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.
Excerpt:
“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 . . .
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Source:
Angelo’s Ashes
Connie Bruck
THE NEW YORKER, JUNE 29, 2009
http://www.newyorker.com/reporting/2009/06/29/090629fa_fact_bruck
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