SEC brings case against Countrywide chief

BBC:

Angelo Mozilo, former boss of Countrywide Financial, has been charged with civil fraud and insider trading by the Securities and Exchange Commission.

He is the highest profile executive to face charges relating to the US sub-prime mortgage crisis in 2007.

Bank of America eventually rescued the biggest US mortgage lender, buying it for $2.5bn (£1.5bn) in July 2008.

Mr Mozilo has denied doing anything wrong. Two other former executives have also been charged with civil fraud.

Former chief operating officer David Sambol and former chief financial officer Eric Sieracki "misled the market by falsely assuring investors that Countrywide was a prime quality mortgage lender that had avoided the excesses of its competitors", the SEC alleged.

It added that Mr Mozilo had deliberately misled investors about the credit risks that the company was taking.

...

Did he overstate Chris Dodd's credit worthiness. Probably not, but many of his other customers were of dubious quality and he was apparently flipping their loans to Fanny or Freddie. A responsible lender who was expecting to service the mortgage to maturity would not have made the loans this company was making. That was one of the key errors of the mortgage system, and it led to failed assumptions up and down the line in the derivitive market too.

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