Sept. 7, 2011, 9:50 a.m. EDT
Feds say Bank of America worse than Countrywide
Commentary: Federal lawsuit says even Mozilo was shocked
By Al Lewis
NEW YORK (MarketWatch) — Bank of America Corp.’s story has long been that Countrywide did it. But a lawsuit filed last week by the Federal Housing Finance Agency tells a different tale.
The lawsuit claims that when former Countrywide Financial Corp. CEO Angelo Mozilo marveled at the dizzying recklessness of the mortgage-lending business, he was in fact looking at Charlotte-based Bank of America.
This is perhaps one of the most insulting claims ever leveled in a mortgage-fraud lawsuit. Bank of America would probably feel outraged if it weren’t so overwhelmed with its nauseating plunge on the stock market.
Mozilo has easily eclipsed Enron’s brass as one of the most-hated executives of all time. He has become the poster child for the fraudulent mortgage-lending practices that torpedoed the U.S. banking system and the entire global economy.
But he was smart enough to sell Countrywide as it nearly collapsed in January 2008. And Bank of America was dumb enough to buy it for $4.1 billion.
Since then, Bank of America has been blaming Countrywide for a litany of problems.
Last May, for instance, Bank of America put up $22 million to settle charges it improperly foreclosed on active-duty troops.
There is no worse public-relations fete than sending foreclosure notices to the people risking their lives on a battlefield. So Bank of America set the record straight in a prepared statement:
“While most cases involve loans originated by Countrywide and the improper foreclosures were taken or started by Countrywide prior to our acquisition, it is our responsibility to make things right,” Bank of America executive Terry Laughlin said.
Ooh-Rah, Bank of America!
There was also that time Bank of America CEO Brian Moynihan testified before the Financial Crisis Inquiry Commission. “Our primary window into the mortgage crisis came through the acquisition of Countrywide,” he said in January 2010, as if Bank of America hadn’t been brewing a mortgage crisis of its own before its acquisition of Countrywide.
In November 2010, Moynihan was about as plainspoken as possible: “At the end of the day, we’ll pay for the things that Countrywide did.”
Hey, it wasn’t Moynihan’s idea to buy Countrywide. He’s simply cleaning up the mess of former CEO Ken Lewis. Yet no truer words were ever spoken.
Bank of America was even on the hook for a big chunk of the $67.5 million Mozilo agreed to pay the Securities and Exchange Commission last October to settle civil-fraud charges — without admitting nor denying guilt, of course.
The Federal Housing Finance Agency, which oversees government-owned mortgage giants Fannie Mae and Freddie Mac, last week sued 17 banks, including Bank of America, Citigroup Inc., J.P. Morgan Chase & Co. , Goldman Sachs Group Inc. and some European banks such as Credit Suisse Group (Barclays Bank and the Royal Bank of Scotland).
Full story: http://www.marketwatch.com/story/feds-say-bank-of-america-worse-than-countrywide-2011-09-07?dist=countdown
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