Countrywide (CFC) Board: Sacked Behind The Line Of Scrimmage

A series of lawsuits against the board and management of Countrywide (CFC) accuses them of insider trading and not being careful enough in regulating the firm’s lending practices. As is the wont in these things, the defendants sought to have the charges dismissed. The judge would have none of it.

According to The Wall Street Journal, the person on the bench wrote “Plaintiffs’ allegations create a cogent and compelling inference that (Countrywide directors) misled the public with regard to the rigor of Countrywide’s loan origination process, the quality of its loans, and the company’s financial situation.”

It also appears that directors sold hundreds of millions of dollars worth of CFC stock from 2004 to 2007. The mortgage lender was doing a large stock buyback during the later part of that process, which would have tended to keep the price up.

Countrywide and its executives face two major issues now. The first is whether any of them will go to jail. The prima facie evidence would say that most of them will serve some time in the big house.

The other open question is whether this whole mess will cause Bank of America (BAC) to back away from its purchase of CFC. So far, the bank is sticking to its acquisition plan. The deal may simply be too good to walk away from. If some of the CFC management is in prison, they will simply have to be replaced with executives from one of the hundreds of other mortgage companies which have failed.

It looks, at least for now, that none of the Countrywide board or management will go to the gas chamber.

Douglas A. McIntyre

Sponsored: Find a Qualified Financial Advisor:

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.