A reader writes with some experience in SoCal financial circles writes:
-- Essentially, Michael Milken felt a certain level of guilt and agreed to go to jail. That sense of guilt seems lacking with the current crew.-- I have been informed that the reason Countrywide would not be the ideal firm to get a judgment against is for at least two reasons:
1) As you mentioned, he seems to have believed he was doing his patriotic duty to the multicultural cult by issuing mortgages to minorities. [Here's Mozilo's pledge of January 14, 2005 "to fund $1 trillion in home loans to minorities and lower-income borrowers and communities through 2010."]
2) Mozilo/Countrywide made it policy to keep only FICO scores on borrowers (i.e., it was policy; whether or not they paid attention to them seems to be another matter). In short, and unlike almost any finance firm I have heard of, Countrywide made plausible deniability the counrnerstone of its recordkeeping process and procedures. This might imply that he really didn't believe that they were going to be paid back, but smoking gun type proof would be tough to come by ....
-- Still, it is hard to believe that fraud is so difficult to prove in at least some cases during the bubble period.
For my money I would go after any and all Wall Street firms. Fraud and failing in their fiduciary duties seems like relatively easy cases to me. It's not the packaging of securities I would focus on; rather, I would push fraud and related issues. Essentially, I would make the case boil down to fraud or stupidity. For example, if presented with the choice between admitting fraud or admitting stupidity, would the head of Goldman Sachs choose stupidity over fraud? I'd bet fraud; whereas, Mozilo would be the one that gets him home without an ankle bracelet (i.e., stupidity with probably a large measure of gross incompetence).
I like the idea of trying them for fraud, while leaving stupidity as a defense. It would certainly be educational to the public. I wouldn't mind seeing the witness list that a hotshot defense lawyer like Mark Geragos would come up with to prove that everybody was this stupid: Henry Cisneros, George W. Bush, Barney Frank ...