Its actually pretty simple to understand Mafoo's logic.  Its the government's fault - always.  If Mafoo lost his dog, it would be the government's fault.

SEC charging ex-Countrywide CEO with fraud

Mozilo led lender who was major player in the subprime mortgage market

http://www.msnbc.msn.com/id/31108985/ns/business-us_business/

WASHINGTON - Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission’s civil lawsuit, filed in federal district court in Los Angeles, also accuses Mozilo of illegal insider trading.

Countrywide was a major player in the subprime mortgage market, the collapse of which in 2007 touched off the financial crisis that has gripped the U.S. and global economies.

Mozilo, 70, is the most high-profile individual to face formal charges from the federal government in the aftermath of the crisis. He has denied any wrongdoing and Mozilo’s attorney on Thursday called the SEC’s allegations “baseless.”

Civil fraud charges also were filed against Countrywide’s former chief operating officer David Sambol, 49, and ex-chief financial officer Eric Sieracki, 52.

The trio “deliberately misled” Countrywide shareholders, SEC enforcement director Robert Khuzami said at a news conference at agency headquarters. While they painted a picture of robust performance, the real Countrywide was “buckling under the weight” of soured mortgage loans, he added.

Mozilo “was actively taking his own chips off the table” by selling his shares to reap nearly $140 million in illicit profits, Khuzami said.

The SEC is seeking injunctions and unspecified civil fines against Mozilo, Sambol and Sieracki and wants them to be barred from serving as officers or directors of any public company. The agency also is seeking unspecified restitution of allegedly ill-gotten profits from Mozilo and Sambol.

Mozilo’s attorney David Siegel said the stock sales “complied with applicable laws and regulations, and were made under the terms of a series of written sales plans which were reviewed and approved by responsible professionals.”

“All of the SEC’s allegations will be answered completely in court and disproved with the full facts and evidence,” Siegel said in a statement.

Attorneys for Sambol and Sieracki also said their clients will fight the charges.

“Making groundless allegations and losing in court will not help the SEC restore its reputation,” said Sambol’s attorney Walter Brown.

Sieracki’s attorney Shirli Fabbri Weiss said her client bought Countrywide stock during the time when the SEC claims he was withholding information from investors, and “lost money just like all other investors in Countrywide stock.”

The SEC and federal prosecutors have undertaken wide-ranging investigations of companies across the financial services industry, touching on mortgage lenders, the Wall Street investment banks that bundled home mortgages into securities sold to investors, and other market players.

And Mafoo, now it sounds like you are arguing that the government should have better regulated this practice even though you created a thread a week or so ago lambasting the government for proposing to do this EXACT SAME THING.

Umm.. so CEO's lied to there shareholders, and somehow this has something to do with this topic?

And I am all for protecting people from lenders. The Truth in Lending is great. The issue I had a few weeks ago was the government making law because they thought was lenders were doing was somehow taking advantage of people.

If I tell you I am going to raise my interest rate if you don't pay your bill, I tell you in clear, understandable language, and you agree to it, then so be it. The government should not be like your mom who looks out for you. They shouldn't say "well, you're just not smart enough to understand this, so we are going to do what's best for you".

Force banks to better explain there position, and put something in place that better ensures that the people signing the contract understand what they are getting into. I am fine with that.

Again, protection vs parenting.

Ah, but the point remains, its because here were banks that were foolish enough to give out loans to people who didn't have the ability to pay them back that there is any problem, if the banks had done their job there would have been no issue whatsoever, even if other organizations like fannie took them and packaged them and resold them, as long as the people they had loaned the money to were trustworthy or had collateral, it would have made no difference, because the loans would have been paid back regardless of who bought it.

Sigh... you're missing the point.

If Government had stayed out of it, the bolded part is exactly how it would have happened. It's how it has happened all along. That percentage of the population is about 60%. Government wanted more then 60% of the people to buy homes. They wanted people who did not meet this criteria given the opportunities of home ownership.

This is what the Community Development Act of 1992 was for. A way for government to force lenders to loan out money to those who they would otherwise never loan money too.

Force might not be the right word. They "force" them the same way they "force" states to make the alcohol level .08%, with money.

If a state does not comply, they don't give them funding for roads, and if a bank does not give out a certain percentage of sub prime loans, they tax the bank more on all there loans.

What your asking the banks to do, is the same as if the government got rid of income tax, no one paid it, and then you blamed all the people for the government not having any money. In your world, people should have paid the same income tax, even if the government made it very attractive not to.

The banks should have defied the government, and for the good of the people, not lend money to the group of people the government wanted them to lend money to.

What dream world are you living in?

You're missing the point though, it wasn't until a decade later, that most of these foolish loans started getting handed out, between 1996 and 2004, only 9% of loans given were subprime, it wasn't until 2004 to 2006 that the number jumped to 21%, if it was just the government trying to mandate expanded housing, it wouldn't have taken 12 years to happen. No the reason it happened was becuase banks got greedy, they saw that the market was charging upwards and thought that they could make big bank by betting on these high risk borrowers.

The government wasn't the cause of this, it was the greedy stupidity of the banks and thinking that the market would keep going up.

I don't think you understand how the changes to lending actually impacted the market on the whole. The changes to lending practices created an imbalance and started the largest bubble the housing market has ever seen. It wasn't until 2004 through 2006 when housing prices had risen to a level where more "Typical" home buyers were forced into sub-prime mortgages in order to qualify to buy any home.

What HappySqurriel said.

And not only that, when this happened, it expanded the number of people who could buy a home. When it went from 60% to 66%, you now have 10% more people look for a house then you have houses. This increased the value of homes.

Builders built to try and provide enough homes, but government kept lowering standards, to the point where people qualifying was at 75%. Once they hit around 75%, they could not go higher (the other 25% either don't want to buy, or are of such low credit standards, that nothing will make them a fair risk).

Once it stopped at 75%, builders caught up. That's a lot of building, and it took 14 years.

Once they caught up, these ARM's that people were refinancing every 3 years to stay in there homes couldn't happen, because there house didn't go up in value. So they foreclosed. This then caused the market to adjust right back to where it should have been all along. Now not only are you having people who can't afford to stay in there homes foreclosing, but you have people who are well off, but would rather take the credit hit, then pay 400K on a house worth 250. Great credit to them, is not worth paying $150,000.

All of this could have been avoided, if Clinton had not tried to get us to 66% (and all the other shit that Government did between now and then).

Clinton himself says he should not have done it, and takes ownership of it in this interview. The part about all this stuff, is at 3:20.

Also, if you listen to that interview from Clinton, he says clear as day, that he felt banks (execs and shareholders) were making to much money, so they should give loans to people who were higher risk, knowing that it will cause profits of the banks to go down, because well, rich people can afford it.

Should that be the role of Government? To look at how much money you're making, and if they "feel" it's to much, force you into a situation where you have to redistribute it?

Not only should they not do it in my opinion, I don't think he did the poor any favors if you look at todays economic situation.

Uh, no, I don't think you get it, there are plenty of markets where home prices didn't rise as fast, in fact a ot of the rise in housing values was centered in certain markets, showing that there was no requirement to push people into subprime to purchse homes, in addition you are still missing the point, the imbalance wasn't caused by the government, it was caused by poor lending policies by the banks, and the proof is in the fact that it took so long to occur, look at your own chart, it wasn't until the early 2000's that the housing prices started to spike, long after any government action, and even then it didn't reach a fever pitch unti lthe mid 2000's, before that point prices were still pretty close to normal, the fact is that the banks loosened up their lending policies becuase they wanted to take advantage to rise in housing prices, low interest rates are probably a much bigger factor in rising home sales in the early part of the decade than any plan to expand housing.