Bank Of America -- and Taxpayers -- Paying Mozilo's Legal Bills
Bank of America is paying the legal fees of Angelo Mozilo, founder of Countrywide Financial, which was purchased by Bank of America last year, the bank said today.
Mozilo is facing civil charges of securities fraud and insider trading and his legal defense is covered by clause in his former employment contract, Reuters is reporting, a revelation that is likely to peg the public outrage needle solidly into the red line.
So far, Bank of America has taken $45 billion in government bailout money.
Mozilo's Countrywide was one of the biggest cogs in the sub-prime mortgage mess, having issued about 17 percent of all U.S. mortgages.
The company had a history of giving loans to people who should have never got them and was the subject of lawsuits brought by states alleging crooked practices.
Countrywide also was high-volume seller of mortgages into the securitization market; when their risky sub-prime loans began defaulting in 2007, it contributed heavily to the system's collapse.
And Mozilo was the head of it all. To save his company, he engineered a takeover by Bank of America for $4 billion.
Since then, he has been charged with making more than $139 million of improper profits by exercising stock options in 2006 and 2007 while his company was going down the drain.
And, because of his cleverly written employment contract with Countrywide -- which translated to Bank of America at the merger -- you, the taxpayer, are now helping to pick up his legal fees.
"Under the agreement that he had when Countrywide was an independent company, Countrywide continued to be responsible for his legal expenses for actions taken while he was an employee," Bank of America spokesman Robert Stickler told Reuters.
June 9, 2009; 5:00 PM ET
Categories: The Ticker | Tags: Angelo Mozilo, Bank of America, Countrywide
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