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We don't mean to harp on the subject of what a lousy acquisition Countrywide was for Bank of America...ok, that was lie...we do intend to harp on it. A few days ago, Reuters ran a story of yet another example of how B of A shareholders are taking another blow to the solar plexus because of allegedly nefarious activities of Countrywide affiliates. This story dealt with an honest appraiser (no, that's not an oxymoron, although "honest lawyer" might be), Kyle Lagow, who was "coincidentally" fired by Countrywide not too long after he complained internally that a Countrywide affiliate was committing appraisal fraud. Oh, yeah: he was also fired while undergoing treatment for thyroid cancer, to add to the despicability factor of Countrywide's conduct.
What Lagow learned was that Countrywide wanted to make loans whatever the collateral was worth. LandSafe executives routinely pressed staff appraisers and independent appraisers to boost home values to ensure sales went through, according to a suit he filed in 2009.
Lagow also spotted trouble with a joint venture Countrywide had with homebuilder KB Home, according to his suit. The builder would only work with select appraisers, who were inflating home values to make sure sales went through, according to his suit. KB Home declined to comment.
[...]
In January 2008, after supervisors had repeatedly ignored his warnings, Lagow sent an email to Countrywide Chief Executive Officer Angelo Mozilo, according to the complaint. Mozilo responded that someone from his staff would get in touch, and Lagow later talked with Countrywide's chief operations officer, Jack Schakett, and its chief compliance officer, Richard Wentz.
Two weeks later, Lagow received an email from Wentz stating that his complaints had been investigated and there were no issues that needed to be addressed, according to the complaint.
[...]
In January 2008, Bank of America agreed to buy Countrywide as it verged on collapse. That November, Lagow was fired. At the time, he was undergoing treatment for thyroid cancer; he has since recovered.
Bank of America declined to comment on Lagow's case. "We have a strategy to put Countrywide and other legacy issues behind us as quickly as we can," bank spokesman Rick Simon said.
Putting a $40 billion "legacy issue" behind you is like Kim Kardashian putting on a skin-tight dress. There's absolutely no doubt that no matter how hard you try to cover it up, you've got a whale-load of junk in the trunk. Nice try by B of A's PR flacks, though.
Kyle later filed a whistle-blower lawsuit, but had to keep mum about it for three years, even from his family, so as not to impede ongoing government criminal and civil investigations of the "legacy issues" presented by Countrywide's pristine behavior in residential lending. Eventually, his suit was wrapped up in the global settlement with B of A and other large lenders and when the dust settled, Kyle walked off with $14.5 million. That almost makes up for the four years of emotional distress inflicted on him because...GASP...he tried to do the right thing.
He has bought a new home and has treated his family to a trip to Disney World, but he plans to leave most of the award to his kids.
"They are the ones," he said, "who suffered through this."
While some, like Kyle and his family, have "suffered through this" to a greater extent than other folks, the pain and misery of the most recent meltdown have been fairly widespread. Unless, of course, your name's Mazilo. That particular apex to a pyramid of greed walked away with a slap on the wrist of $47.5 million out-of-pocket out of over a half-billion dollars in income received from 2000 to 2008. Or, for that matter, unless you were a friend of Mazilio's and a member of the US House or Senate, in which case absolutely nothing bad will happen to you at all.
