Judge Approves Countrywide Probe

Judge Thomas Agresti of the U.S. bankruptcy court in Pittsburgh has granted the U.S. Department of Justice wide authority to investigate whether Countrywide Financial Corp. abuses the bankruptcy process.

According to a Reuters article, the judge rules that the Office of the U.S. Trustee, an arm of the Justice Department that oversees bankruptcy cases, has authority to conduct examinations and demand documents from Countrywide provided that it exercises ‘good cause’ and does not overreach.

‘The U.S. Trustee has made a showing of a common thread of potential wrongdoing,’ Agresti wrote in his 50-page opinion.

‘The apparent point of Countrywide's argument is that recognizing the authority of the U.S. Trustee to conduct these examinations could have the unintended consequence of leading to an unregulated 'free-for-all,’' he continued. ‘The court finds Countrywide's argument … to be without merit.’

In addition, judges in other bankruptcy courts could follow suit in response to this recent decision. U.S. trustees have also filed lawsuits in courts in Florida, Georgia and Ohio, the article notes.

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