It turns out Angelo Mozilo is not yet in the clear with the US government, which reportedly is preparing a new lawsuit against the architect of the behemoth US mortgage firm Countrywide Financial for his role in the housing collapse, Bloomberg reports. This is significant news.
Regulators have long been criticized for failing to hold individual actors, like Mozilo, suitably accountable for inflating the housing market before the fall. If anyone has paid a steep price for bad behavior by Countrywide, it has been Bank of America, which has shelled out more than $100 billion in mortgage-related costs since scooping up Countrywide in 2008 as the crisis began to heat up. The expenditures include an estimated $60 billion that BofA has paid for mortgage-related legal headaches and $45 billion paid back to the US government for buoying the firm during the worst of times.
Word of the government’s renewed interest in Mozilo comes as BofA is set to fork over even more cash. The bank reportedly is close to announcing, as early as tomorrow, that it has agreed to pay roughly $17 billion to settle what the bank’s CEO, Brian Moynihan, hopes is the last chunk of the mortgage mess the firm inherited from Mozilo.
This isn’t the first time the government has gone after Mozilo. Four years ago he struck a $67.5 million civil fraud settlement with the US Securities and Exchange Commission, which also permanently banned him from serving as a director or officer on any publicly-traded company. Critics of the settlement argued that it amounted to little more than a slap on the wrist, and a light one at that, considering that a portion of the legal tab was covered by BofA—and that Mozilo’s net worth is estimated at $600 million. Even an eight-figure penalty, they argued, wasn’t going to faze the Bronx, New York-born businessman, known as much for his tanned visage as for his outsized wealth.
It sounds like Mozilo is ready to fight the government’s new suit, which reportedly is rooted in a a 1989 law. Mozilo’s lawyer, David Siegel of Irell & Manella, told Bloomberg, “There is no sound or fair basis, in law or fact, to pursue any claim against Angelo Mozilo.” He added that Mozilo “stands virtually alone among banking and mortgage executives to actually have been pursued by this government before and already paid a record penalty.”