The FBI appears to have uncovered some fraud in lending practices at Countrywide (CFC) and now the question is whether management knew. As Captain Renault said in a scene in Casablanca "I’m shocked, shocked to find that gambling is going on in here." Of course, he owned part of the casino.
According to The Wall Street Journal the Feds have "turning up evidence that sales executives at the company deliberately overlooked inflated income figures for many borrowers." Some loans were made without income verification or tax returns. Worse, in other cases sales people inflated the income numbers from certain borrowers to help close the deals. Of course the sales people were getting a piece of the action. Who can blame them?
The first problem that CFC has is that making loans based on false data is usually frowned upon. Not disclosing the practice and its potential impact on earnings is also something about which the government takes a dim view.
The most intriguing question now if whether there is evidence to be had that the people in the corner offices at CountryWide knew what was going on. Were they so many Nixons covering their trails?
Mozilo and his thugs must have known something was up. They did not build the largest mortgage bank in the US by being idiots.
Bank of America (BAC), which is about to buy Countrywide, is going to get more than its hands dirty because of the transaction. The web of bad, and perhaps illegal, practices at CFC gets worse by the day. B of A. would be best to sneak out a side door.
Douglas A. McIntyre
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.