FBI launches Countrywide investigation

Source: Exec Digital USA

Date :3/10/2008 3:12:52 AM

According to media reports, federal authorities have launched an investigation into Countrywide Financial for suspected securities fraud.

The New York Times claimed that The Justice Department and the Federal Bureau of Investigation are looking in to whether officials at Countrywide offered misleading information about the company’s financial condition and the quality of its mortgage loans in securities filings.

Countrywide agreed back in January to be acquired by Bank of America for $4 billion, and is already under investigation by the Securities and Exchange Commission, as well a class-action civil lawsuit from pension funds over alleged securities fraud.

On course

None of this, however, has put off BoA, with spokesman Scott Silvestri saying that the acquisition remains on track.

Countrywide is among at least 14 companies that are under FBI probe for possible accounting violations associated with the sub-prime lending crisis. Apart from mortgage lenders, the list includes housing developers and Wall Street firms that package loans as securities. The review was announced in January without identifying the companies.

Countrywide recently disclosed that its losses for the fourth quarter of 2007 were 422 million dollars, more than double analysts' estimates.

March 10, 2008