Criminal Probe of Countrywide Bank May Be Speeding Up

Criminal Investigation of Countrywide Bank May Be Accelerating
Criminal Investigation of Countrywide Bank May Be Accelerating

When you think you're looking at a lazy, slow-moving river, that's the time to stick a hand in the water -- sometimes fast-moving currents run deep.

That truism may apply in the criminal investigation by federal prosecutors into Countrywide Financial, which was the nation's mortgage leader prior its spectacular collapse and fire-sale acquisition by Bank of America (BAC) in 2008. Two years into the investigation of the bank, a grand jury late last year began hearing witness testimony -- signaling an acceleration in the process, and the possibility that this phase of the case may now be nearing its resolution, according to an article in The Wall Street Journal.

That resolution could take the form of the grand jury issuing indictments, or potentially not. Grand jury proceedings are conducted in secret, and the article notes it's not clear who the targets of the investigation are, nor what potential crimes are being examined.

As the criminal investigation moves forward, another federal agency is pursuing its own case against Countrywide.

The Securities and Exchange Commission in June filed a civil lawsuit against former Countrywide CEO Angelo Mozilo and two other top executives at the bank. The SEC alleges the three misled investors by claiming the mortgage company underwrote loans to folks who had good credit scores and the ability to afford down payments, shielding investors from the knowledge the company was also doling out the riskier subprime loans to borrowers. Mozilo also faces SEC charges of insider trading with Countrywide stock. That trial is set for October.

As for the criminal investigation, there's still time. The statue of limitations doesn't run out for several more years.