The Chapter 13 bankruptcy trustee in Pittsburgh accused Countrywide Financial, the poster child for lending practices that were disastrous for both investors and consumers (but worked out quite well for Angelo Mozilo), of losing or destroying more than $500,000 in checks between December 2005 and April 2007, and then charging already downtrodden borrowers for illegitimate late fees and legal costs.Countrywide recently settled those allegations, and will pay $325,000. That's it. Is that a deterrent? Now that Countrywide is owned by Bank of America (NYSE: BAC), it's barely a rounding error, and certainly not something that will discourage Countrywide or other lenders from ripping people off.
Crime might not pay, but apparently it doesn't cost much either. Given the continuing flow of hugely negative publicity for Countrywide, it's hard to imagine that Bank of America isn't rethinking its plan to keep the Countrywide brand. Why would someone go a company synonymous with foreclosures, bait and switch, and corporate greed when they want a home loan?
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Reader Comments (Page 1 of 1)
7-16-2008 @ 10:53AM
Bigben said...
So what's new? Is anyone surprised?
7-16-2008 @ 11:16AM
Jonathan Meyers said...
Even with the fine Countrywide was ordered to pay, they still madew a PROFIT of at least $175,000.00 based on the "more than $500,000"
they cheated customers out of.
7-16-2008 @ 11:27AM
Kate said...
Crime does pay in the corporate world. A $325,000 fine is nothing compared to the devastation caused by loans Countrywide sanctioned and profited greatly off of. Countrywide should receive millions in fines and forced to shut down. The CEO should also be fined for his participation. How much wealth did the CEO accumulate off bad loans? Slapping a small fine on a huge operation like Countrywide means nothing. It's like a $10 fine for stealing cars. Big deal. Let's steal some more...
7-16-2008 @ 1:01PM
Steve in Denver said...
The article didn't say anything having about the trustee having any real proof; just accusations. Contrary to the bone headed thinking expressed earlier, any defendant is entitled to a day in court where evidence is presented; or pay a "fine". Regulatory agencies, courts, and various levels of government have learned it is simple to pass any kind of law, rule or regulation and then assess fines for violating them. I'm sure everybody has had their share of traffic tickets, for example. This same thing is done to "evil corporations" and well as all businesses and is the government version of protection shakedown that the mob does, except it's legal. Elliott Spitzer, the New York AG (& governor before he took "Wille" for a walk) was famous for these types of shakedowns. Frankly businesses, including "evil corporations" find it's easier to pay the shakedown and get on with business, because they know they don't really pay them...their customers do in the form of higher prices because of the need to build these fines in to their prices. Doing so is actually doing the consumer a service as the cost of defending any charges is far more expensive than paying a fine. They know it and certainly government mob men know it. You should too.
8-11-2008 @ 10:49PM
Cliff Tuttle said...
This is one US Trustee's Office and one Bankruptcy Court. Apparently, the practice is nationwide. If the trend continues, Countrywide could theoretically be put out of business with court imposed sanctions. Stay tuned.
Cliff Tuttle
Pittsburgh Legal Back Talk
http://www.pittsburghlegalbacktalk.com/?p=8