Tuesday, March 11, 2008

FBI reportedly probing Countrywide on Securities Fraud charges

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PLANO — According to a number of media outlets ranging from the Wall Street Journal to Consumer Affairs, it seems that beleaguered mortgage lender Countrywide is once again under the microscope, this time as the subject of an FBI investigation into possible securities fraud.

Photo not provided by the FBI

The agency may start poking through City of Plano dumpsters as early as next week

Because of the political panic caused by the subprime crisis, the FBI has been known to be checking into a number of financial companies with connections to subprime lending. This, however, is the first time the name of an actual company has been publicly reported.

Reports say that sources within the government say the FBI is trying to determine whether Countrywide misrepresented the soundness of its loans, loans which were later re-packaged into securities and sold on the stock market.

Because of a nationwide surge in home loan defaults, banks have been hard hit on both their bottom line, as well as their credit and bond ratings. Even worse, most banks do not have any idea of the extent of their losses, nor what to expect. Scared bankers have since ceased giving out credit to anyone, regardless of credit worthiness, and a nationwide recession is very likely.

Posted by Todd M.

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