Subprime villain Angelo Mozilo could be close to making an appearance in a Florida courtroom to respond to civil charges that he and his company, Countrywide Financial, put consumers in risky loans that jeopardized their financial security.

Florida Attorney General Bill McCollum has sued Mr. Mozilo. Countrywide was originally part of the lawsuit but settled and now Mr. McCollum is going after Mozilo himself.

David Siegel, an attorney representing Mr. Mozilo told (subscription required) the Wall Street Journal that "The claims brought by the Florida state attorney general appear, like so many of the other claims being made against him, to be motivated primarily for political ends. When the true facts are heard, it will be clear that Mr. Mozilo has no personal liability for alleged improper lending practices in the state of Florida or elsewhere."

McCollum appeared on CNBC to explain the lawsuit. Check out the video below.

If you were the executive running the show at Countrywide Financial as it made horrible loans that torpedoed the company, then sold it to Bank of America (NYSE: BAC) at a fire-sale price that was still high enough to torpedo that company, what would you do?

If you're Stanford L. Kurland, the company's former president, you would assemble a team of former Countrywide executives and buy back these crummy loans for pennies on the dollar -- hoping to collect whatever you could from the struggling consumers whose financial lives have been ruined by the products you peddled.

The fund has raised hundreds of millions of dollars from institutional investors and Mr. Kurland has plowed some of his own personal fortune in as well -- he sold $200 million worth of Countrywide stock before the company imploded.

Bank of America's (NYSE: BAC) acquisition of Countrywide Financial has been a complete disaster, although it has mostly lurked in the shadows of Ken Lewis' other enormous screw-up, Merrill Lynch.

In an effort to put the deal in the past, Bank of America has decided to plaster over the Countrywide Financial and replace it with "Bank of America Home Loans." The reason: Few people want to go to a company whose name is synonymous with mortgage fraud, housing bubbles, misleading sales tactics and foreclosures.

With all the hoopla surrounding Ken "What's a Guy Got to Do to Get Fired Around Here?" Lewis's company-destroying decision to acquire Merrill Lynch, it's easy to overlook his other boneheaded blunder of 2008: Countrywide Financial.

Friedman, Billings, Ramsey & Co. analyst Paul Miller tells The New York Post that Bank of America (NYSE: BAC) could end up reporting losses of as much as $33 billion as a result of the Counrywide acquisition. That's more than twice as much as Merrill Lynch's gigantic fourth quarter loss.

Everyone cheered when Countrywide Financial, owned by Bank of America (NYSE: BAC), agreed to modify loans under a settlement with 11 state attorneys general reached in October.

Everyone, that is, except the people who held those mortgages and stood to lose hundreds of millions of dollars as a result of slashed balances and reduced interest rates. So Greenwich Financial Services has filed a lawsuit in a New York state court, arguing that Countrywide does not have the right to unilaterally modify as many as 400,000 loans.

"Loan modifications have been occurring for decades without objections or challenges, so we are especially troubled at the timing of this complaint," Countrywide said in the statement. "We are confident any attempt to stop this program will be legally unsupportable."

It's easy to blast Greenwich Financial as the bad guy -- I was kidding in my headline -- but it's also wrong. The fact is that these modifications to previously agreed to contracts are coming out of the pockets of investors, including pension funds and investments held in 401(k) plans. There truly is no free lunch, and people should keep that in mind as they hear self-serving politicians brag about measures that help keep people in their homes.

The New York Times reports that following its acquisition of Countrywide and Merrill Lynch & Co., Inc. (NYSE: MER), Bank of America (NYSE: BAC) may well be the dominant U.S. bank. Will that make it too big to fail in the years ahead? Or is it likely that when the economy recovers, it will have the strongest operation in place to grab a big share of that growth.

Its recent purchases indeed give Bank of America a strong market position in many segments of the financial services market. "Overnight, the shotgun merger will transform Bank of America into the nation's largest player in wealth management. It already holds the biggest branch network and is the largest issuer of credit cards, home equity loans and auto loans. In January, it paid $4 billion for Countrywide Financial, the troubled lender that was the nation's largest mortgage lending and payment collection operation," writes the New York Times.

With big acquisitions can come big risks. For example, Merrill still has plenty of problems with "$40 billion of real estate mortgage investments and $17 billion in commercial buildings," according to the Times. As I posted, Merrill had $40 a share worth of salable assets and Bank of America's $29 a share price effectively valued its liabilities at $11 a share. I admire the strategic boldness of Bank of America buying up market leaders at what may look in the future to be distressed prices.

But it remains to be seen whether those distressed prices were in fact too high because the liabilities Bank of America bought may turn out to be bigger than it gambled. If not, and if the economy recovers, Bank of America would be a screaming buy.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Bank of America's (NYSE: BAC) newly-acquired Countrywide Financial is being sued by yet another state attorney general, with Indiana's Steve Carter announcing on Sunday that he's suing the company for deceiving borrowers into loans that they could not afford and/or were not aware of the associated risks.

In a press release announcing the suit, Carter said that "These unfair lending practices may have harmed thousands of people and, in turn, negatively affected our communities and neighborhoods throughout the state." According to Carter, "The most common misrepresentations uncovered to date have been on 1) pre-payment penalty terms, and 2) the time period in which interest rates would be recalculated (resetting ARMs – adjustable rate mortgages)."

Carter is seeking penalties of up to $15,500 per violation, plus investigative costs and restitution.

Countrywide had been sued many times before the Bank of America acquisition, and BofA knew that there would be more to come. But for a deal that is widely considered to have been too expensive and too risky, the distraction and headache of all these lawsuits would seem to make this a deal Ken Lewis probably regrets. Of course, he won't say that publicly.

The U.S. Department of Justice is challenging (subscription required) a settlement Countrywide Financial reached with a Pittsburgh bankruptcy court that had alleged that Countrywide was intentionally mishandling mortgage payments it received as part of a scheme to extract large fees and penalties from struggling borrowers.

The Justice Department says that a non-disparagement clause in the settlement could "impede, impair or otherwise chill witness testimony in the U.S. Trustee's ongoing investigation of Countrywide."

The non-disparagement clause required court official and whistle blower Ronda Winnecour to agree not to "in any manner, whether directly or indirectly, disparage" Countrywide, and to assure that her employees didn't disparage the company either.

Connecticut Attorney General Richard Blumenthal has sued Bank of America's (NYSE: BAC) Countrywide Financial alleging that the company misled borrowers into taking on risky loans that they couldn't afford. California, Illinois, and Florida have filed similar charges, and it seems likely that more will follow.

Blumental said that "Countrywide conned homeowners into mortgages they simply could not afford," and wants Countrywide to amend mortgages that violated state laws and make restitution to affected borrowers. Blumenthal is also seeking fines of $100,000 per violation of state banking laws, and up to $5,000 per violation of state consumer protection laws.

CNNMoney reports that Bank of America (NYSE: BAC) reports that its earnings fell 41% in the second quarter to 72 cents a share. In response, its stock is up 11% in pre-market. Why the celebration? Analysts expected Bank of America's earnings to tumble 48% to 53 cents, so it beat those expectations by 19 cents a share.

According to CNNMoney. Bank of America's revenue was up 14.6% to $20.32 billion during the quarter due to "wider net interest margins, loan growth and higher income from mortgage banking and the company's investment and brokerage services." Thomson Reuters surveyed analysts who expected revenue of $18.37 billion -- 10% lower than its actual results.

I am wondering whether some investors will think we have bottomed out of the banking crisis. I think it's too early to break out the champagne, but the coming rally could be a good time for nervous investors to bail out. That's because credit losses could keep rising -- Bank of America added $5.8 billion to reserves for bad loans and its Countrywide purchase could boost those reserves far more in coming quarters.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

The Friends of Angelo Mozilo loan scandal widens, with Portfolio.com publishing a list of prominent people who received favorable loan terms from Countrywide Financial because they were friends of its chairman and CEO. Christopher Dodd has already been raked over the coals for the special deals he received, but there's more: former Fannie Mae CEOs James Johnson and Franklin Raines, former HUD director Henry Cisneros, CNN commentator Paul Begala, and many others. View the full list here, with 17 names and details on the terms.

It's tempting to level allegations of political corruption, and special terms given to executives at Fannie Mae and a judge who later heard a case involving Countrywide would seem to be obvious conflicts of interest. But as scandals go, this one seems pretty lame in that regard. The amounts involved just weren't that big: What's $15,000 when you're William Esrey, the former CEO of Sprint? It seems more likely that Angelo Mozilo, an incredibly vain man, wanted to be a "player" and hobnob with influential people. That he used shareholder assets to pursue his social agenda is distasteful but, unfortunately, not particularly rare. And given what a corporate governance outhouse Countrywide was, it certainly isn't surprising.

But in the current environment where Countrywide is being raked over the coals, mostly with good reason, this was destined to turn into a big mess. Read the Portfolio exposé here.

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?

With all the terrible press Countrywide Financial, which is now owned by Bank of America (NYSE: BAC), has gotten, it seems hard to imagine that there's more bad information to come. A former Countrywide regional vice president showed NBC internal emails where he had expressed concerns about mortgage fraud -- inflated appraisals, and employees coaching borrowers to lie about their incomes.

The vice president/whistle blower was fired -- he says it was because he refused to close bad loans, while the company says he was not performing. Interestingly, those could well be the same thing. He is now suing the company, and this will be an important lawsuit to watch for people looking to understand the mortgage crisis.

His allegations seem to fit in well with everything we know about Countrywide, and the rapid deterioration in its financial position indicates that its lending practices were, at best, sloppy.

If pretty much every other attorney general in the country was suing Countrywide Financial (NYSE: CFC), would Florida's? Apparently. Last night the Associated Press reported that Florida Attorney General Bill McCollum has sued the company for misleading and unfair trade practices.

There's no question that Countrywide is a horrible company on a multitude of levels, but there's some irony to the allegations that the company took advantage of borrowers. Take a look at the chart for the company's stock price over the past 5 years -- how much worse would it have done if they'd treated people ethically? It's a little bit like finding out that career minor leaguer Manny Alexander was a steroid user.

In some ways the beat down on Countrywide seems unfair, more of a response to general market problems than anything else. Countrywide helped people use toxic mortgages to buy homes they couldn't afford at a time when lenders were operating on the assumption that home values always went up, interest rates never did, and everything was comin' up roses. It was a happy conspiracy and, sure, Countrywide was happily working on loans that were fraudulent -- but everyone knew the subprime game was the wild west and no one cared. Towns benefited from increased property taxes and federal loan programs encouraged home buying with little money down. But with a lot of people angry about losing their homes, these lawsuits are good politics in an election year.

Angelo Mozilo, CEO of Countrywide (NYSE: CFC) may be a thug and he may get in trouble with federal authorities due to the way he ran his company. But at least he was generous.

According to The Wall Street Journal, everyone from casino employees to retired pro athletes got sweet deals. The paper writes that, Mr. Mozilo regularly lined up loans for people he met, according to several current and former Countrywide executives. Said one: "Angelo would call in and say, literally, 'My maid needs a loan.'"

Mozilo even gave a loan to the buyer of hockey player Wayne Gretsky's home.

The big open question about these mortgages is whether the people could have gotten them in the normal course of business, or was Mozilo's help necessary. He also may have made certain that his pals got below market rates.

Based on most of what has come out about Mozilo's behavior, he should probably give back those tens of millions of dollars in cash he got from stock options.

And perhaps, spend a few years in the pen.

Douglas A. McIntyre is an editor at 247wallst.com.