This story (from Sep. 2011) has never been published here. I've been saving it for the right time, and news earlier this week that BofA CEO Brian Moynihan has been named as a defendant in a federal foreclosure lawsuit, makes now a pretty good time for a BofA pile-on.
By Al Lewis
Federal lawsuit says even Angelo Mozilo was shocked...
NEW YORK (MarketWatch) — Bank of America Corp.’s story has long been that Countrywide did it. But a lawsuit filed last week by the Federal Housing Finance Agency tells a different tale.
The lawsuit claims that when former Countrywide Financial Corp. CEO Angelo Mozilo marveled at the dizzying recklessness of the mortgage-lending business, he was in fact looking at Charlotte-based Bank of America.
This is perhaps one of the most insulting claims ever leveled in a mortgage-fraud lawsuit. Bank of America would probably feel outraged if it weren’t so overwhelmed with its nauseating plunge on the stock market. Mozilo has easily eclipsed Enron’s brass as one of the most-hated executives of all time. He has become the poster child for the fraudulent mortgage-lending practices that torpedoed the U.S. banking system and the entire global economy.
But he was smart enough to sell Countrywide as it nearly collapsed in January 2008. And Bank of America was dumb enough to buy it for $4.1 billion.
Since then, Bank of America has been blaming Countrywide for a litany of problems.
You’ve heard the allegations before: These banks sold billions worth of mortgage-backed securities while lying about the thousands of funny little mortgages behind them.
Since Bank of America bought Countrywide, it will indeed pay for things Countrywide did. But it will pay for things it did, too.
The government is suing Bank of America for Countrywide, and it is suing Bank of America, separately, for things it did without Countrywide.
Bank of America issued a statement in response to the lawsuits, essentially saying Fannie and Freddie knew the risks of the securities they bought, and that the losses are due to a downturn in the housing market. But the United States of America would rather blame the Bank of America.
“BOA was one of the most aggressive competitors in the mortgage-origination market,” the government’s lawsuit reads.
And that’s where it hints that Bank of America was even worse than Countrywide:
“Even the top executives of Countrywide Financial Corp., the notorious mortgage lender ...complained to each other...that BOA’s appetite for risky products was greater than that of Countrywide,” the lawsuit reads.
“In a June 13, 2005, email, Countrywide CEO Angelo Mozilo wrote to President and COO David Sambol: “This is the third deal in the last 10 days that BOA has offered that is impossible to beat. In fact, the other two were substantially worse than this one. It appears to me that BOA is making an aggressive move into mortgages once again.’”
Imagine that. Bank of America doing mortgage deals that even Mozilo found shocking.