tarmack, more space to park.

    Product ID: 204284-1
    Format: House Committee
    Appropriations
    Last Airing: 03/09/2008
    Event Date: 03/05/2008
    Length: 1 hour, 54 minutes
    Location: Washington, District of Columbia

    link to cspan video:

    http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=204284-1

    If we need these planes bringing fuel to our cities because??

  31. DonKei says:

    CFC down about $2.00 in last several days, to about $5.00, yet deal is scheduled to close in August @ $7.00.

    If the deal is really going to close, quite a few folks are apt to turn a sweet 40% or so in six months time.

    Anyone?

  32. Francois says:

    “Whatever happened to caveat emptor?”

    That is the characteristic of a bubble: too many emptor(es), not enough caveats.

    Rep ipsa loquitur.

  33. Bob A says:

    The Boeing Tanker deal went to Alabama (red state) because Everett is in Washington (blue state). End of story.

  34. ef says:

    I thought our leadership only cared about corruption in baseball (i.e., steriods), not Wall Street (ie., Enron, Countrywide). Guess they have their priorities straight. Not!

  35. Marcus Aurelius says:

    GWB: Bas-e-boll been berry, berry good to me.

  36. tom a taxpayer says:

    I expect the FBI will “follow the money” and bring every every lawbreaker to justice, wherever they may be, from loan originators to appraisers to homeowner scammers to rating agencies to Wall Street investment firms to bankers to government regulators to the Fed to…?

    This is what Congress should be holding investigative hearings on. Instead we have a Congressional circus led by ringmaster Waxman. Waxman, also a toothless lion tamer, tried to get three Lion Kings of the Wall Street jungle to jump thru hoops of contrition over executive pay. Instead of a circus about pay, Waxman should have grilled the three Lion Kings about their role in mauling the natives and destroying villages.

    Congress should be grilling Angelo Mozilo of Countrywide Financial, Stanley O’Neal of Merrill Lynch and Charles Prince of Citigroup (and others) about their role in possible illegal activities such as the FBI is now investigating.

    The dereliction of duty by Congress in investigating the financial crime of the century is a scandal. Unlike Congress’s post-mortem investigations of Enron, Congress has every reason to believe the potential illegal activity is continuing and on-going as firms, banks, and federal co-conspirators do what they can to continue the Ponzi scheme or to hide the extent of damage to the banking system, shareholders, pension funds, municipalities, etc.
    Congress needs to investigate now, especially to stop any on-going illegal activity by private firms, banks, or federal regulators.

  37. Jerry Barber says:

    Big Fan of TBP. Thanks for your insight over the past several years. The markets are finally providing proof that your analysis has been on target Barry. My only question is how much are our markets (S&P 500) likely to fall? Although the markets are in disarray – and NFP data indicate we are likely already well into a recession, what kind of additional carnage (10%? 20%? More?) can reasonably be expected? My Point: With the $$ in free fall and the gov’ts bent towards propping up the “consumer portion of GDP”, isn’t the S&P 500 likely to be at least as good of an investment as cash over the next several/many months?

  38. BG says:

    In regard to the financial mess…..I am amazed that there is not more investigations into illegal activity (can it only be unfettered greed?) that apparently went unchecked across the entire industry. This isn’t coming from just one company, it is industry-wide! Everybody was doing it! What were they (all) thinking? It smacks of an industry making desperate attempts to deceive all outsiders knowing full well all along that this thing would end badly. But, they (all) did it anyway. It was financial suicide!

    The entire financial industry was complicit in this fraud. Anytime you hear of anybody (other than the CEO) getting a million dollar bonus from Santa you know the gig is just before blowing up. I suppose since the “questionable” practices cover an entire industry instead of one rogue CEO or Company, prosecutors literally don’t know where to even start on this one. The whole industry was in on this one! What do you do? I hear Larry b#tch about Sarbanes Oxley almost on a daily basis. The problem is that we have a bunch of crooks in high and powerful places making bad decisions. What ever happened to business ethics,”checks and balances” and fudiciary responsibility? Is the mob running finances in the US now?

    The other thing that is still bouncing around in my head is how the lack of ethics and trust worthiness from the US financial community will play out when Hank (what a perfect name for the current situation….awesome……Hank) goes begging to other Countries for money. The US is (actually) literally over a barrel (let’s just leave oil out of it for the moment). We know it and the rest of the world knows it and over the next few months and years we will pay a heavy price for our transgressions. It’s not unlike trying to make friends with someone you just screwed. That’s about where we are with the rest of the world. Our bargaining position is not very good at the moment.

    But in regard to the 1st line of this post, I’m amazed how calm most people are with our current situation. We are in a serious mess and I don’t see any easy way out of it. We are boxed in on every side. As the saying goes, “We really did it this time!” and you never know how these things will ultimately turn out while you are still in the middle of “it”. It’s very much like a train wreck or falling dominoes in slow motion…..it really is. I think it is a lot more serious than we are being led to believe.

  39. wunsacon says:

    I would like to see a death penalty for some white collar crimes.

    You might say “misallocating billions in capital is wrong but no one died.” Well, we all assume the misallocation of capital in communist countries led or contributed at times to starvation in those countries. The only difference here is: the misallocation occurred not at the hands of information-poor central managers but information-rich private managers. There’s still a misallocation of capital. And since money is fungible, additional money for:
    - Katrina victims, (re)building proper NOLA levees,
    - people with no healthcare or
    - other people living at the margin
    arguably could’ve been provided had it not gone to to decrepit bank and homebuilder execs.

    How well do some Enron pensioneers live on social security instead of on a real pension? If we were to look, I expect the life expectancy of some of them went down as a result of *that* fraud.

  40. russ DoGG says:

    FLASH: Countrywide Toxic Mortgage (finally) under investigation by FBI, and Angelo Mozilo under SEC investigation too. It’s just a matter of time now

    Frog March the Tan One.

    And His Friends.

    Treat him like the criminal he is. Confiscate his Wealth from the caribbean Banks. By Force if necessary.

  41. kennycan says:

    russ DoGG

    Are you advocating an invasion of several Caribbean islands?

    Is this the Big Picture or Daily Kos (the death penalty !!!! for white collar crime!)?

  42. Greg0658 says:

    Dennis – anytime government gets into it they’ll be after my account next
    Erin – but why do only common shareholders loose the boat of money
    Posted by: Greg0658 | Mar 8, 2008 10:46:28 AM

    sorry for the slip
    Michelle said (paraphrased) – but why do only common shareholders loose the boat of money