Countrywide
<div><font face="Times New Roman" size="4">=</font></div><div><p style="margin: 0px 0px 22px; font-family: Lato, sans-serif; font-size: 18px; background-color: rgb(255, 255, 255); line-height: 32px !important;">reasury Secretary Steven Mnuchin doesn’t exactly come across as the guy you’d want in your corner in a playground tussle. In the Trump administration, he’s been more like the kid trying to cop favor with the school bully. That, at least, is the role he seems to have taken in the Trump White House. When he isn’t circling the Sunday shows stooging for the president, he regularly plays the willing fall guy for tax policies guaranteed to <a href="https://thehill.com/policy/finance/352126-mnuchin-on-if-there-will-be-no-absolute-tax-cut-for-upper-class-it-was-never-a" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">stoke further inequality</a> in America and for legislation that will <a href="https://www.latimes.com/business/la-fi-treasury-arbitration-20171023-story.html" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">remove</a> just about any consumer protections against Wall Street.</p><p style="margin: 0px 0px 22px; font-family: Lato, sans-serif; font-size: 18px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Mnuchin, a former Goldman Sachs partner, arrived in Washington with a distinct reputation. Back in 2009, he had corralled a bundle of rich financiers to take over California’s IndyMac bank, shut down amid the 2008 foreclosure crisis by the Federal Deposit Insurance Corporation (FDIC). Bought for $<a href="https://www.fdic.gov/news/news/press/2009/pr09001a.pdf" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">13.9 billion</a> (but only <a href="https://www.fdic.gov/news/news/press/2009/pr09001a.html" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">$1.3 billion</a> in actual cash), Mnuchin turned it into a genuine foreclosure machine, in the process sealing his own fate when it came to his future reputation. At the time, he didn’t appear concerned about public approval. Something far more valuable was at stake: the $200 million that, <a href="https://www.bloomberg.com/news/articles/2016-11-22/trump-treasury-contender-mnuchin-found-profits-in-mortgage-mess" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">according to</a> Bloomberg News, he raked in personally, thanks to the deal.</p><p style="margin: 0px 0px 22px; font-family: Lato, sans-serif; font-size: 18px; background-color: rgb(255, 255, 255); line-height: 32px !important;">No such luck, of course, for the bank’s ordinary borrowers. During Mnuchin’s reign, IndyMac carried out more than <a href="https://www.bloomberg.com/news/articles/2016-11-22/trump-treasury-contender-mnuchin-found-profits-in-mortgage-mess" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">36,000</a> foreclosures, tossing former homeowners (including active <a href="https://www.npr.org/2017/01/19/510628736/trump-treasury-nominee-defends-role-in-foreclosure-crisis" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">duty military</a> servicemen and women) onto the street without hesitation or pity by any means necessary. According to a memo obtained by investigative reporter <a href="https://theintercept.com/2017/01/03/treasury-nominee-steve-mnuchins-bank-accused-of-widespread-misconduct-in-leaked-memo/" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">David Dayen</a>, OneWest, the new name that Mnuchin and his <a href="https://www.npr.org/2016/11/29/503755613/trumps-potential-treasury-secretary-headed-a-foreclosure-machine" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">billionaire posse</a> coined for Indybank, of which Mnuchin was now <a href="https://www.npr.org/2016/11/29/503755613/trumps-potential-treasury-secretary-h" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">CEO</a> and chairman, “rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.”</p><p style="margin: 0px 0px 22px; font-family: Lato, sans-serif; font-size: 18px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Now, Mnuchin <a href="https://www.businessinsider.com/mnuchins-onewest-bank-has-long-record-of-mortgage-foreclosures-2017-8" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">remains bitter</a> and frustrated that he can’t kick the reputation he got in those days. As he told a House Financial Services Committee Congressional hearing this July, "I take great offense to anybody who calls me the foreclosure king." Such indignation would ring truer if, in May, one of Mnuchin’s banking units, a company called Financial Freedom, hadn’t <a href="https://money.cnn.com/2017/05/16/news/mnuchin-financial-freedom-settlement/index.html" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">agreed to pay</a> a more than $89 million settlement to the government for taking unreasonable advantage of <a href="https://www.propublica.org/article/trump-treasury-pick-excelled-at-kicking-elderly-out-of-their-homes" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">thousands</a> of seniors<strong> </strong>through <a href="https://www.investopedia.com/university/finances-actual-retirement/reverse-mortgages-other-home-loan.asp#ixzz4wfLlnDCY" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">reverse mortgages</a> which convert equity in a home into a loan. (A few months later, in August, a watchdog group, <a href="https://campaignforaccountability.org/mnuchin-false-statements-to-congress/" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">Campaign for Accountability</a>, <a href="https://theintercept.com/2017/08/02/treasury-secretary-steve-mnuchin-allegedly-lied-under-oath-will-the-justice-department-investigate/" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">called upon</a> the Justice Department to investigate Mnuchin for allegedly making false statements under oath to Congress about his actions at OneWest between 2009 and 2015.)</p><p style="margin: 0px 0px 22px; font-family: Lato, sans-serif; font-size: 18px; background-color: rgb(255, 255, 255); line-height: 32px !important;">Like Donald Trump, Mnuchin is a man intent on making the rich richer and to hell with everyone else. Continually channeling Trump’s ego, whatever his smoldering resentments may be, he soldiers on -- and in the context of the Trump White House successfully indeed. After all, this administration has <a href="https://www.businessinsider.com/who-has-trump-fired-so-far-james-comey-sean-spicer-michael-flynn-2017-7" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">lost 14 </a>key people in less than a year, including an FBI director, a national security adviser, a White House chief of staff, and a White House communications director. Through it all, Mnuchin has remained in place, one of the relatively few members of The Donald’s original team not related by blood or marriage who is seemingly thriving. (Admittedly, he and the president were linked in what CNN once called a “<a href="https://www.cnn.com/2016/05/05/politics/donald-trump-steven-mnuchin-finance-chair/index.html" target="blank" style="color: rgb(241, 96, 44); text-decoration-line: none;">business capacity</a>” even before he became Trump’s campaign finance director in May 2016.) </p><p style="margin: 0px 0px 22px; font-family: Lato, sans-serif; font-size: 18px; background-color: rgb(255, 255, 255); line-height: 32px !important;"><strong>Hamilton, Trump, and a Playbill for the Economy...</strong></p></div><div><font face="Times New Roman" size="4"></font></div><div><p style="box-sizing: border-box; margin: 15px 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background: rgb(255, 255, 255); list-style: none; line-height: 1.5rem;"><font size="4" face="Times New Roman"><span style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background: transparent; list-style: none;">There are plenty of reasons for <b>Mnuchin</b> to not want to draw attention to this part of his record. His future boss Donald Trump used Goldman Sachs as a cudgel to beat Hillary Clinton during the presidential campaign over paid speeches she gave to groups at the bank. The firm is also associated with the reckless gambles and greed that caused the Great Recession, and the name alone can cause the public to </span><a href="http://www.jewishvirtuallibrary.org/jsource/Judaism/spitting.html" target="blank" style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background: transparent; list-style: none; text-decoration: none;">spit like a Jewish grandmother</a><span style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background: transparent; list-style: none;"> at the mention of it.</span></font></p><p style="box-sizing: border-box; margin: 15px 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; list-style: none; line-height: 1.5rem;"><font size="4" face="Times New Roman"><span style="background-color: rgb(255, 255, 102);"><span style="background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none;">And OneWest stands accused of a vast ocean of </span><a href="https://theintercept.com/2017/01/03/treasury-nominee-steve-mnuchins-bank-accused-of-widespread-misconduct-in-leaked-memo/" target="blank" style="background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none;">unethical and downright inhumane behavior</a><span style="background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none;"> during the foreclosure crisis of a few years ago.</span></span><span style="background: transparent; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none;"> This includes an infamous incident when the</span><span style="background-color: rgb(255, 255, 102);"><span style="background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none;"> bank foreclosed on the home of a 90-year-old woman who </span><a href="http://www.politico.com/story/2016/12/trump-treasury-foreclosed-homes-mnuchin-232038" target="_blank" style="background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none; text-decoration: none;">accidentally shorted</a><span style="background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; list-style: none;"> one mortgage payment by 27 cents.</span></span></font></p><p style="box-sizing: border-box; margin: 15px 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background: rgb(255, 255, 255); list-style: none; line-height: 1.5rem;"><span style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; background: transparent; list-style: none;"><font size="4" face="Times New Roman">All of this would be embarrassing for a president who is still claiming to be a populist wanting to “drain the swamp” and lift up the American people — at least, if Donald Trump were capable of feeling shame. But Trump won’t be the one in the hearing room, and this history, particularly the part at OneWest, could make for a very difficult grilling for Mnuchin, assuming Senate Democrats are willing to put up a fig</font></span></p></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">[links lost highlight?</font></div><div><font face="Times New Roman" size="4">
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</b></font></div><div><font face="Times New Roman" size="4" /><div><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><font face="Times New Roman" size="4"><b>The IndyMac bank failure on July 11, 2008</b>, left many shocked and wondering how such a large and formidable bank could collapse. The banking giant rose rapidly and failed just as fast, but this story's intrigue goes beyond its dramatic rise and fall. Read on to learn more about <b>one of the largest U.S. bank failures in history.</b></font></font></font></font></font></font></font></font></font></font></font></font></font></div><div>
</div><div>The Beginning</div><div>
</div><div><span style="background-color: rgb(255, 255, 102);"><b>IndyMac was born in 1985 but it was originally called Countrywide Mortgage Investment </b>by David Loeb and Angelo Mozilo. It was built to collateralize Countrywide Financial loans that were too large to be sold to Fannie Mae or Freddie Mac.</span> In 1997, Countrywide Mortgage Investment was spun off and became IndyMac. <b>The Mac in IndyMac is short for Mortgage Corporation. So, while the "Mac"<span style="background-color: rgb(255, 255, 102);"> may sound like Freddie Mac</span> or some of the other government loan mortgage corporations, IndyMac was always a private company with no ties to the government.</b> (These government agencies suffered problems of their own. See Fannie Mae, Freddi Mac And The Credit Crisis Of 2008 for more insight.)</div><div>
</div><div><b>In 1999, IndyMac loaned out record amounts - $1.6 billion in the first quarter alone.</b> In July of 2000, IndyMac became IndyMac Bank when it acquired SGV Bancorp. The total acquisition cost was $62.5 million and it made IndyMac Bank into the ninth largest bank at the time. IndyMac was also the 28th biggest lender in the country. In 2004, <b><span style="background-color: rgb(255, 255, 102);">IndyMac expanded by buying a company called Financial Freedom</span>, a company in the business of creating and servicing <span style="background-color: rgb(255, 255, 102);">reverse mortgage loans.</span></b> Two more acquisitions for IndyMac came in 2007; first up was New York Mortgage Company, which was an East Coast mortgage bank. Later that year the company bought Barrington Capital Corporation, which was a mortgage bank located on the West Coast.</div><div>
</div><div>While it is usually difficult to pinpoint why certain companies failed when it came to IndyMac, there are two suspects: Alt-A loans and reverse mortgages. So, while IndyMac's meteoric rise is impressive, the questionable loans that help it get there are one of the biggest reasons it came crashing down.</div><div>
</div><div>Suspect No.1</div><div>IndyMac specialized in what are known as <b>Alt-A loans.</b> Alt-A is short for Alternative A-paper. Alt-A loans fall in between prime, which is A paper, and subprime. This means the loans are riskier than prime loans but less risky than subprime loans. The interest rates for Alt-A loans fall in between prime and subprime as well. These Alt-A loans were handed out to buyers who had good credit scores but could produce little or no proof of income or assets besides the house they were planning on buying. Alt-A loans at the time were a "can't lose" proposition for IndyMac.</div><div>
</div><div>For example, if the bank handed out a loan to a buyer and that buyer defaulted, IndyMac would get the title for the home. Most of the time the home would be worth more then the amount owed. Because real estate values had been consistently ticking up for years, Alt-A loans seemed like a sure bet. This seemed to be confirmed when, in 2003, U.S. house prices had their biggest one-year jump in value in more than two years.</div><div>
</div><div>To understand just how big these Alt-A loans were we need to look at the numbers. Alt-A loans accounted for 2% of the overall U.S. mortgage market with $55 billion in loan productions in 2001. By 2006, Alt-A loans jumped to a whopping 13% of the overall U.S. mortgage market with a staggering $400 billion in loan production. And Alt-A loans accounted for 80% of IndyMac's business, making IndyMac the No.1 lender in Alt-A mortgages. (Learn more on subprime and Alt-A mortgages in the answer to our frequently asked question What is a subprime mortgage?)</div><div>
</div><div>The Double-Whammy</div><div><b>But loans were not the only way IndyMac and other banks made their money. IndyMac and many other banks were able to find investors eager to purchase<span style="background-color: rgb(255, 255, 102);"> pools of these types of mortgages that had been meshed together to create securities backed by future payments.</span></b><span style="background-color: rgb(255, 255, 102);"> <b>Hedge funds </b>and other investment houses were looking for ways to make more money quickly. These Alt-A loans were a great way to make a lot of money.</span></div><div>
</div><div>This did not last long, however, and when the real estate market started to collapse so did investor interest. Investors quickly pulled out, leaving the banks to suffer the loan losses without the investor funding needed to make new loans. (Read Why Housing Market Bubbles Pop to learn more about the collapse of the real estate market.)</div><div>
</div><div>Suspect No.2</div><div>The other problem bringing down IndyMac was the reverse mortgage business. Reverse mortgages are a certain type of loan in which a homeowner can convert a portion of the equity in the home to cash. In order to pay the cash, IndyMac needed money, but with the collapsing housing market as well as investors running away from the pools of loans, IndyMac found that it was unable to generate the cash needed. In 2007, investors saw a great stock price for IndyMac but this was the beginning of the fall for the bank.</div><div>
</div><div>The first year real estate prices were flattening was 2007. The real estate market crash was coming, but IndyMac didn't see it coming - neither did most other consumers, companies and investors. The year 2008 would prove to be disastrous for IndyMac. In April of 2008, both Moody's and Standard and Poor's downgraded the ratings of IndyMac's mortgage-backed security bonds. By that summer, the credit crisis was all over the news, housing prices were collapsing and IndyMac was in big trouble. The Alt-A mortgage business dried up and nearly disappeared. (To learn more about the crash, read The Fall Of The Market In The Fall Of 2008.)</div><div>
</div><div>The Devastating Consequences</div><div>
</div><div><b>In May of 2008, IndyMac announced job cuts to the tune of 4,000 employees</b>.<span style="background-color: rgb(255, 255, 102);"> In late June of the same year,<b> Senator Charles Schumer</b> of New York in a letter he wrote to regulators said "IndyMac could face a failure." The letter was leaked to the public and, along with a collapsing housing market, caused a bank run. IndyMac banks were flooded with customers withdrawing their money. This run would see $1.3 billion being taken out of IndyMac banks in only 11 days.</span></div><div>
</div><div>This was far too much for IndyMac and on Friday July 11, 2008, with listing assets of $32 billion and deposits of $19 billion, the bank was seized by the federal government. The bank run had caused a liquidity crisis at the bank. The stock price reflected the bleak future of IndyMac when in July of 2008 the stock was valued for less than a dollar a share. That was a 99% drop in value since the peak price seen only three years earlier. IndyMac reopened on Monday July 14, 2008, as IndyMac Federal FSB, a bridge bank. This bridge bank was established and had taken control of IndyMac. Funds were guaranteed up to $100,000 per account.</div><div><b>
</b></div><div><b>IndyMac filed for Chapter 7 bankruptcy on August 1, 2008</b>. (Read the answer to our frequently asked question What are the differences between chapter 7 and chapter 11 bankruptcy? to learn more about a business' liquidation.)</div><div>
</div><div>The Bottom Line</div><div>
</div><div>IndyMac's collapse was not an isolated incident. It was one of many, as other banks failed in its wake. The world economy also suffered; banks both within and outside the U.S. had to be bailed out. The collapse of IndyMac was one of the biggest dominoes in the banking world, but as one of the first banks to fail, it only provided a glimpse into the difficulties the U.S. banking system would go on to face in 2008 and 2009.</div><div>
</div><div>For further reading on IndyMac and other institutions that were destroyed by the subprime crisis, be sure to check out our Subprime Mortgage Meltdown Crisis Special Feature.</div><div>
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</div><div>Read more: Too Good To Be True: The Fall Of IndyMac | Investopedia http://www.investopedia.com/articles/economics/09/fall-of-indymac.asp#ixzz4RW8UXZ6b </div><div>Follow us: Investopedia on Facebook</div></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">https://www.propublica.org/article/us-attorney-asks-court-to-reconsider-countrywide-loan-case</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Preet Bharara is not giving up on bringing civil charges for “the Hustle.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">In an unusual move, the U.S. attorney for Manhattan’s Southern District has asked a three-judge panel on the Second Circuit Court of Appeals to reconsider a ruling that <b>overturned a verdict that found Countrywide Home Loans and a bank executive liable for fraud.</b> The company made billions of dollars of home loans that defaulted after the 2008 global meltdown.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The case arose from mortgages that Countrywide Home Loans sold to Fannie Mae and Freddie Mac, the government-backed mortgage giants. Back in the late-housing-bubble period, in 2007, Countrywide, then the largest mortgage provider in the country, rolled out a new program for processing mortgage applications.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>The company called it the “high-speed swim lane,” internally nicknamed “hustle.</b>” Countrywide, like most mortgage lenders, wrote mortgages for consumers and then immediately sold the loans to Wall Street banks or Fannie Mae and Freddie Mac, which bundled them and, in turn, sold them to investors. Countrywide’s program dropped most of the conditions meant to insure that loans would be repaid. The company didn’t tell Fannie or Freddie it had the loosened conditions, or that the loans no longer met their requirements.</font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><b>In 2013, a jury found Countrywide, now owned by Bank of America, and a Bank of America executive liable for fraud.</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>But a three-judge panel of the Second Circuit overruled the jury, a puzzling decision that ProPublica and The New Yorker examined in May.</b><span style="background-color: rgb(255, 255, 102);"> The panel determined that while Countrywide had intentionally breached its contracts, it did not amount to fraud because the company had not planned to deceive its customers when it initially signed the contracts.</span></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>Bank of America’s Winning Excuse: We Didn’t Mean To</b></font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><span style="background-color: rgb(255, 255, 102);"><b>A federal appeals court overturned a $1.3 billion judgement against Bank of America,</b> ruling that good intentions at the outset shield bankers from fines for subsequent fraud. </span>Read the story.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">In its new petition, the U.S. attorney’s office takes square aim at that contention, noting that the company made new, false statements when it sold bundles of loans to Fannie, Freddie, and its other customer....?</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4"><b>Massive Fraud' at Center of Trial Against BofA Over US Mortgages</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By Nate Raymond, Reuters</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">25 September 13 Bank of America Corp's Countrywide unit placed profits over quality in a "massive fraud" selling shoddy mortgages to Fannie Mae and Freddie Mac, a U.S. government lawyer said on Tuesday.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> The claim came at the start of the first case by the government to go to trial against a major bank over defective mortgage practices leading up to the 2008 financial crisis.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>Pierre Armand, a lawyer in the civil division of the U.S. Attorney's Office in Manhattan, said Countrywide made $165 million selling loans that it promised were investment quality to Fannie and Freddie.</b></font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">"What documents and witnesses will show is that the promise of quality was largely a joke," Armand said.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">But Brendan Sullivan, a lawyer for Bank of America, said Countrywide had sought to ensure the loans it made were good and that no fraud occurred.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">"No fraud," he said. "Two words. That's the heart and soul and body of the defense. No fraud. And that's what the evidence will show."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Filed in October, the lawsuit blames the bank for losses suffered by Fannie Mae and Freddie Mac on thousands of prime mortgages that later defaulted. Fannie and Freddie, government-sponsored enterprises that underwrite mortgages, were taken over by the government in 2008.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The Justice Department says the loans were pushed out through a Countrywide program called the "High Speed Swim Lane" - also called "<b>HSSL" or "Hustle"</b> - that began in 2007 amid rising mortgage delinquency and default rates and as Fannie and Freddie were tightening underwriting guidelines.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">The program was overseen by Rebecca Mairone, a former chief operating officer of Countrywide's Full Spectrum Lending division, who is a co-defendant in the lawsuit and today works at JPMorgan Chase & Co.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>The lawsuit is brought under the Financial Institutions Reform, Recovery, and Enforcement Act. The law, passed in the wake of the 1980s savings-and-loan scandals, covers fraud affecting federally insured financial institutions.</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">The Justice Department estimates Fannie and Freddie has a<b> gross loss of $848.2 </b>million on the Countrywide HSSL loans, though their<b> net loss on loans it says were materially defective was $131.2 million.</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">=</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">October 15, 2008</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>Republicans continued the drumbeat of allegations against ACORN</b> on Tuesday. Sen. John McCain's presidential campaign, the Republican National Committee and others accuse the grassroots group of widespread voter registration fraud. It's the latest, and most bitter, battle in a long conflict between conservatives and ACORN.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">ACORN, which stands for the Association of Community Organizations for Reform Now, makes no secret of its progressive tilt. Its top job isn't CEO, it's chief organizer.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">"We're like a community union," says Bertha Lewis, the interim chief organizer. "Our folks are low and moderate income. And we've been doing the fight on bread-and-butter issues for 38 years."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><span style="background-color: rgb(255, 255, 102);">Those bread-and-butter issues have recently included predatory lending and mortgages. Not long ago, ACORN forced <b>Countrywide Financial</b> into an agreement to help homeowners trapped in their<b> subprime loans.</b></span> In 1996, it led a campaign in Philadelphia to stop Pennsylvania from selling liquor stores to raise money for sports arenas.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">"We have huge needs around education, around housing, around jobs programs, around social services," Bruce Dorpalen of ACORN Housing said at the time. "And to devote that kind of money to sports stadiums is just wrong."</font></div><div>
</div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">foreclosure home defense</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">http://www.alternet.org/story/121844/resistance_to_housing_foreclosures_spreads_across_the_land</font></div><div><font face="Times New Roman" size="4">...</font></div><div><font face="Times New Roman" size="4">In Boston the Neighborhood Assistance Corporation of America began protesting in front of Countrywide Financial offices in October 2007. Within weeks, Countrywide had agreed to work with the group to renegotiate loans. In Philadelphia ACORN and other community organizations helped to pressure the city council to order the county sheriff to halt foreclosure auctions this past March. Philadelphia has since implemented a program mandating "conciliation conferences" between defaulting homeowners and lenders. ACORN organizers say the program has a 78 percent success rate at keeping people in their homes. One activist group in Miami has taken a more direct approach to the crisis, housing homeless families in abandoned bank-owned homes without waiting for government permission....</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><span style="background-color: rgb(255, 255, 102);"><b>In December, a few weeks after the Countrywide protest, she and Gnaizda wangled a meeting with California Attorney General Jerry Brown</b>, asking him to sue Countrywide for defrauding borrowers. He wasn't interested, Bautista says. The following June, a few days before Bank of America bought out the crippled lender, Brown finally filed suit against Mozilo and Countrywide.</span> Gnaizda explains the delay: "Countrywide was not weak in December."...</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Craig Robbins, who directs ACORN's foreclosure campaign, echoes Kruggel's sentiment: "We're excited about some of the things Obama has been saying, but there's got to be tremendous pressure for a real, comprehensive federal solution." Taking cues from Depression-era antiforeclosure movements, ACORN activists began disrupting foreclosure sales at courthouses across the country in Januaary. "We're looking to throw a wrench in the foreclosure machinery," says Robbins, adding that ACORN is planning to organize "rapid defense teams" ready to turn out crowds on short notice to prevent evictions. Until that happens, it might help to remember that the crowd of thousands that came to the Sparanga family's defense in Cleveland didn't gather until four years into the Depression. This one has just begun. endit</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">http://www.<span style="background-color: rgb(255, 255, 102);">foxnews</span>.com/story/2009/02/23/arrest-made-in-home-foreclosure-civil-disobedience-program.html</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">http://www.<b>sourcewatch</b>.org/index.php/Countrywide</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><b>Countrywide Financial Corporation was an American lender providing single-family home mortgages through its Countrywide Bank and Countrywide Home Loans subsidiaries. Countrywide was the country's largest mortgage lender.</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">On July 1, 2008, Bank of America Corporation completed its purchase of Countrywide.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">It now operates as Bank of America Home Loans.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Contents</font></div><div>
</div><div><font face="Times New Roman" size="4">1 Financial crisis and the bailout</font></div><div><font face="Times New Roman" size="4">1.1 Role in the crisis</font></div><div><font face="Times New Roman" size="4">1.1.1 Predatory lender</font></div><div><font face="Times New Roman" size="4">2 Political influence</font></div><div><font face="Times New Roman" size="4">2.1 Political contributions and inducements</font></div><div><font face="Times New Roman" size="4">3 Favorable mortgage deals</font></div><div><font face="Times New Roman" size="4">4 Resources</font></div><div><font face="Times New Roman" size="4">4.1 Related SourceWatch articles</font></div><div><font face="Times New Roman" size="4">4.2 References</font></div><div><font face="Times New Roman" size="4">4.3 External articles</font></div><div><font face="Times New Roman" size="4">Financial crisis and the bailout</font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><b>Role in the crisis</b></font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><b>Predatory lender</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Countrywide was a classic predatory lender. An example of Countrywide's tactics are available in the March, 2009 report "How Wall Street and Washington Betrayed America" from the Consumer Education Foundation:[1]</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">In one lawsuit, Albert Zacholl, a 74-year-old man living in Southern California, alleges that Countrywide and a pair of mortgage brokers “cold-called and aggressively baited” him. They promised him $30,000 cash, a mortgage that would replace his previous mortgage (which was leaving him owing more each month) and a monthly payment that would not exceed $1,700. Zacholl told the brokers that his income consisted of a pension of $350 a month and Social Security payments of $958, and that with help from his son, he could afford a mortgage up to $1,700. According to the lawsuit, the broker falsified his loan application by putting down an income of $7,000 a month, and then arranged for a high-interest mortgage that required him to pay more than $3,000 a month (and failed to deliver the $30,000 cash payment). The motivation for the scam, according to the lawsuit, was to collect $13,000 in fees. In court papers, the Center for Responsible Lending reports, Countrywide responded that Zacholl “consented to the terms of the transaction” and that any problems were the result of his own “negligence and carelessness.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">A 2007 NY Times article detailing Countrywide's predatory lending practices reported[2],</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">... potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">[. . .] “In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Political influence</font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><b>Political contributions and inducements</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">From Countrywide Mortgage Scandal: In June 2008, Conde Nast's Portfolio magazine began an investigation into whether or not several politicians received favorable mortgage deals from Countrywide Financial Corporation. Portfolio exposed internal company documents and e-mails that show that <b>Sens. Christopher Dodd, (D-Conn.) Kent Conrad (D-ND), and other current and former government officials may have received preferred deals.</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Favorable mortgage deals</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">The following are among prominent politicians who may have received favorable mortgage deals from Countrywide:</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">Alphonso Jackson</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">Donna E. Shalala</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">Richard Charles Albert Holbrooke</font></div><div><font face="Times New Roman" size="4">Resources</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Related SourceWatch articles</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Countrywide Mortgage Scandal</font></div><div><font face="Times New Roman" size="4">Patrick McHenry, took money from Countrywide according to Open Secrets</font></div><div><font face="Times New Roman" size="4">Written testimony of Bank of America Corp. to Financial Crisis Inquiry Commission</font></div><div><font face="Times New Roman" size="4">References</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">? Page 58, Sold Out - How Wall Street and Washington Betrayed America , Consumer Education Foundation, March, 2009. Retrieved october 10, 2009.</font></div><div><font face="Times New Roman" size="4">? Gretchen Morgenson, Inside the Countrywide Lending Spree, NY Times, August 26, 2007, Retrieved October 10, 2009</font></div><div><font face="Times New Roman" size="4">External articles</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Gretchen Morgenson, "Inside the Countrywide Lending Spree", NY Times, August 26, 2007.</font></div><div><font face="Times New Roman" size="4">Categories:</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Real Economy Project</font></div><div><font face="Times New Roman" size="4">Stubs</font></div><div><font face="Times New Roman" size="4">Corporations</font></div><div><font face="Times New Roman" size="4">Scandals</font></div><div><font face="Times New Roman" size="4">United States</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>5. “I have no regrets about…how Countrywide was run. It was a world-class company.”</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Spoken like a world-class asshole! Angelo Mozilo, the former head of Countrywide, brought “subprime mortgage” into common parlance by chasing high-risk borrowers to boost market share. Countrywide's shady practices led to a frenzy of subprime lending in the industry that eventually torpedoed the economy. To keep the frauds and hustles going, the company aggressively silenced whistleblowers.</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>But according to the perma-tanned Mozilo, foreclosure problems in America had nothing to do with his company.</b> It was all the fault of irresponsible homeowners who decided to abandon their homes because the value dropped below the mortgage amount. “These people didn't lose their jobs,” he fumed. “They didn't lose their health. They didn't lose their marriage…They left their home because the values went below the mortgage. That's what caused the problem.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Oh, really? As CNBC’s John Carney has pointed out [12], there’s no evidence that anything but a tiny fraction of homeowners walked away from underwater mortgages, even at the very height of the crisis.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>Nobody bought Mozilo’s ludicrous defense, including the SEC, which sued him for fraud.</b> Mozilo's and Countrywide's insurance policies paid $67.5 million [13] to settle a civil fraud case and Mozilo is banned from ever serving as an officer or a director at any public company. Portfolio magazine ranked him as #2 on its list of "Worst American CEOs of All Time."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">=</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">In June 2008, Conde Nast's Portfolio magazine began an investigation into whether or not several politicians received favorable mortgage deals from Countrywide Financial Corporation. Portfolio exposed internal company documents and e-mails that show that Sens. Christopher Dodd, (D-Conn.) Kent Conrad (D-ND), and other current and former government officials may have received preferred deals.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Contents</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> [hide] </font></div><div><font face="Times New Roman" size="4">1 Background</font></div><div><font face="Times New Roman" size="4">2 House Ethics Panel</font></div><div><font face="Times New Roman" size="4">3 SourceWatch resources</font></div><div><font face="Times New Roman" size="4">4 External links</font></div><div><font face="Times New Roman" size="4">4.1 Sources</font></div><div><font face="Times New Roman" size="4">4.2 Articles</font></div><div><font face="Times New Roman" size="4">Background</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">A magazine investigation is being conducted into whether or not various politicians received favorable mortgage deals from Countrywide Financial Corporation. Conde Nast's Portfolio magazine broke the scandal in June 2008, by exposing documents and emails that described a special, preferred V.I.P loan program. In the company’s documentation, the recipients of the loans were called "F.O.A's" or Friends of Angelo Mozilo, who is the chief executive of Countrywide.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Participants in the V.I.P. program included Senators Christopher Dodd, (D-Conn.) Kent Conrad (D-ND), former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. These individuals allegedly received better mortgage offers than ordinary buyers, leading to half point mortgage reductions and the waving of fees. [1]</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">If these loans really were given on favorable terms, then the aforementioned individuals could have violated Federal Ethics laws regarding the amounts that officials can receive as gifts. [2]</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">House Ethics Panel</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">All six members of the Senate Ethics Panel proposed that there should be stricter mortgage disclosure requirements for lawmakers. According to CQ Politics, the proposal would require Congressmen to "disclose residential mortgages as a liability on their financial disclosure reports." [3] Senators would be obligated to disclose the rough amount of the mortgage, the interest rate, duration of the loan, date of the loan, and the location of the lender. [4]</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">SourceWatch resources</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">External links</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Sources</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">? Daniel Golden, "Countrywide's Many Friends","Conde Nast Portfolio", June 12, 2008</font></div><div><font face="Times New Roman" size="4">? Leslie Wayne, "Senators Caught in Mortgage Fallout","New York Times", June 14, 2008</font></div><div><font face="Times New Roman" size="4">? Ethics Panel Seeks Fuller Disclosure of Senators’ Mortgage Deals CQ Politics June 24, 2008.</font></div><div><font face="Times New Roman" size="4">? Ethics Panel Seeks Fuller Disclosure of Senators’ Mortgage Deals CQ Politics June 24, 2008.</font></div><div><font face="Times New Roman" size="4">Articles</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Leslie Wayne, "Senators Caught in Mortgage Fallout","New York Times", June 14, 2008</font></div><div><font face="Times New Roman" size="4">"Countrywide's Many Friends","Conde Nast Portfolio", June 12, 2008</font></div><div><font face="Times New Roman" size="4">http://www.cqpolitics.com/wmspage.cfm?docID=cqmidday-000002904320 Ethics Panel Seeks Fuller Disclosure of Senators’ Mortgage Deals] CQ Politics June 24, 2008.</font></div><div><font face="Times New Roman" size="4">Jim McElhatton, "Countrywide's PAC closing amid inquiries," The Washington Times, July 2, 2008.</font></div><div><font face="Times New Roman" size="4">Categories:</font></div><div><font face="Times New Roman" size="4">Real Economy Project</font></div><div><font face="Times New Roman" size="4">Stubs</font></div><div><font face="Times New Roman" size="4">Congresspedia</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4"><b>
</b></font></div><div><font face="Times New Roman" size="4"><b>propub</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Exec Who Allegedly Enabled Fraud Runs Chase’s Effort to Compensate Foreclosure Victims</font></div><div>
</div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">An executive who the Justice Department says facilitated a scheme to defraud Fannie Mae and Freddie Mac is now spearheading JPMorgan Chase's role in the government's program to compensate victims of the big banks' abusive foreclosure practices.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>The executive, Rebecca Mairone, worked at Countrywide and Bank of America </b>from 2006 until earlier this year, when she left for<b> JPMorgan Chase</b>, according to her LinkedIn profile.</font></div><div>
</div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">In a lawsuit filed last month in federal court in New York, Justice Department attorneys allege that Countrywide, which was bought by Bank of America in 2008, perpetrated a two-year scam to foist shoddy home loans on Fannie and Freddie. Neither Mairone nor any other individuals are named as defendants in the civil suit, and no criminal charges have been filed against her or anyone else in connection with the alleged misconduct. But Mairone is one of two bank officials cited in the suit as having repeatedly ignored warnings about the "Hustle," as the alleged scheme was called inside the company, and she prohibited employees from circulating some of those warnings outside their division.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Mairone was chief operating officer of the Countrywide lending division that allegedly carried out the "Hustle." She took the helm of JPMorgan Chase's involvement in the Independent Foreclosure Review this summer, according to a former Chase employee.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Angelo Mozilo</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Page: 1 2 3</font></div><div><font face="Times New Roman" size="4">Mozilo: 'I Have No Regrets'</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The Huffington Post | Mark Gongloff | Posted 12.13.2012 | Business</font></div><div><font face="Times New Roman" size="4">Read More: Angelo Mozilo No Regrets, Salmon-Americans, Video, Countrywide Financial Ceo Angelo Mozilo, Subprime Mortgages, Housing Crash, Countrywide Financial, Subprime Mortgage Crisis, Angelo Mozilo, Housing Crisis, Tangelos, Housing Bubble, Business News</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Angelo Mozilo is the smartest man in the world.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The Salmon-American hero of the housing boom that sadly ended for no apparent reason a few years ago has the kind of attitude about life that we should all emulate.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Do you think Angelo Mozilo stops to reflect on what went wrong with Countrywide Financial, the company he founded and built with his bare hands over four decades of toil? Do you think he lays awake at night wondering if maybe he helped inflate an economy-destroying housing bubble by offering increasingly risky loans, while lying to his investors about the soundness of those loans, right up until Countrywide was ruined and had to be bought by Bank of America, which Countrywide is still poisoning to this day?</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">You might think Angelo Mozilo does that. You might even, out of some sense of justice, kind of hope he does that.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">But you would be wrong: Angelo Mozilo sleeps like a baby at night. A big, leathery baby.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">“I have no regrets about how Countrywide was run,” Mozilo said in a deposition last year, according to Bloomberg. “We were a world-class company in every respect.” His lawyer, shockingly, agrees, telling Bloomberg that Mozilo "remains really proud of his company and this institution he built."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">And why should he have regrets, really?</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">For one thing, he had nothing to do with the housing disaster, according to his sworn testimony:</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">“This is all about an unprecedented, cataclysmic situation, unprecedented in the history of this country," he reportedly said, "not caused by an act of Countrywide."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);">Meanwhile, in just the five years it took Mozilo to turn Countrywide into a giant subprime-mortgage machine, he took home $471 million. He netted more than $139 million in insider stock sales alone between November 2006 and August 2007, according to a Securities and Exchange Commission lawsuit. According to that suit, while Mozilo was selling his stock, he and other Countrywide officers were increasingly worried about the quality of the loans they were churning out. At the top of the bubble, in 2006, Countrywide originated $461 billion in mortgages, including $41 billion in subprime. Despite his concerns about those loans, Mozilo told Countrywide investors that everything was fine, according to the SEC lawsuit.</font></div><div>
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</font></div><div><font face="Times New Roman" size="4" style="background-color: rgb(255, 255, 102);"><b>Mozilo settled that lawsuit in 2010 for $67.5 million.</b> He didn't have to admit or deny any wrongdoing, and he has avoided criminal prosecution. He regularly appears on lists like Time's "25 People to Blame For the Financial Crisis" or Portfolio's "Worst American CEOs Of All Time," but nobody reads those things anyway, and it's not exactly the same as going to jail.</font></div><div>
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</font></div><div><font face="Times New Roman" size="4">Meanwhile, aside from having to appear for the occasional deposition, where rude lawyers ask him "nonsensical and insulting" questions, he has not had to bear the damage still being done to the bank that bought Countrywide, Bank of America.</font></div><div>
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</font></div><div><font face="Times New Roman" size="4"><b>The lawsuit in which Mozilo testified was one brought by a bond-insurance company, MBIA, accusing Countrywide of fraud.</b> BofA shareholders could have to pay more than $1 billion if MBIA wins. Separately, the U.S. government has sued BofA for more than $1 billion over a Countrywide lending scheme dubbed "the hustle."</font></div><div><font face="Times New Roman" size="4">
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</div><div><font face="Times New Roman" size="4"><b>BofA shareholders have already shelled out $40 billion to cover losses from the toxic garbage Mozilo handed to them in the Countrywide sale,</b> Bloomberg points out. Just months after it bought Countrywide, BofA paid $8.7 billion to settle predatory-lending charges. The bank has also paid hundreds of millions of dollars to settle shareholder lawsuits, charges of discriminatory lending and accusations that Countrywide overcharged customers.</font></div><div>
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</font></div><div><font face="Times New Roman" size="4">Meanwhile, Mozilo has nothing but free time to golf, work on his tan and spread blame for what happened to the economy to everybody else in the world -- to the Federal Reserve and other regulators, greedy homebuyers, Fannie Mae and Freddie Mac -- to anybody but him and Countrywide.</font></div><div>
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</font></div><div><font face="Times New Roman" size="4">Angelo Mozilo is the smartest man in the world. The Salmon-American hero of the housing boom that sadly ended for no apparent reason a few years ag...</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Ben Hallman</font></div><div><font face="Times New Roman" size="4">Subprime Bankers Have Much To Be Thankful For</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">HuffingtonPost.com | Ben Hallman | Posted 11.21.2012 | Business</font></div><div><font face="Times New Roman" size="4">Read More: Mortgage Fraud Task Force, Credit Suisse, Eric Schneiderman, Wells Fargo, Mortgage Fraud Jpmorgan, Bank of America, Mortgage Fraud, Mortgage Crisis, Mortgage Fraud Credit Suisse, Angelo Mozilo, Mortgage Fraud Lawsuits, Mortgage Fraud Charges, Video, Business News</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Even in the movie version of the financial crisis, the giant mortgage company accused by the U.S. government of rampant fraud and abuse wouldn't be so...</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">From a Democracy to a Plutocracy: Why This Democrat Despises Barack Obama</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Eric Zuesse | Posted 11.19.2012 | Politics</font></div><div><font face="Times New Roman" size="4">Read More: Plutocracy, Lloyd Blankfein, CEO Pay, Wealthy, Barack Obama Plutocracy, Poor, Angelo Mozilo, Banksters, Barack Obama, Politics News</font></div><div><font face="Times New Roman" size="4">Eric Zuesse</font></div><div><font face="Times New Roman" size="4">Unlike Mitt Romney and his plutocratic financial backers, Barack Obama does this sort of thing only because he respects plutocrats, not because he is one. He won't gain financially by turning this nation into a banana republic.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Will R-I-C-O Spell 'Relief' for BofA Mortgage Borrowers?</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Joel Sucher | Posted 12.16.2012 | Business</font></div><div><font face="Times New Roman" size="4">Read More: Brian Moynihan, John Thain, Ken Lewis, Countrywide Financial, Bank of America, Rico, Dave Angle, Mers, Department of Justice, Angelo Mozilo, Federal Trade Commission, Mark Malone, Lanny Breuer, Eric Holder, Covington & Burling, Business News</font></div><div><font face="Times New Roman" size="4">Joel Sucher</font></div><div><font face="Times New Roman" size="4">Down the line, many hope that what Occupy has failed to accomplish, hard-nosed prosecutors might be able to provide: a measure of justice for the millions of aggrieved homeowners either forced out in foreclosure.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">'Get Up Every Day And Beat Your Head Against The Wall'</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Reuters | Posted 09.11.2012 | Business</font></div><div><font face="Times New Roman" size="4">Read More: Fraud, Kyle Lagow, LandSafe Inc., Video, Whistleblower, Countrywide Financial, Kb Home, Reuters, Bank of America, False Claims, Angelo Mozilo, U.S. False Claims Act, Business News</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">By Rick Rothacker July 12 (Reuters) - For nearly three years, as Kyle Lagow struggled to find work and his finances crumbled, he kept ...</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"><b>Key House Republican Under Fire For Countrywide Loan</b></font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">HuffingtonPost.com | Greg Rosalsky | Posted 07.10.2012 | Politics</font></div><div><font face="Times New Roman" size="4">Read More: Video, 2012 Election, Countrywide, Countrywide Financial, Buck Mckeon Countrywide, Elections 2012, <span style="background-color: rgb(255, 255, 102);">Buck McKeon Loan, Buck Mckeon, Lee Rogers,</span> Angelo Mozilo, California 25th District, House Republicans, Howard McKeon, Politics News</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">WASHINGTON -- The Democratic challenger to Rep. Howard "Buck" McKeon (R-Calif.) said Monday that the high-ranking House member should "pay back" the s...</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Remind Me, Why Is Angelo Mozilo a Free Man?</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Sarah Anderson | Posted 09.08.2012 | Business</font></div><div><font face="Times New Roman" size="4">Read More: Bank of America, Subprime Mortgages, Angelo Mozilo, Countrywide Financial, Financial Crisis, Business News</font></div><div><font face="Times New Roman" size="4">Sarah Anderson</font></div><div><font face="Times New Roman" size="4">Steal a Snickers bar from the 7-11 and you could face jail time. Angelo Mozilo took a half billion dollars in compensation for loans that blew up our economy. And so far, he's gotten off virtually scott free.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Why Jamie Dimon Just Doesn't Get It</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Robert Greenwald | Posted 02.20.2012 | Politics</font></div><div><font face="Times New Roman" size="4">Read More: Lloyd Blankfein, 99 Percent, 1 Percent, JPMorgan Chase, Brian Moynihan, Monsanto, Brave New Foundation, Darrell Issa, Jamie Dimon, Bankers, Angelo Mozilo, Robert Greenwald, Politics News</font></div><div><font face="Times New Roman" size="4">Robert Greenwald</font></div><div><font face="Times New Roman" size="4">Jamie Dimon, the infamous CEO of JPMorgan Chase, is back to doing what he does best: defending the bankers of the 1% against the petulant 99%.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Countrywide Covered Up Massive Fraud, Former Employees Say</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">iWatch News | Posted 11.22.2011 | Business</font></div><div><font face="Times New Roman" size="4">Read More: Brian Moynihan, Countrywide Home Loans, Subprime Mortgages, Countrywide, Great Recession, Bank of America, Eileen Foster, Financial Crisis, Kenneth Lewis, Angelo Mozilo, Countrywide Cover-Up, Financial Collapse, Business News</font></div><div><font face="Times New Roman" size="4">Editor's note 12/2/11: Eileen Foster, the fraud sleuth profiled in iWatch News' "Great Mortgage Cover-Up" series, appeared on CBS News' "60 Minutes" on Sunday night (12-4-11). In a two-part story published Sept. 22-23, iWatch News staff writer Michael Hudson reveals how Foster, Countrywide Financial Corp.'s fraud investigation chief, uncovered massive fraud within the company and, federal officials say, paid a price for doing so.</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">In the summer of 2007, a team of corporate investigators sifted through mounds of paper pulled from shred bins at Countrywide Financial Corp. mortgage shops in and around Boston.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By intercepting the documents before they were sliced by the shredder, the investigators were able to uncover what they believed was evidence that branch employees had used scissors, tape and Wite-Out to create fake bank statements, inflated property appraisals and other phony paperwork. Inside the heaps of paper, for example, they found mock-ups that indicated to investigators that workers had, as a matter of routine, literally cut and pasted the address for one home onto an appraisal for a completely different piece of property.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Eileen Foster, the company’s new fraud investigations chief, had seen a lot of slippery behavior in her two-plus decades in the banking business. But she’d never seen anything like this.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">“You’re looking at it and you’re going, Oh my God, how did it get to this point?” Foster recalls. “How do you get people to go to work every day and do these things and think it’s okay?”</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">More surprises followed. She began to get pushback, she claims, from company officials who were unhappy with the investigation.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">One executive, Foster says, sent an email to dozens of workers in the Boston region, warning them the fraud unit was on the case and not to put anything in their emails or instant messages that might be used against them. Another, she says, called her and growled into the phone: “I’m g--d---ed sick and tired of these witch hunts.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Her team was not allowed to interview a senior manager who oversaw the branches. Instead, she says, Countrywide’s Employee Relations Department did the interview and then let the manager’s boss vet the transcript before it was provided to Foster and the fraud unit.</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">In the end, dozens of employees were let go and six branches were shut down. But Foster worried some of the worst actors had escaped unscathed. She suspected, she says, that something wasn’t right with Countrywide’s culture — and that it was going to be rough going for her as she and her team dug into the methods used by Countrywide’s sales machine.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By early 2008, she claims, she’d concluded that many in Countrywide’s chain of command were working to cover up massive fraud within the company — outing and then firing whistleblowers who tried to report forgery and other misconduct. People who spoke up, she says, were “taken out.”</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">By the fall of 2008, she was out of a job too. Countrywide’s new owner, Bank of America Corp., told her it was firing her for “unprofessional conduct.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Foster began a three-year battle to clear her name and establish that she and other employees had been punished for doing the right thing. Last week, the U.S. Department of Labor ruled that Bank of America had illegally fired her as payback for exposing fraud and retaliation against whistleblowers. It ordered the bank to reinstate her and pay her some $930,000.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Bank of America denies Foster’s allegations and stands behind its decision to fire her. Foster sees the ruling as a vindication of her decision to keep fighting.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">“I don’t let people bully me, intimidate me and coerce me,” Foster told iWatch News during a series of interviews. “And it’s just not right that people don’t know what happened here and how it happened.”</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">A California branch of Countrywide Financial Corp., which was once the nation's largest home mortgage lender.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Damian Dovarganes/AP</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The Great Mortgage Cover-Up</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">iWatch News reveals one of the hidden causes of the financial crisis – how corporate codes of silence and whistleblower abuse helped lenders flood the nation with toxic mortgages. "The Great Mortgage Cover-Up" has been selected to appear in Columbia University Press's Best Business Writing 2012 and has been honored with a "Best-in-Business" Award from the Society of American Business Editors and Writers and an Excellence in Financial Journalism Award from the New York State Society of CPAs.</font></div><div><font face="Times New Roman" size="4">Stories in this series</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Countrywide protected fraudsters by silencing whistleblowers, say former employees</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By Michael Hudson</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">September 22, 2011</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">Mortgage industry tanks, fraud continues at Countrywide</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By Michael Hudson</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">September 23, 2011</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">Wells Fargo hit with $3.1 million fine in mortgage servicing mess</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By John Dunbar</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">April 10, 2012</font></div><div><font face="Times New Roman" size="4">
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</font></div><div><font face="Times New Roman" size="4">New whistleblower cases allege continued bank fraud</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">By Amy Biegelsen and Emma Schwartz</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">March 9, 2012</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">More stories</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">‘Greedy people’</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">This is the story of Eileen Foster’s fight against the nation’s largest bank and what was once the nation’s largest mortgage lender. It is also the story of other former Countrywide workers who claim they, too, fought against a culture of corruption that protected fraudsters, abused borrowers and helped land Bank of America in a quagmire of legal and financial woes.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">In government records and in interviews with iWatch News, 30 former employees charge that Countrywide executives encouraged or condoned fraud. The misconduct, they say, included falsified income documentation and other tactics that helped steer borrowers into bad mortgages.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Eighteen of these ex-employees, including Foster, claim they were demoted or fired for questioning fraud. They say sales managers, personnel executives and other company officials used intimidation and firings to silence whistleblowers.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">A former loan-underwriting manager in northern California, for example, claimed Countrywide retaliated against her after she sent an email to the company’s founder and chief executive, Angelo Mozilo, about questionable lending practices. The ex-manager, Enid Thompson, warned Mozilo in March 2007 that “greedy unethical people” were pressuring workers to approve loans without regard for borrowers’ ability to pay, according to a lawsuit in Contra Costa Superior Court.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Within 12 hours, Thompson claimed, Countrywide executives began a campaign of reprisal, reducing her duties and transferring staffers off her team. Corporate minions, she charged, ransacked her desk, broke her computer and removed her printer and personal things.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Soon after, she said, she was fired. Her lawsuit was resolved last year. The terms were not disclosed.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Bank of America officials deny Countrywide or Bank of America retaliated against Foster, Thompson or others who reported fraud. The bank says Foster’s firing was based only on her “management style.” It says it takes fraud seriously and never punishes workers who report wrongdoing up the corporate ladder.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Read Whole Story</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">===</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The U.S. government has sued a specific individual in a major case alleging fraudulent subprime mortgage sales in the lead up to the financial crisis.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Rebecca Mairone, formerly a top official at Countrywide Financial, has been named in an amended complaint filed earlier this month by Preet Bharara, the U.S. Attorney for the Southern District of New York, against Countrywide and its parent Bank of America. The suit alleges that Mairone, as chief operating officer for Countrywide's Full Spectrum Lending division in 2007, set up a program dubbed the "High Speed Swim Lane," or "HSSL," or "Hustle," to speed up the origination of mortgage loans, including increasingly shady subprime loans. The government claims the alleged Hustle ultimately cost its sponsored entities Fannie Mae and Freddie Mac more than $1 billion in losses.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The government has recently launched a flurry of lawsuits against major banks alleging mortgage fraud ahead of the crisis, none of the recent major suits have named individuals, making this case unique.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Mairone now works for JPMorgan Chase and is in charge of that bank's efforts to compensate victims of foreclosure fraud, ProPublica recently reported.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">JPMorgan referred questions to Mairone's attorney, Marc Mukasey of the law firm Bracewell & Giuliani. In an emailed statement, Mukasey said his client had done no wrong.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">"Rebecca Mairone has always been a loud voice for ethics and integrity in the mortgage business and she will be vindicated because she never did anything improper," Mukasey wrote. "The Government has trumped up a meritless case against Countrywide and Bank of America and has chosen to lay false blame at the feet of Rebecca, a single mother who is a champion of diversity and women's leadership and who has personally helped thousands of distressed homeowners, veterans and working people to avoid foreclosure and stay in their homes."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Bank of America echoed that sentiment in a statement.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">"Bank of America asked that the court dismiss the U.S. Attorney's complaint for lack of merit, so they've revised their legal theories," said Bank of America spokesman Lawrence Grayson. "We believe they're equally unfounded and that neither Bank of America nor Countrywide defrauded Fannie Mae or Freddie Mac."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Countrywide, once one of the largest mortgage lenders in the U.S., nearly collapsed in 2008 and was acquired on the cheap by Bank of America that summer. The deal continues to haunt Bank of America with mortgage losses and legal headaches.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">According to the complaint, the Hustle program began after the subprime mortgage market had started to collapse, and continued through 2009, long after Countrywide was rescued by Bank of America. The government has alleged that although the Hustle was originally designed for prime loans, Mairone pushed it to include "dirty prime" and subprime loans.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Bharara accuses Mairone and Countrywide of using the program, the motto of which was "Loans Move Forward, Never Backward," to funnel toxic loans straight to government-sponsored entities Fannie Mae and Freddie Mac, "with the knowing misrepresentation that they were investment-quality loans that complied with GSE requirements."</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Mairone and other Countrywide officials ignored warnings from other bank employees that the Hustle program created "a disastrous layering of risk" of churning out fraudulent loans, according to the complaint. The lawsuit also alleges that Mairone told grumbling employees to "get with the program" and even reduced the responsibilities of those who made too much noise about it.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">Mairone was not identified by name in the government's initial complaint against Countrwide, filed in October.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">No individuals were named in that first suit, in fact, a feature of other government suits alleging pre-crisis mortgage fraud, including cases against Bear Stearns and Wells Fargo.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4">The tendency to not name specific people may be changing with this lawsuit; though it remains to be seen whether that will be more of a deterrent for future bad behavior.</font></div><div><font face="Times New Roman" size="4">
</font></div><div><font face="Times New Roman" size="4"> </font></div>