Rags to riches to stripes
Angelo Mozilo, the son of a Bronx butcher known for his tan and sometimes referred to as "Tangelo", Mozilo is the poster boy of reckless lending. Mozilo built Countrywide into the nation's largest mortgage lender and was charged with fraud by the Securities and Exchange commission yesterday.
"This is the tale of two companies," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Countrywide portrayed itself as underwriting mainly prime quality mortgages using high underwriting standards. But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk. Angelo Mozilo privately described one Countrywide product as 'toxic,' and said another's performance was so uncertain that Countrywide was 'flying blind.'"
Read the press release from the SEC.
Mr. Mozilo is of course innocent until proven guilty. And his attorney, David Siegal said, "The SEC's allegations are baseless. The mix and risks of Countrywide's loan portfolio and its underwriting standards were well disclosed to and understood by the marketplace."
The SEC cites a series of emails from Mozilo including one addressing subprime loans that didn't require a down payment, Mozilo apparently wrote "In all my years in the business, I have never seen a more toxic product."
I think he'll be trading in his pinstripe suits for some prison stripes.
Photo Illustration; Mozillo: Mark Wilson / Getty Images courtesy of Time: 25 People to Blame for the Financial Crisis.