US drops probe of ex-CEO of Countrywide over subprime loans
The US Justice Department has dropped plans to sue the former head of Countrywide Financial, a driver of the subprime mortgage debacle behind the 2008 financial crisis, his lawyer said Friday.
Los Angeles lawyer David Siegel said that the Justice Department had informed him that Angelo Mozilo, who built and ran what became the country’s largest mortgage issuer before the market collapsed in 2006, is no longer under investigation.
“We are pleased and gratified with the news that the DOJ has closed its investigation without further litigation,” Siegel said. The Justice Department declined to comment on the issue.
We are pleased and gratified with the news that the DOJ has closed its investigation without further litigation
With the Obama administration under pressure to punish bankers and mortgage companies responsible for the crisis that spurred the 2008-2009 Great Recession, two years ago the Justice Department opened a civil investigation into Mozilo’s role at Countrywide.
In the housing boom in the early 2000s, Countrywide issued and sold millions of mortgages to homebuyers.
Many of those were low-quality loans that were fraudulently labelled good investments and packaged into securities that eventually failed, at a huge cost to investors.