FBI in Countrywide investigation

TEXT OF STORY

Lisa Napoli: Add possible securities fraud to the list of Countrywide’s woes. Reports this weekend that the faltering mortgage lender is under investigation by the FBI. That hasn’t daunted Bank of America, which is still planning to take Countrywide over. Marketplace’s Nancy Marshall Genzer reports.

Nancy Marshall Genzer: According to reports in the New York Times and Wall Street Journal, the FBI and Justice Department are looking into whether Countrywide misrepresented its financial position and the quality of the loans it made.

One source told the Journal some Countrywide executives knew there would be more defaults than the company predicted publicly. Bank of America has agreed to pay $4 billion for Countrywide.

Hill Townsend Capital President Gary Townsend says there’s no going back for B of A:

Gary Townsend: They’ve so much skin in the game already. I don’t know that they’re getting a bargain here, but I think that they nonetheless, Bank of America, feels they’ve got to complete the deal.

Townsend says Bank of America has already invested $2 billion in Countrywide, and has lent the mortgage giant billions of dollars more. Countrywide is reportedly among at least 14 companies being investigated by the FBI in connection with the subprime lending crisis.

In Washington, I’m Nancy Marshall Genzer for Marketplace.