The business practices of Countrywide Financial are being investigated by the FBI according to Bloomberg. While it is hard to keep track of everything, the charges of security fraud are hard to get out of if Mozilo selling a huge chunk of his stock right before the share price tanked does raise a red flag.
With Bank Of America looking to buy Countrywide would a large scale investigation give them the out if they did not want to go through with the deal? The clash of cultures and rot under the surface of Countrywide must be raising some red flags in the boardroom of Bank of America. A large scale investigation into securities fraud would be just the thing to allow BoA to scuttle the deal.
Investigators are focusing on whether Countrywide officials misrepresented the company’s financial position and the quality of its mortgage loans in securities filings, said the person, who declined to be identified because he wasn’t authorized to speak about the probe. He described the inquiry, reported earlier today by the Wall Street Journal, as preliminary.
Countrywide is among at least 14 companies that the FBI is checking for possible accounting violations related to the subprime lending crisis, including mortgage lenders, housing developers and Wall Street firms that package loans as securities. The FBI announced the review in January without identifying any of the companies. via Bloomberg
Post from: The Real Estate Bloggers
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