SEC Opens Formal Probe Of Countrywide

Scrutiny Of Countrywide Financial Escalated, According To Regulatory Filings

(AP)  The Securities and Exchange Commission has escalated its scrutiny of Countrywide Financial Corp. into a formal investigation, according to a regulatory filing by Bank of America Corp.

The document, filed Thursday, did not specify what aspect of the lender the SEC's probe is focused on, although regulators launched an informal inquiry into Countrywide Chairman and CEO Angelo Mozilo's stock trades last fall.

Bank of America, which finalized its acquisition of Countrywide last month, also noted in the filing that Countrywide has responded to subpoenas from the SEC.

Representatives for Charlotte, N.C.-based Bank of America and Countrywide declined to comment beyond the filing Friday.

A call to an SEC spokeswoman in California was not immediately returned.

The Los Angeles Times reported Friday that the SEC probe centers on whether Mozilo's stock trades violated the law and whether the lender's financial disclosures misled investors.

The newspaper based its report on unnamed persons close to the investigation.

Mozilo, who is no longer with Countrywide, could not immediately be reached for comment.

Mozilo's trades of Countrywide stock began drawing negative attention last year as the company's stock price tumbled.

The executive exercised options on thousands of shares of common stock through a prearranged trading plan, but the timing of changes in the stock-selling program drew shareholder criticism.

The changes, which were made in the months before the company's stock plunged, allowed Mozilo to significantly increase his sales of Countrywide shares.

Mozilo has denied making any improper trades and has said he is cooperating with the SEC.

Since the collapse of the subprime mortgage market last summer, Countrywide has been hit with lawsuits by investors, consumers, and state officials in California, Illinois, Florida and Connecticut.

On Aug. 11, a U.S. Bankruptcy Court judge in Pittsburgh is set to review an agreement in which Countrywide agreed to pay a bankruptcy trustee $325,000 to settle allegations that the mortgage lender sought improper fees or payments from bankrupt homeowners and otherwise violated bankruptcy court orders and regulations in nearly 300 cases.

Countrywide acknowledged errors in handling some debts, but it had denied any systematic effort to thwart bankruptcy protections to collect money.

Countrywide is also among the companies being investigated by the FBI as part of the agency's probe into the financial services industry in the wake of the mortgage meltdown.

Shares of Bank of America rose 73 cents, or 2.3 percent, to $32.25 Friday.

[downtowner97]

Sometimes I feel as though I am the last person in the country who speaks English. For years, the motto of Countrywide was "No one can do what Countrywide can". That statement basically absolved Countrywide from all blame. Think about it.

Eliot Spitzer was going after the mortgage companies for deceptive lending practices. He got his phone tapped, and we know what happened next. The SEC isn''t exactly going after Martha Stewart here.

[smurfcrusher]

"Why is the SEC trying to get in the way of the "free market"?

Ronald Reagan taught us that government regulations are bad. Don''''t you remember?"

Posted by sparks224


I also remember the S&L scandal and massive bailout that resulted.

Reagan was a doofus who tried to pass off ketchup as a vegetable so he could cheat students out of school meals.

[smurfcrusher]

"SEC Opens Formal Probe Of Countrywide"



...now that they''ve had months to cover their tracks...

[stn_sage]

It''s approximately 1:28A.M. CST, this CBS site is failing miserably to serve up the articles, instead I''m just getting the headlines, while the ip address line says waiting for www.answers.com! Anybody else having this problem?!

[mcv57]

why does the SEC hate America?
-------------
Posted by sparks224

Talk about the simple minded ... GO to school and major in economics, perhaps you may learn the answer to your own question.

I guess Paulson is exhausted in mopping-up the mess of corporate america, so he is forcing SEC to do its job. UK has no SEC, its financial regulators are billionares.

[payasyougo]

The SEC is going to step in so a fine can be levied.
It is important for our government to make some revenue.

America has short memories but most of this banking mess is a result of years of government manipulation of the system to assure that banks lend money to people who could not afford it or the banks would face discrimination investigations into their lending practices.

[alphaa10-2009]

Sparks224-- probably ridiculing the GOP rant about free markets-- asks, "Why is the SEC trying to get in the way of the "free market"?
---
There is no free lunch, remember? So, there is no free market, either. Market conditions exist by a combination of government regulations and a body of generally-accepted conventions for doing business.

Take away the SEC, and you remove the regularory police from your city. We can presume you will sense this is not a good idea, eventually.

"Ronald Reagan taught us that government regulations are bad. Don''t you remember?
---
Reagan expanded the federal government and the national debt to run it by an order of magnitude. Did Reagan understand government policy is, in fact, government regulation? Or did he forget?

[alphaa10-2009]

Good comments via poster ubrew12 from economist Joseph Stiglitz--

The most pointed of comments from Stiglitz: "Unfettered markets do not operate well on their own -a conclusion reinforced by the current financial debacle. Defenders of markets sometimes admit that they do fail, even disastrously, but they claim that markets are ''self-correcting.''"

Significantly, Deutsche Bank''s Josef Ackerman confessed to the free market faithful he no longer believes in the "self-correcting" nature of the market. Read as little or a much as you like from that statement, whose bedrock conviction is the market is NOT an intelligent entity, worship it though some might prefer.

The economic literalist is somewhat like the biblical fundamentalist-- both advance unsupported doctrines with self-serving agenda. In the American free marketer''s case, that agenda is freedom from regulatory restraint in exactly the same sense the average safecracker wants freedom from police investigation.

[stn_sage]

NOW, that the horses have had time to get out of the barn and flee the state, the SEC is going to step in an do an INVESTIGATION?! Let''s all say together: what a bunch of dumb@$$es! Look, you guys should have done your investigation when there were ''rumblings'' of problems with them, NOT after action has been taken to let them off the hook on the shoulders of the public! You jerk$! My advice: You''re too late! DON''T BOTHER!

WarDogLRS, get those ropes ready! I''ll warm up the tar and pile the feathers up!

[wardoglrs]

What ever happens there wont be justice and the Tax Payers will ounce again have to pay for this one two.
Time to get a rope

[sparks224]

why does the SEC hate America?

[sparks224]

Why is the SEC trying to get in the way of the "free market"?

Ronald Reagan taught us that government regulations are bad. Don''t you remember?

[iphyt4u]

They''ll investigate Countrywide to appease the public, and by doing so, they''ll let 20 other banks and mortage companies go free.

[whitemale08]

How ''bout them "tax cuts for the rich" morons?

I love how you took all that loot and invested back into the community and created high paying jobs for the "uppewr middle class homeless".

(smirk)

[ubrew12]

Economist Joseph Stiglitz: "Unfettered markets do not operate well on their own -a conclusion reinforced by the current financial debacle. Defenders of markets sometimes admit that they do fail, even disastrously, but they claim that markets are ''self-correcting.'' During the Great Depression, similar arguments were heard: the government need not do anything, because markets would restore the economy to full employment in the long run. But, as John Maynard Keynes famously put it, in the long run we are all dead.

Markets are not self-correcting in the relevant time frame. No government can sit idly by as a country goes into recession or depression, even when caused by the excessive greed of bankers or misjudgment of risks by security markets and rating agencies. But if governments are going to pay the economy''s hospital bills, they must act to make it less likely that hospitalisation will be needed. The right%u2019s deregulation mantra was simply wrong, and we are now paying the price. And the price tag -in terms of lost output -will be high, perhaps more than $1.5 trillion in the US alone. "

[greeneyes222]

The more agencies that investigate these crooks the better. But don''t stop there - justice demands that they be punished.