So the LA Times reports that former Countrywide CEO Angelo “Agent Orange” Mozilo has had a criminal investigation against him dropped.

It appears, as Atrios notes, that “If Everybody is Guilty Then Nobody Is.”  As the Times puts it:

Columbia University law professor John Coffee said mortgage cases like Mozilo’s were muddied by the numerous parties involved, unlike Enron and other “cook the books” cases in which executives were convicted.

Countrywide’s model was to make or buy mortgages only to sell them off immediately to Fannie Mae or Wall Street as fodder for securities.

Given that model, Coffee said, blame could be assigned to an entire chain of players: mortgage brokers who falsified applications; investment bankers who concocted complex and “opaque” mortgage bonds; rating firms that provided high ratings on the bonds but said they were lied to; and institutional investors that relied on dubious ratings because the securities carried above-market interest while promising to be risk-free.

“All share responsibility, but none are culpable enough by themselves to compare with [Enron's] Ken Lay, Jeff Skilling or the WorldCom CEO,” Coffee said.

It’s the old “plausible deniability” scheme (I think I remember a “24″ season in which that was a theme) in different skin.  Or perhaps like the operation of a cell:  Various actors each undertake different activities, none of which is illegal in and of itself (though I’m sure in this instance there was enough illegality going on) and without the knowledge of what any of the other actors’ roles are.  The sum of the parts constitutes a crime, but none of the individual acts does.  So instead of getting dozens or hundreds of prosecutions, we’ll get none.  Moral of the story:  Do not commit massive fraud by yourself (i.e. Skilling, Lay, Ebbers, Madoff).  Commit exponentially larger fraud with the help of co-conspirators.

Category: Current Affairs, Really, really bad calls

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.

36 Responses to “Angelo “Agent Orange” Mozilo Off the Hook…For Now”

  1. deaner66 says:

    This country is doomed. Maybe not now, maybe not in ten years, but this country is doomed.

  2. mbelardes says:

    “blame could be assigned to an entire chain of players … All share responsibility, but none are culpable enough by themselves ”

    CIVIL RICO!!!!!!!!!!!!!!!!!

    WTF is going on in this country?

    Where is Eric Holder for god’s sake?

    Glad we caught those 111 doctors ripping off Medicare. Can we do something about the economic back stabbing of America already?

  3. mbelardes says:

    And Criminal RICO too, it’s just you bring the Civil Suit first so they can’t plead the 5th, then once you have all the evidence through discovery for the civil suit … OH Grand Jury Subpoena and Indictments start flying!

  4. Coffee’s apologia is nothing more the (High-Grade(?)) Prole-Feed..

    he should be aware of http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Pfizer+too+big+to+prosecute

    what’s the ol’ adage, along the lines of ~” if it happens more than once..” ?
    ~~

    fascinating, what this dude http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=U.S.+Attorney+General+Eric+%22Bag%22+Holder ‘thinks’ is important ..

  5. RW says:

    Atrios’s sentiment is captured will by Hanna Arendt although others have made similar statements:

    “Where all are guilty, no one is; confessions of collective guilt are the best possible safeguard against the discovery of culprits, and the very magnitude of the crime the best excuse for doing nothing.”

    She was likely referring to the holocaust which she avoided by leaving Germany in 1933 while still in her early 20′s (emigration was literally a life of death decision although far from a clear one at a time when many still thought the growing nationalistic madness could be bargained with).

    Responsibility, to Arendt, was essentially individual: There was no such thing as German war guilt or even Jewish complicity (just going along to get along or collaboration) because if everyone was guilty then no one was really responsible.

    Individuals who claimed they were helpless pawns of bureaucracy, fate, necessity, or what have you were evading the primary responsibility of all individuals: the requirement that one give a credible moral account of their own actions.

    We have lost much as a society if neither law nor shame will enforce that requirement.

  6. Andy T says:

    “All share responsibility, but none are culpable enough by themselves to compare with [Enron's] Ken Lay, Jeff Skilling or the WorldCom CEO,” Coffee said.

    Interesting that these guys continue to use Skilling as an “example” of a successful prosecution. People need to do some “Google News” and understand what has been happening in that case….

  7. wally says:

    Or, alternatively, it is an ‘inside job’ with so many regulators and agencies – up to and including the Fed and the President – acting as facilitators that the justice system itself is prejudiced.

  8. stopGOVTwaste says:

    Yeah, just look at this mess (link below), no wonder these guys are in a fetal position of regulatory forbearance… allonge payable to the borrower, and the shi**y assignment of mortgage notarized in Ventura Co. or LA Co. (page 8), but page 9 is absolutely classic!

    Assignments, assignment… get your assignments here (Florida Default Law Group). What a joke!!!

    http://www.scribd.com/doc/49169040/AssignmentsFDLG-p9

  9. profoundlogic says:

    Agent Orange should be convicted for impersonating a human being. There’s a special place for pricks like Mozilo. Karma is a bitch!

  10. wunsacon says:

    This is sad news. So, I worry deaner66 is correct.

  11. MayorQuimby says:

    Time to cut more spending.

    Sorry, Mr. Economy. I vote with my feet and my $$$$.

  12. DonF says:

    The Corporatocracy continues. Just be sure to make those campaign donations, and it wouldn’t hurt to give some favorable loans to key chairmen. When Coffee said—with that model, blame could be assigned to an entire chain of players. This is the excuse? So if an entire drug cartel is exposed–the guy who runs the meth lab would not get charged, because he is only responsible for cooking the stuff, not selling distributing etc.

    I dont get it at all. With the massive amounts of fraud, recklessness and greed defrauding taxpayers out of trillions, how do we not have ONE person in prison as a result?

  13. deaner66 says:

    Without trying to sound too melodramatic, it is sad to have to come to grips with this kind of news. For example, my 19 year old daughter was asking me about this topic after we watched Matt Taibbi on Real Time with Bill Maher last night. “How come they can get away with this stuff Dad?”

    I told her the truth, that money buys justice, and that these big banks can basically do whatever they want. She’s not a little kid, but she looked at me like she was and asked, “But how can that be? Isn’t this America?”

    I literally didn’t know what to say.

    Somebody tell me, what I should have told her?

  14. Andy T says:

    deaner@12.28

    Don’t worry, it did come across as very melodramatic.

    I’m not sure what kind of idealistic fantasyland you think this country was in the past, or what it “should be” in the future, but “it is what it is” now. So, move on.

    I would tell you and your 19 year old daughter:

    a) Don’t spend too much money on a college education. The ROI sucks and you actually only need a few classes anyway.

    b) Work hard.

    c) Save Your Money.

    d) America is still a great place to start a business. Utilize b) and c) to form your own enterprise and get rich.

    e) If you can’t do d), go to work for someone who has done it, and work hard for them. Get rich that way.

    f) Be Happy.

    g) Stop snivelling about the “way things are” and do something about it.

  15. GeorgeBurnsWasRight says:

    We’ve reached the stage in this country where it’s virtually impossible to get a jury which can follow a complicated case. So all the defense has to do is to confuse the jury enough to get an acquittal. Somehow I don’t think that’s what the founding fathers had in mind when they adopted the principle of trial by jury.

  16. Lyle says:

    Re deaner66: The more you read history in detailed books the more you find out that what is taught in school is a bleached boiled and freeze dried version of what happens anything that does not fit the feel good template is removed. Consider that in the 19th century, bribes were common, people went to the congress or state legislature with a sachel full of money or stock (It actually happend in the mid 1980s when someone came to the Texas Legislature to pass out “campaign donations”. In those days (19th century) you bought a judge and hoped the judge stayed bought (see Jay Gould, Dan Drew and Vanderbilt for example). I am reading a book on Chicago, and it says that there was a report that said that the lack of an enforced building code was the cause of the fire. (both what it said and how it was enforced) but the powers that were did not want that story so they invented the cow story.
    It has always been the case that there are two sets of law one for those who have the money for good lawyers and one for those who don’t.
    Anyway, the big issue is to provide that in the future contracts like that Mozzilo had with Bof A where the Bof A payed his civil fine should be voidable in a civil action, so that he has to pay the fine (also true of insurance when the actions are judged deliberate). Civil actions are better because the standard of proof is only a preponderance of the evidence, not beyond a reasonable doubt. A civil fine makes you as broke as a criminal fine, and the state does not have to pay to support you in prison.

    Consider that neither Insull or Mitchell got convicted (Mitchell was charged with tax evasion) although Mitchell, did loose a civil action. So all the calling for criminal convictions does not jibe with what happened in the past, read more detailed historys to get the real scoop, the stuff taught in school is propaganda only.

  17. Expat says:

    I don’t believe the system is any more corrupt than it was in the past. It is simply more transparent. Only fifty years ago, Wall Street and Washington played the same games, but citizens were less informed and more naive. Even after the soft revolutions of the sixties and seventies, we still had little idea of how things really worked.

    But as for letting the bad guys get away, it is a theme as old as time. Why wasn’t Nixon thrown in jail? To protect all of Washington. Why has Bush been arrested, tried, and executed? To protect all of Washington? And so on for the financial crimes of Wall Street.

    It makes one wonder just how Madoff managed to carry out his scheme for so long without having greater relationships to the powers that be? He was the quintessential insider, yet he went down without a swipe at the system (other than his recent rather weak “but the banks HAD to know” defense). Enron was arrogant and headquartered far from the East Coast; Kenny Boy was a friend of GWB but he was not part and parcel of the Wall Street or even energy industry establishment per se.

    Mozillo, on the other hand, did not commit a separate, easily separable crime. His criminal activity was a fundamental part of the financial system. Pull at the Mozillo thread and you unravel the financial cabal all the way to the pinnacles at JPM and GS. Best leave that one alone.

  18. budhak0n says:

    I was at the Met yesterday and saw everywhere in the broken busts and shattered marble the faces of men who thought they were gods. Then you go upstairs and are simply blown away but what is housed within those walls.
    And that is just a tiny sampling … What struck me is how universally disregarded and demonetized the true masterpieces become. Perhaps Wilde had it right.

    Rome did not fall due to any lack of military strength or the predilection of it’s leaders to dabble into curious moral territory.

    Rome fell when they no longer believed in the glory of what “Rome” represented enough to care.

    If the entire exercise is only to find out who has the highest building or the longest phallus, then it becomes a farce, not a story worth following.

    It doesn’t surprise me that some of the best comedic actors come here.

    It is never the fault of the teacher, or the school, or the system, or the course material. The blame will always, infinitely, lie with the pupil.

    It’s like music. We take the verses that suit us and leave the rest to those who dare to suspect a meaning.

    Time to get back to building us a 21st century no matter how strange the twists may be.

    The past decade has been mostly reactionary and fear mongering for very little purpose. Not that much different from the 80′s lol.

  19. Petey Wheatstraw says:

    Corporatists have won the wealth and power, lock, stock, and barrel.

  20. Patrick Neid says:

    …”Mozilo and Loeb founded Countrywide in 1969 as a Federal Housing Administration and Veterans Administration lender. The company became the largest supplier of loans to government-sponsored mortgage financing company Fannie Mae.”

    A long and colorful history together.

  21. DeDude says:

    I guess if you make swindling legal then you cannot prosecute the swindlers.

  22. farmera1 says:

    Mozilo should be in jail just for his ads alone. The old Countrywide adds used to just piss me off.

    We can get you a loan, bad credit, no job, no problem. I used to throw things at the screen when I saw these ads;

    http://www.huffingtonpost.com/2009/07/13/ironic-ads-from-before-th_n_230840.html

    Wonder if the smarmy guy in the Countrywide ads reminded Mozilo of himself.

  23. rktbrkr says:

    If they can’t make an example out of an unpopular public figure like AM then they will all probably slide. And maybe they just had no case against the guy.

  24. louis says:

    We might have to go grab these guy’s ourselves. Anyone have a stock of feathers?

  25. RW says:

    What Expat said: where elites are involved it is not simply the strength of influence but the extent of implication that determines prosecution.

    In the case of the recent credit debacle the extent of implication was so wide, linked so many parties in conspiracy to defraud, that even if you could avoid upsetting applecarts from Monte Carlo to Washington DC you’d still clog the courts with criminal cases and class action law suits for decades.

    “It was then that I began to look into the seams of your doctrine. I wanted only to pick at a single knot; but when I had got that undone, the whole thing raveled out. And then I understood that it was all machine-sewn. – Mrs. Helen Alving (in ‘Ghosts’ by Henrik Ibsen, act 2)

  26. farmera1 says:

    “Mozillo, on the other hand, did not commit a separate, easily separable crime. His criminal activity was a fundamental part of the financial system. Pull at the Mozillo thread and you unravel the financial cabal all the way to the pinnacles at JPM and GS. Best leave that one alone.”

    I suspect that to unwind the ball of string would reach much further than to JPM, GS and their ilk. The string would reach all the way to Europe and China. If for no other reason than they held piles of the worthless crap these banks produced.

    Who was it that said if you are going to fail as a bank, fail in the accepted way. The way the system works. The accepted way. Mozillo and the rest of the boys were just playing in the accepted way of doing business. When there are no rules, how can you break the rules. Just get rich and grab as much as you can as fast as you can. The only rules are there are no rules.

  27. deaner66 says:

    OK, Andy T, sorry for being melodramatic. Of all your points, most are already racked up. I work hard, I don’t rely on the government for life, I save, my family and I ARE happy, and if I seem to be sniveling about the “way things are”, well, excuse me. As far as “idealistic fantasyland” goes, I suppose I’m not the fatalist you seem to be.

    If someone in the neighborhood gets away with murder, if a local official embezzles public funds, or if a food manufacturer sells dangerous goods, do we just sigh and “move on”?

    Yeah, I know this country has a long and brutal history of injustice, but just ignoring it only emboldens the guilty and lets those in charge of overseeing and prosecuting it think they can just ignore it.

    I try to do something about it. I write my conservative Congressmen and women, I try to angry up people up at work about it, but by and large, no one seems to care. There is a huge disconnect between reality and perception among the American public. And yes, I know that’s what those in power want.

    I keep my head up and take care of my own, but it does bring you down sometimes. It angers me that this country goes around the world talking about how great we are and if only others would emulate us, their fortunes would be boundless. Of course we are better than many, many other countries, but who is to say we are the greatest country? The rule of law only applies to those who don’t have connections and lots and lots of money.

    What is wrong with trying to correct that?

    So what do YOU do about it?

  28. RW says:

    @deaner66, you won’t get wisdom from the jocks, just more jabs.

    Communism was a living rival up to Reagan’s day and it was not merely stories of our material success but of our system’s fairness, its ability to deliver better lives to all including workers, that gave us advantage in that long war of ideas. Nowadays nominal capitalists such as the Banksters and their ilk do not espouse Marx’s theories so much as enact them in real life: they are behaving exactly the way Marx said capitalists behave.

    Shorter version: they confirm Marx; some real irony there, eh?

    (ht SRW @ http://tinyurl.com/6kf62jw)

  29. skijaypeak says:

    My guess is Coffee took a look at the cast of characters and realized his university had a hand in educating many of them. He now has to refocus the argument to prevent the masses from realizing the failures of intellect and judgement from graduates of many highly regarded institutions (aka Failure of the Best and Brightest, followed by Noone Could Have Known) . For starters check out the former head of RMBS/CMBS at Fitch.

  30. Andy T says:

    “If someone in the neighborhood gets away with murder, if a local official embezzles public funds, or if a food manufacturer sells dangerous goods, do we just sigh and “move on”?”

    Stick the facts at hand brother, and then we can have a discussion. Nobody was defending murderers here….don’t go down THAT slippery slope of simpleton liberal rhetoric.

  31. Andy T says:

    “…if a food manufacturer sells dangerous goods, do we just sigh and “move on”?”

    I’m guessing you would stop buying their food?

  32. deaner66 says:

    Point is, do you let a wrong just go? The bigger point isn’t murder or bad food. I didn’t think you take those things so literally. Again, I wouldn’t eat bad food, as I said before, I take care of my own, but would I keep quiet about it? No, I wouldn’t.

  33. jjay says:

    mblardes,
    Eric Holder is very busy holding off the people of Arizona who have the nerve to complain about their state being invaded by Mexico.
    To Eric Holder the enemy of the state is the average citizen who wants the Federal government to protect and serve him.

    Lyle,
    It is true that the corruption was very much out in the open in the 19th century.
    But the robber barons back then did create lots of jobs in their steel mills, railroads, factories etc., and the currency was sound, we did not have trillion dollar wealth transfers to bankrupt corporations, US Steel and the rest all were sound business operations.
    We did not have trillion dollar foreign wars which we lost, our foreign interventions in Central America etc. were cheap and effective, the Panama Canal actually got built and made money.
    We now are at a level of corruption in a world power unseen in human history, and the transfer of the wealth of that world power to China, OPEC, and a few US mega corporations in thirty years.

  34. Greg0658 says:

    I’m logging in to shout out for being “melodramatic” – for the purposes of change. Don’t be shouted down. It seems the hot winds of change need to really burn first before folks get it.

    AndyT – wondered who you really are – and “a crummy commercial”
    and
    “c) Save Your Money” .. really really – so it can be exported to create factories in emerging markets – cheaper labor, less stringent environmental laws
    “c) Save Your Money” .. really really – so it can be exponentialed by banksters to do the same

    have I railed on how much I hate this system today .. where did I read that it would be nice to have a second system .. like maybe 1 in that your earned and SAVED Blue currency can’t be used against your own interests for anothers gains

  35. bobthehorse says:

    In England there is a saying, ‘practice makes law’. In other words, if everyone is doing something then even if that is technically illegal, it basically becomes unprosecutable and hence the law is deemed to have changed. But that is probably because the english law is based on precedent and if no precedent exists, then ‘the reasonable man’ principle applies. So a reasonable man would suppose that something which is common practice is allowed. In the USA which is more rules-based that may not be the case but could it be an infringement of your rights to be prosecuted for behaviour which is widespread? Why should one individual be singled out? Not defending Mozillo at all but shows I think the fault lies with the authorities for allowing the system to get out of control.

  36. Joel50 says:

    Moral of the story: Do not commit massive fraud by yourself (i.e. Skilling, Lay, Ebbers, Madoff). Commit exponentially larger fraud with the help of co-conspirators.

    Yes, a true lesson for life. Now that IS the big picture!