SEC charges former Countrywide executive

The government on Thursday charged Angelo Mozilo, the former head of the mortgage lender Countrywide Financial Corp., with fraud and insider trading.

The Securities and Exchange Commission (SEC) brought charges against Mozilo and two other former executives for misleading investors about the lender's financial business.

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Countrywide was a major player in the sub-prime lending market that spurred a broader financial crisis and eventually led the firm to be sold to Bank of America. Mozilo is the most prominent financial executive to be charged by law enforcement officials since the financial crisis began.

Countrywide contributed heavily to congressional campaigns, but it was Mozilo, and the "Friends of Angelo" program in particular, that drew fire on Capitol Hill.

Sens. Chris Dodd (D-Conn.), Kent Conrad (D-N.D.) and other former or current government officials obtained better mortgage terms through the VIP program than did other Countrywide borrowers. Both senators denied any wrongdoing, but for Dodd, the association with the downfallen lender has been a constant source of attack for critics.

Mozilo was charged on Thursday with insider trading in the sale of Countrywide stock that resulted in $140 million in profits.

"Mozilo raked in nearly $140 million while fully aware that Countrywide's business model was deteriorating and faced a bleak future," said Robert Khuzami, director of the SEC's enforcement division.

Mozilo drew scorn from other Democrats after the charges became public.

"Under Angelo Mozilo, Countrywide became the poster child for unconscionable behavior by mortgage lenders," said Sen. Charles Schumer (D-N.Y.). "This is a company that turned the American Dream into a nightmare for thousands of innocent borrowers, and misled their shareholders along the way.”