Frank Mozilo, founder and CEO of Countrywide (CFC), is almost universally viewed as a thug and miscreant. It will be left to the celestial authorities whether he eventually goes to heaven or purgatory. But, the Attorney General of Illinois wants him in state court.

According to The Wall Street Journal, "In a draft of the complaint, Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans." The root causes of this is probably that Mozilo wanted to improve his earnings and fuel the secondary mortgage market. He was willing to pay brokers to loan money to anyone, even those in homeless shelters.

The charges are severe because they assume a conspiracy on the part of the CFC top management to push practices which they know were wrong. It is not the first time that ethics have arm-wrestled profits at financial companies, and it will not be the last.

There are enough government agencies after Mozilo that one or more of them will probably catch him. He helped ruin a significant part of the national financial system.

But, Mozilo alone is not at fault. How could such a large fraud go detected for so long? Certainly other companies in the industry must have been aware of what was transpiring at CFC. And, what about the mortgage firm’s own employees? And, local authorities which could see the home sales and mortgage documents come across their desks?

For Mozilo, the question will be what is the price of depravity?

A big fine? Or, twenty years to life?

Douglas A. McIntyre

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