Is This Justice For Mortgage Fraud?

In the years prior to the real estate collapse, Countrywide Financial under CEO Angelo Mozilo wrote by far the most mortgages. When many of those mortgages went bad, in 2008 Countrywide collapsed and was merged into the Bank of America in a multi-billion dollar taxpayer bailout.

But from Countrywide's "profits" Mr. Mozilo paid himself over a 1/2 billion dollars from 2000 - 2008, as the mortgages he underwrote were quickly sold to investors. He also manipulated the Countrywide stock price using those "profits" and in 2006-2007 alone made an additional $140 million from the sale of his stock. Yet in internal emails not publicly disclosed, he spoke of how toxic many of their mortgages were.

To ensure no government interference during the real estate run up, Mr. Mozilo had his "friends of Angelo" program in which he personally approved secret special financing for Congressmen, Senators and other senior government officials.

When the collapse came, he said the problems were not caused by unqualified borrowers used to pump up loan volume and create "profits" but by the weak credit markets and sinking home prices.

Ultimately, the government filed a civil suit against Mr. Mozilo alleging fraud and insider-trading, but not a criminal suit for in my opinion, that could have brought potential criminal liability on the government officials who got special deals.

On Friday, Mr. Mozilo settled the suit for $67.5 million, admitting no wrong doing. But most of that money will be paid by the Bank of America, which had agreed to indemnify Mr. Mozilo and other top Countrywide officials at the time of the merger.

Also on Friday, Bruce Karatz, former KB Home CEO was convicted of felony fraud for manipulating the stock of this giant home builder and pocketing $6 million. The recommended sentence? Five years probation, including eight months confinement in his Bel-Air estate.

In fairness to Messrs. Mozilo and Karatz, Los Angeles area businessmen, no Wall Street titan has been prosecuted for the financial collapse. And I have nothing personal against either man. Given the chance, many people would be tempted to do what they did, for greed is a part of all of us.

But is this justice? Is it justice when no-one on Wall Street is held accountable for massive fraud while collecting staggering bailouts and bonuses?

If you don't think this is justice, raise your voice, for this is your justice system. Our nation desperately needs people of wisdom and integrity to make their values felt. You could make a difference by blogging and by writing newspaper editorial letters, letters to prosecutors and by confronting politicians to let them know we are paying attention and we will replace them with those willing to set a higher standard. This is the least we can do for our nation's future and that of our children.

Dick