U.S. prosecutors have abandoned their case against Angelo Mozilo, the over-tanned character at the center of the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him. As Bloomberg reports, The Justice Department has decided not to sue Mozilo, according to people familiar with the matter, ending a decade-long hunt for someone, anyone to jail over what happened.
As Bloomberg reports,
In 2014, the Justice Department began trying to build a civil case against Mozilo, using the same anti-fraud laws it had employed to extract more than $37 billion from Wall Street banks. The Financial Institutions Reform, Recovery and Enforcement Act, known as Firrea, gave the department a low threshold for bringing civil suits and a long period to bring cases.
The Justice Department used Firrea to reach a $17 billion settlement with Bank of Bank of America over how Countrywide and Merrill Lynch & Co. -- which Bank of America bought in 2009 -- marketed mortgage-backed bonds to investors in the run-up to the financial crisis.
The closure of the Mozilo case comes weeks after a federal appeals court reversed a 2013 Firrea ruling against Bank of America and Rebecca Mairone, the only executive of a major U.S. bank to be found liable for their part in the mortgage crisis.
Mozilo, known for his tanned visage, became an American success story after co-founding Countrywide in 1969 and building it into the nation’s largest mortgage lender.
His fortunes turned in 2007 during a surge in defaults of loans the company made to borrowers with poor credit. That year, Countrywide, based in Calabasas, California, reported its first annual loss in more than two decades.
By March 2008, lawmakers tried to make Mozilo a poster child of Wall Street greed as the U.S. economy slumped.
They beckoned him to Washington, where he testified before a combative congressional committee about his pay along with the ousted CEOs of Merrill and Citigroup Inc. U.S. Senator Charles Schumer, a New York Democrat, said in a Bloomberg Television interview two months later that Countrywide “will come to symbolize what went wrong with housing.”
In recent years, the 77-year-old has been living in a 12,692-square-foot house in Santa Barbara, California, investing in real estate and writing a book about his life so his grandchildren will “know the truth.” Interviewed in late 2014, shortly after news of prosecutors’ civil pursuit became public, he denied any wrongdoing and said the national real-estate collapse, not Countrywide’s lending, was at the root of the crisis.
“Countrywide or Mozilo didn’t cause any of that,” he said at the time.
The decision not to move forward with civil cases against Mozilo and other Countrywide executives was made by Justice Department officials in Washington and Los Angeles, according to one of the people familiar with the matter.