Posts filed under “Legal”
In the June 29, 2009 issue of The New Yorker, Connie Bruck slashes and burns her way behind-the-scenes at Countrywide Financial. She paints a somewhat sympathetic portrait of the Man with a Tan, Angelo Mozilo.
His driven personality eventually led him to disdain risk management on the altar of market share. As the 2000s progressed, his increasingly bad judgment and poor decision-making skills led to the end of his reign in disgrace and now scandal.
“Mozilo had gained full control of Countrywide in 2000, after the retirement of his partner, David Loeb, and he relished the freedom. The company had recently moved its corporate headquarters from Pasadena to Calabasas, an hour’s drive north of downtown Los Angeles, where it occupied a sprawling Mediterranean-style villa at the foot of the Santa Monica Mountains. The senior executives’ offices were on the third floor, where the corridors were lined with Hudson River School paintings, by Thomas Cole, Frederic Edwin Church, and others. In the executive dining room, lunch was served each day, at a long table that seated twenty, with Mozilo at the head . . .
Under Mozilo’s leadership, Countrywide’s growth had been astonishing. Between 2000 and 2003, the company tripled its workforce, to more than thirtyfour thousand. The company changed its name from Countrywide Credit Industries to Countrywide Financial Corporation—a proclamation that it was no longer a mere mortgage company. A fullfledged diversified financial-services company, it owned a bank, sold title insurance, and traded securities. Mortgages, however, remained the core of its business, and, according to Inside Mortgage Finance, it was the third-largest home-loan provider in America, after Wells Fargo and Washington Mutual. Mozilo wanted Countrywide, which he always referred to as his “baby,” to be No. 1, a position it occupied briefly, in the early nineties, before being overtaken by the competition. Mozilo was aiming to achieve a market share—thirty to forty per cent—that was far greater than anyone in the financial-services industry had ever attained. If he succeeded, Countrywide’s rivals would be severely diminished and its continued hegemony assured. Mozilo had always wanted to build a company that would last a century or more.
For several years, Countrywide continued to thrive. In 2004, the company edged out Wells Fargo to become the largest home-mortgage provider. In 2005, Fortune placed Countrywide on its list of “Most Admired Companies,” and Barron’s named Mozilo one of the thirty best C.E.O.s in the world. The following year, American Banker presented him with a lifetime-achievement award. But, as 2007 progressed, subprime defaults escalated rapidly, and Wall Street bankers abandoned the mortgage-backed securities they had prized, and their supplier, too. In August, they cut off Countrywide’s short-term funding, a move that constricted its ability to operate, and a few months later Mozilo was forced to choose between bankruptcy or being acquired by Bank of America. (In January, 2008, Bank of America announced that it would buy the company for four billion dollars, a fraction of what Countrywide was worth at its peak.)”
It only goes downhill from there . . .
THE NEW YORKER, JUNE 29, 2009
> US Foreclosure filings (default notices, scheduled auctions and bank repos) were 321,480 U.S. properties during May 2009. Total foreclosures from April 2009, however, decreased 6%. One in every 398 U.S. housing units received a foreclosure filing in May, the third highest month on record. RealtyTrac said they expect REO activity to “spike in the…Read More
As we noted last month, The Man with a Tan was charged with Fraud. Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and two other people were accused of fraud by the U.S. Securities and Exchange Commission following an investigation of the firm’s role in the subprime mortgage crisis. The agency will hold a…Read More
Apparently, there is some strange U.S. rule that that allows only one major auto manufacturer to be in bankruptcy at any given time. We may see a brief overlap, as GM’s filing today seems to be pushing Chrysler out the courthouse door. Hardly a boost to the recession. But, do not expect to see GM’s…Read More
Good article about the inherent conflicts of interest the various bailout manager firms — BlackRock, PIMCO, and AllianceBernstein are some examples — have due to their ordinary businesses. The Washington Independent: “As the Wall Street bailout nears its first anniversary, the controversy over giving public money to private banks has become public knowledge. But an…Read More
Arthur Samberg, among the best-known hedge-fund managers, is closing down his firm amid an ongoing investigation into possible insider trading WSJ: “Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction,” Mr. Samberg wrote in a letter that was sent to investors of his…Read More
“We’re about to have a big problem. Foreclosures were bad last year? It’s going to get worse.” -Morris A. Davis, a real estate expert at the University of Wisconsin. > This is a theme I have been hammering on for some time: As more people lose their jobs, we will see increasing foreclosures, adding further…Read More
Now how about this: “The Securities and Exchange Commission staff is readying civil fraud charges against Countrywide Financial Corp. co-founder Angelo Mozilo, in what would be the highest-profile government legal action against a chief executive connected to the financial crisis. The SEC sent a so-called Wells notice to Mr. Mozilo several weeks ago alerting him…Read More