Countrywide exec often warned about mortgage risks

By Steve Eder

NEW YORK (Reuters) - John P. McMurray made it clear to his Countrywide Financial Corp bosses that they were playing a dangerous game with risk. But they didn't listen.

Even so, he is being called a hero.

Warnings from McMurray are cited often in a lawsuit filed by the U.S. Securities and Exchange Commission against Countrywide's co-founder Angelo Mozilo and two lieutenants.

McMurray was chief risk officer of the lender that became a symbol of some of the worst excesses of the subprime mortgage crisis.

Mozilo, now the most prominent defendant in investigations into the U.S. housing bust and subsequent financial crisis, was charged on Thursday with securities fraud and insider trading as he made profits of more than $139 million from share sales in 2006 and 2007. Countrywide's former president David Sambol and former chief financial officer Eric Sieracki were also charged with fraud.

McMurray, who is mentioned 31 times in the complaint filed by the SEC, comes across as an internal watchdog who raised concerns that were ignored by company officers.

It is a story that may have some echoes of the role played by internal whistleblowers in other corporate scandals like Enron and WorldCom, where executives were warned about financial problems but the messengers were shunned or ignored.

"He is the classic whistleblower," said Stephen Kohn, president of the Washington, D.C.-based National Whistleblowers Center, who reviewed the 53-page complaint.