Countrywide's misdeeds have systemic smack

In reading through the Justice Department's complaint against Countrywide, what strikes me are the sheer numbers: 200,000 Hispanic and African-American borrowers were steered into costly subprime loans, even though they could have qualified for a prime mortgage. This is more than just a few rogue staffers looking to bulk up on their monthly numbers. This is a corporate-wide strategy of deceit and criminality - and while Bank of America, which bought Countrywide in 2008, did agree to pay $335 million to the settle the allegations, it's not enough. People should be going to jail on this one. From the NYT:

Under federal civil rights laws -- including the Fair Housing and Equal Credit Opportunity acts -- a lending practice is illegal if it has a disparate impact on minority borrowers. Amid the housing boom, the Justice Department brought relatively few enforcement actions based on fair lending laws under the Bush administration. But against the backdrop of the foreclosure crisis, the Obama administration has made a major effort to step up enforcement of fair lending laws. In January 2010, the division created a unit to focus exclusively on banks and mortgage brokers suspected of discriminating against minority mortgage applicants, a type of litigation that requires extensive and complex analysis of data.

But prosecuting any white-collar case requires specific people being alleged to have done specific, unlawful things - and as we've seen with all the other investigations, that's proven very hard to do. By the way, nearly one-third of all Countrywide's discrimination victims were located in California, with L.A., Riverside, San Diego, and Santa Ana mentioned in the complaint as having the highest number of victims. From the complaint:

Countrywide's home mortgage lending policies allowed its employees and mortgage brokers both to set the loan prices charged to borrowers and to place borrowers into loan products in ways that were not connected to a borrower's creditworthiness or other objective criteria related to borrower risk. Countrywide's policies created financial incentives for its employees and mortgage brokers by sharing increased revenues with them. Countrywide knew or had reason to know based on its own internal monitoring and reporting that its policies of giving unguided direction to its own loan officers as well as to brokers was resulting in discrimination.

From a DOJ press release:

The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of Countrywide's discrimination. The department will make a public announcement and post contact information on its website once an administrator is chosen. Borrowers who are eligible for compensation from the settlement will then be contacted by the administrator. Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the department at countrywide.settlement@usdoj.gov .