The investigation centers on possible securities fraud: specifically, whether company officials misrepresented Countrywide's financial position and the quality of its mortgage loans in securities filings. The WSJ has the story, citing four sources. The feds are apparently looking at evidence that may indicate widespread fraud in the origination of Countrywide mortgages. That, of course, would raise questions about what company honchos knew and when they knew it. Another potential issue, reports the Journal, is whether Countrywide has been candid in its accounting for the extent of its losses.

Countrywide, which agreed in January to be acquired by Bank of America for $4 billion, already is under investigation by the Securities and Exchange Commission for possibly improper accounting. SEC investigators are working closely with FBI agents on several subprime investigations, officials said. The attorneys general of Florida and Illinois have launched probes too. Countrywide also is the subject of a class-action, securities-fraud civil lawsuit by various government pension funds and their managers, including the city and state of New York.

Bank of America still appears on course to complete its acquisition of Countrywide, perhaps as early as August. You have to wonder what B of A knows that the rest of us don't.