Countrywide’s Mozilo off the hook as U.S. said to abandon suit

Angelo Mozilo, co-founder of Countrywide Financial Corp
Angelo Mozilo, co-founder of Countrywide Financial Corp Bloomberg News

U.S. prosecutors have abandoned their case against Angelo Mozilo, a pioneer of the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him.

The Justice Department sent a letter informing Mozilo, the co-founder of Countrywide Financial Corp., that it isn’t moving ahead with any action against him, according to people familiar with the matter. That effectively ends nearly a decade of U.S. scrutiny of a man who became a face of risky lending practices and later an emblem of the government’s mixed success in holding individuals accountable.

Justice Department officials in Washington and Los Angeles made the decision not to move forward with civil cases against Mozilo and other Countrywide executives, according to people familiar with the matter.

David Siegel, an attorney for Mozilo, didn’t immediately respond to requests for comment. The Justice Department, though a spokesman, declined to comment.

Countrywide, which was bought by Charlotte-based Bank of America Corp. in 2008, originated more than $408 billion of worth of loans in 2007,at the height of the housing market. Many of them went to poorly vetted and risky borrowers, the Justice Department has said.

After the 2008 crash in housing – and the accompanying meltdown of complex financial instruments containing nonperforming mortgage loans – the Justice Department opened widespread investigations into industry practices. Prosecutors in the U.S. Attorney’s office in Los Angeles dug deeply into Countrywide’s actions, including Mozilo’s stock sales in the months leading up to the bursting of the mortgage bubble. They brought no criminal case against him.