Mozilo Exit Payday: $110 Million Dollars

Nothing like a combination of reckless lending standards, aggressive stupidity and irresponsible behavior being rewarded.

For pushing no doc, no money down loans, emphasizing the sub-prime market, oh, and dumping $414 million of Countrywide shares before the stock tanked 85%, Countrywide Financial CEO Angelo Mozilo stands to get a severance package valued at
more than $110 million, according to this LA
Times blog
.

Forget SEC investigations and shareholder lawsuits — where are the townspeople with pitchforks and torches?

I guess after building up Countrywide over 40 years, he gets some sort of a pass. I don’t understand why . . .

26countryxlarge2

graphic via The Mess That Greenspan Made

>

Sources:
Mozilo severance: $110 million and change   
L.A.Land, January 10, 2008
http://latimesblogs.latimes.com/laland/2008/01/mozilo-severanc.html

Mozilo’s Monster Payday
Dana Cimilluca
Deal Journal,
  January 11, 2008, 11:08 am
http://blogs.wsj.com/deals/2008/01/11/mozilos-monster-payday/

Inside the Countrywide Lending Spree
GRETCHEN MORGENSON
NYT, August 26, 2007
http://www.nytimes.com/2007/08/26/business/yourmoney/26country.html

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What's been said:

Discussions found on the web:
  1. John commented on Jan 11

    I don’t think we’ve heard the last of Mr Mozilo. I’m wondering whether the market has fully absorbed what happened today. The country’s biggest savings and loan was going bust. It was saved by the intervention of BoA in what I think was a smart move. They bought a huge business for 17% of what it was worth a year ago with $4billion of paper! Lot’s of legal downsides but the govt and legal system is not going to let the biggest financial institution in the country go down. They’ll come thru it and in about three years time this will look like the steal of the century. Apart from the merits of the deal what it must tell the world, quite apart from the increasing signs of panic being manifested by the Helicopter man, is that things are in a very serious condition. The market seems to have reacted badly to hte news at first blush but when they’ve had time to digest it we could be seeing a slide to below 12,000. If Countrywide had actually gone the market would probably have fallen to the mid 11’s and this seems only marginally better to me. Interesting times.

  2. michael schumacher commented on Jan 11

    add in the downgrades that are just appearing for CFC. A little late methinks….

    If this guy does’nt go to jail then we might as well live in the wild,wild,west. It is becoming increasingly easier to rape and pillage and all that is ever offered up is “we’re sorry”

    Thanks to Bushco we are.

    Ciao
    MS

  3. Kevin Kraft commented on Jan 11

    where are the townspeople with pitchforks and torches?

    Sounds like a job for John Edwards.

  4. JAN commented on Jan 11

    It is not unfair to ask if we are too civilized? Or sheepified?

    Shouldn’t someone pop this guy?

    Perhaps the possibility of truly personal responsibility would do more than the possibility of temporary embarrassment (soothed by big time booty).

  5. D H commented on Jan 11

    Once again, the system proves to incentivize those who have no long term care for the benefit of our society.

    Do they still shoot people like this in China, or do they honorably kill themselves out of shame?

  6. bart commented on Jan 11

    Are you prejudiced against tar and feathering… or perhaps (with some poetic justice), the public stocks?

  7. donna commented on Jan 11

    One hopes they will find Mozilo a nice Fed pen with a tanning booth after the SEC investigation….

  8. Michael Donnelly commented on Jan 11

    Oh but you forgot to include:

    Free flights on CFC corporate jets
    Country Club dues to be paid on his behalf

    and likely free cheese and toothbrushes, guys like this don’t like to pay for anything

  9. RichB commented on Jan 11

    The most disgusting aspect of this story is that Countrywide would be bankrupt right now if it weren’t for the federal government handing over billions to them through the Federal Home Loan Banks — $50 billion for the year as of September according to the Financial Times. Mozilo’s payday is coming straight out of taxpayers’ wallets.

  10. MooPoint commented on Jan 11

    You all realize the aristocracy don’t like it much when the unwashed masses question them. He deserves $110M not because of what he DID, but because of who he IS.

    Once you enter into that stratisphere of society, you are entitled to anything and everything regardless of what you do or don’t do. The rest of us just have to pay our taxes and fees and STFU.

    :)

  11. Short Man commented on Jan 11

    Just wait until the AG’s office gets to him. In 5 years when the post-mortem is complete and Michael Moore has finished his documentary we look back at this debacle and see that he was the Ken Lay/Jeff Skilling rolled into one.

    OT: Boy yesterday is shaping up to be the ultimate pump and dump day.

  12. Johnny Vee commented on Jan 11

    If history is any guide, the Fed always makes big moves when a large institution, like CFC, goes down–which is what BoA’s buyout is. Therefore a half point cut in the Fed Fund rate and probably at least that much in the discounse rate is a lock on or before 1/31/08. Lookout belowwww!

  13. Greg0658 commented on Jan 11

    MEW (mortgage equity withdrawl) and how it helped / hurt community’s. Money borrowed on the home collateral to buy vacations, furniture, Harley Davidsons and autos. As opposed to a kitchen / bathroom repacement that is directly associated with MEE (mortgage equity enhancement).

    You’ll find many incentives to Buy Now, that fell into both categories. Free garage upgrade, landscaping, TVs, kitchen appliances.

    see link:
    http://money.cnn.com/2006/08/24/real_estate/inventive_incentives/index.htm

    I return to phase 2 of MEW (mortgage equity withdrawl) and how it helped / hurt community’s. These activities pumped foreign money into community’s in the way of sales contract fees, lawyer fees, other
    processing fees. Add in the home building industry, retail sales (of the incentives) and hotel stays for traveling migrant home builders.

    Communities like Florida, New York and California are way ahead of Illinois because of their community’s not being timid to taking advantage of the situation.

    what ever this plan is to fix sub prime or whatever
    IMO
    subprime mess is camoflage
    to cover up the dot com bubble pop, Enron, WorldCom, Tyco, Healthcare
    South, Anadarco

    something had to be invented to fix the real event ie: give away money to the poor
    this plan is more sellable to the public

    and while your at it knowing the plan ahead of time is a real hoot

  14. Steve Barry commented on Jan 11

    Barry,

    You seem critical of people for not holding him to account, then your statement seems to pull punches. I would have like to hear what you really think of this guy and what he represents. Rip him a new one Barry.

  15. Christopher Laudani commented on Jan 11

    $110 million?? That’s seems kinda low for a failed company.

    Didn’t Chainsaw Al from Sunbeam get $400 million?

  16. randy commented on Jan 11

    we used to hang horse thieves. oh how i long for those good-old days to return.

  17. Stuart commented on Jan 11

    $110 million is outrageous, yet, no one is going to do anything about it…. same ole same ole.

  18. dukeb commented on Jan 11

    Global economy, global parachutes. I think there are few “Americans” left at the top of corporate America. They may have the passports, but they’ve got a bunch of them and don’t really give a damn anymore. We’ve been letting these scumbags gut this country, and maybe it’s time we gut them instead.

  19. Moose commented on Jan 11

    Let’s not exaggerate. It’s ONLY $83M. (the PV of the pensions don’t count).

  20. michael schumacher commented on Jan 11

    Tangelo has perfected the art of painting himself as a victim too.

    Can’t prosecute a fellow victim can you??

    That’s the part we’ll hear next….how he lost his entire business and expect some crocodile tears as well. Worked for Hillary…

    Ciao
    MS

  21. me commented on Jan 11

    And people wonder why Jim Rogers left this country?

  22. me commented on Jan 11

    And people wonder why Jim Rogers left this country?

  23. VJ commented on Jan 11

    Jim Cramer screamed that everybody should BUY Countrywide at $44 share. It closed today at $7.16.
    .

  24. FT Woods commented on Jan 11

    In Part I, Marie Antoinette said ‘Let them eat cake.’ In Part II, well, the rest of the story didn’t turn out so well.

    Why do they always forget about Part II?

  25. Paul Jones commented on Jan 11

    Where were the people after Enron? Where were the people for the last 7 years?

  26. Bigrayvin commented on Jan 11

    It is amazing how the CEO of companies get so much money for fing up. I wish when I get a pink slip that I get a severance package like that. When will the fire be put out on this sub prime market debacle?

  27. Don commented on Jan 11

    Jim Cramer is an idiot. Anybody that goes on TV w/ his sleeves rolled up…well there’s a perfect example of when you should wear a suit.

    As for Mozilo–cut him some slack. He’s a hell of a salesman, but he’s not a liar like Ken Lay, Richard Scrushy, et al. He never lied about how CFC was doing, or about what it was doing. And CFC would not be here to beat up if it hadn’t been for Mozilo and his partner (whose name presently escapes me) building it from nothing to something.

    Even at the $4b sales price, building a company to that size in about forty years is an impressive achievement. And I’m sorry folks, but if you are so naive to think that insiders don’t trade on inside information–well isn’t that the whole point behind requiring trades of insiders to be disclosed?

    And quit w/ pinning the whole mortgage/housing debacle on CFC. CFC just rode the money wave the fed and our deficit spending created. They didn’t create zero-down Option ARMS–they sold them because Citi and Merrill and Bear and Lehman wanted to buy them because all those dollars the rest of the world held because of trade deficits had to go somewhere.

    Angelo Mozilo did what any CEO of a mortgage company or any company should do–he made as much money as he could for his shareholders, given the market conditions he faced. That the market turned on him is no cause for the rest of us to do so as well. His employees were the best-paid in the business. I personally know branch managers that were making seven (yes, $1m/yr) during the heyday of the boom. Even processers and closers barely out of high school were doing well above $50,000. He got rich, yes, but so did a bunch of his employees.

    The sad truth is that Mozilo and CFC got big and thereby became a target and a sink for all that is ailing the housing market, when in fact, it was Greenspan’s fear of deflation that really caused this whole mess, and he’s just out doing book tours and hiccuping markets to crashes….

  28. Joe commented on Jan 12

    Don,

    He didn’t practice risk management, he made a very large gamble with shareholder money and lost big time. If you are running a financial institution the goal is to “provide maximum earnings within acceptable levels of risk”. Mozilo failed big time.

  29. todd commented on Jan 12

    Frankly, I don’t see a whole lot of difference between the looting of Enron, Tyco, Adelphia and Worldcom and Mozilo’s accepting $110 million to leave CFC. Given the ruinous policies put in place by Mozilo, taking this money from the sad carcass that is left is very much like looting.

    You may say that Mozilo built a very successful company that for 50 years made a lot of employees and investors wealthy. But, it was Mozilo’s policies of no credit checks, no docs, no money down et al that led to the company nearly going bankrupt if not for BAC rescuing it. These sub-prime loans were the most lucrative (read:greedy) loans to make. The fact that ”everybody else was doing it too” doesn’t fly. Where is the accountability for responsible management? Would Mozilo really care if it all went bad if he knew he was going to get $110 million golden parachute anyways?

    Mozilo had 50 years to be well compensated for creating a successful corporation through generous salary, large bonuses and selling stock in the open market. Why was this not enough and why is this man so greedy to take out $110 million while so many employees, former employees and shareholders have to endure so much pain for his decisions? It’s looting in my book, even if officially it’s legal.

  30. todd commented on Jan 12

    I also wonder about the sour taste left in the mouth of investors who suffer large losses and hear about the gigantic severance packages for executives who have been poor managers that have led to billions in losses.

    It’s been going on for years, not just recently with Stan O’Neill of Merrill and Mozilo now. Awful CEO’s like Bob Nardelli of Home Depot, Jill Barad of Mattel, Philip Purcell of Morgan Stanley all received huge packages to leave.

    Why wouldn’t a lot of investors feel the game is rigged and they are just going to avoid the American stock market because of it, just like after Enron, Worldcom, Tyco?
    Why wouldn’t they choose to invest in foreign stock markets which are outperforming anyways, and eschew the rigged system that is Corporate America?

  31. Ellis commented on Jan 12

    Barry, yes Mozilo gets the big pay day and guess what the employees are left with? A one-hundred dollar restaurant debit gift card for 2007, no bonuses, and a decimated pension plan worth nothing (facts). So many people were loyal to this company – very sad. Capitalism makes this nation great but it’s sad C-level management and the BOD are not held accountable for golden parachutes.

  32. Ellis commented on Jan 12

    Don, you said…”He got rich, yes, but so did a bunch of his employees.” Really? Fifty-thousand $ and a worthless pension plan is rich? Your numbers are wrong regarding plebe pay. You don’t know what you’re talking about so please zip it. P.S. Is your first name really Angelo?

  33. Francois commented on Jan 12

    “I don’t understand why . . .”

    I think you do understand Barry. You area very smart person. The problem is to come to accept the truth: this country has completely lost its moral compass.

    After 30+ years of pervasive neoconservative propaganda, weakening of the press as a watchdog, the evisceration of the government agencies responsible for providing a modicum of level-playing field in the financial system, and politicians addicted and dependent on a political donor class for re-elections, we are in this gigantic Charlie-Fox.

    The crux of the whole matter is deceptively simple: instead of the economy driving politics, we’ve had politics driving the economy.

    That can only lead to situations like you described in this post, and a whole lot of others that just won’t stop popping up until WE, THE PEOPLE, decide that we’ve had ENOUGH.

    For that to happen, Professor Pain we’ll need to hit our wallets, kick us out of our collective comfort zone while jack-hammering the masses with a multiple rabbit punch of job loss, negative equity, and general misery, a.k.a. severe recession.

    Too bad we gotta get through that, but pain increases focus on what really matters.

  34. Joe commented on Jan 12

    Kudos for Credit Suisse for nailing this:

    11-Jan-08 Credit Suisse Downgraded CFC from Outperform to Neutral

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