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The Community Reinvestment Act: Its Evolution and New Challenges*

At the Community Affairs Research Conference, Washington, D.C.

March 30, 2007 B of A Settles Lending Case By Ruth Simon and Brent Kendall

Wall Street Journal ~ December 22, 2011


Mr. Melton Commented: BofA just did not do due diligence and helped CW hide it's wrong doing and would have gotten away except for the housing mess.


Reply To: Mr. Melton, Please note that the allegations in the article claim that most of the overcharging took place "from 2004 through 2008, at the height of the housing bubble". During that time Bank of America was actually, in many ways, a competitor of Countrywide Financial.Â  During that time Countrywide Financial had borrowed significant amounts of money from B of A, and Countrywide had a large authorized line-of-credit with B of A.


Toward the end of Countrywide's independent existence, executives at Countrywide, and most significantly Angelo Mozilo, claimed Countrywide had insignificant sub-prime exposure and that the company was in strong financial condition. Not long after the last time they made that claim Countrywide exercised the balance of the authorized B of A line of credit. I have always thought that when B of A bought Countrywide, B of A did it, in significant measure, to protect the B of A loans which B of A made to Countrywide without any knowledge (apparently) of what a snake-pit Countrywide actually was.


It's interesting that you claim that B of A participated in the alleged activities while in fact it was a competitor of, and a banker for, Countrywide, yet you don't question why Countrywide's Board-of-Directors and the CFO at Countrywide weren't more aware of the alleged abuses, and why they werenât more actively engaged in monitoring and bridling-in the alleged abuses.


What kinds of people sat on Countrywide's Board-of-Directors almost up-to the very end? Were they unsophisticated rubes with no understanding of mortgage finance and no understanding of what was going on? If you think that might be the case, key-words-search: "The Tragedy of Countrywide Financial and Angelo Mozilo Muckety".[1] Notice that Kathleen Brown,[2] the very financially savvy and well credentialed sister of then California Attorney General - now Governor of California - Jerry Brown sat on the Countrywide Board of Directors, as did former (under President Bill Clinton) Director of the U.S. Department of Housing and Urban Affairs (HUD) Henry Cisneros [see, âThe Reckoning: Building Flawed American Dreamsâ By David Streitfeld & Gretchen Morgensen, NYT 10/18/2008.][3]


Maybe the abrupt retirement of former President of Countrywide, Stanford Kurland, (who most considered the obvious 'heir apparent' to CEO Angelo Mozilo) about a year 'before the fall' should have been recognized as a sign that it was time to look more closely at what was going on inside Countrywide Financial. [see, "Former Countrywide No. 2 Sees Opportunities in Troubled Mortgages" By Mathew Padilla - Orange County Register, 6/10/2008].[4]

[1] âThe Tragedy of Countrywide Financial and Angelo Moziloâ at: http://news.muckety.com/2008/06/26/the-tragedy-of-countrywide-financial-and-angelo-mozilo/3712

[2] Kathleen Brown Wikipedia at: http://en.wikipedia.org/wiki/Kathleen_Brown

[3] âThe Reckoning: Building Flawed American Dreamsâ By David Streitfeld & Gretchen Morgensen, NYT 10/18/2008 at: http://www.nytimes.com/2008/10/19/business/19cisneros.html?pagewanted=all

[4] âFormer Countrywide No. 2 Sees Opportunities in Troubled Mortgagesâ By Mathew Padilla â orange County Register - 6/10/2008, at: http://mortgage.ocregister.com/2008/06/10/former-countrywide-no-2-sees-opportunities-in-troubled-mortgages/ Â

Bill George