For whom the final bell tolls

News from Los Angeles that a federal judge has refused to dismiss civil fraud charges against Angelo Mozilo, the former CEO of Countrywide Financial Corp., and two of his associates means that regulators are still pursuing the fabulously wealthy wheeler-dealers whose recklessness helped cause the collapse of world financial markets and sparked a global recession. Of course, the U.S. Securities and Exchange Commission filed only civil charges against Mozilo and fellow top Countrywide officers David Sambol and Eric Sieracki, so any penalties assessed against them, assuming they're found guilty, will be financial. Hopefully, criminal charges against scores of financial roughriders responsible for the massive frauds that helped sink the country's housing market are still in the offing. Mozilo built Countrywide into the country's largest mortgage lender in large part through tens of billions of dollars worth of subprime and adjustable-rate mortgages, according to the Reuters international news service. But when the poorer-quality loans began failing, the SEC alleged, Mozilo reassured investors that Countrywide's portfolio was strong while using stock options to buy millions of dollars in company stock and then selling it for more than $139 million in profits, Reuters said. The SEC said in its complaint that Mozilo admitted in an e-mail to colleagues that Countrywide was "flying blind" about the quality of its loans. Countrywide had to be sold to Bank of America in a $2.5 billion deal arranged by federal regulators in 2008. U.S. Judge John Walter in Los Angeles found it possible, as the SEC's complaint alleged, that Countrywide's management was responsible for "the virtual abandonment of prudent underwriting guidelines and the resulting proliferation of poor quality loans, during the same period Countrywide was touting the superior quality of its underwriting guidelines and its loan portfolio." Mozilo's attorney, David Siegel said he was disappointed by the judge's decision but predicted that Mozilo would be "vindicated" in a trial. "Angelo Mozilo is an innocent man who helped millions of people find a home for more than 40 years," Siegel said, according to Reuters.