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Monday, March 10, 2008

Angelo Mozilo

It's a name you might not recognize. Whether you recognize him or not, chances are pretty good that he's touched your life in some way. He's Angelo Mozilo, CEO of the world's largest mortgage company, Countrywide (

Here in north Texas, his Countrywide companies collectively are one of the biggest employers we have. Thousands work for Countrywide in Fort Worth, Plano, Richardson and other north Texas cities. The firm's headquarters are in California, and it is an important employer in Simi Valley and Pasadena. Nobody makes more home loans than Countrywide. Nobody services more loans than Countrywide. In all the world.

Mr. Mozilo and his original business partner (David Loeb) were pioneers in the mortgage industry. A scrappy New Yorker who believed strongly in what he was doing, Mozilo set the standard for excellence in the industry. He pushed hard, dreamed bigger and did what many only dream of doing. Countrywide was known for, among other things, a self-sufficient, independent company that got things done. Clearly, Mr. Mozilo poured a lot of blood, sweat and tears into his baby.

I remember many years ago, when Angelo was named Chairman of the Mortgage Bankers Association of America. The event was held at the Anatole Hotel in Dallas. Mozilo was there, with all his family. I remember riding down in an elevator with him. His son, who might have been around 12 or 13 at the time, looked just like him. It was like a little version of Angelo (who isn't a big many anyway). I admired the pride they both exhibited in what they were doing. It seemed that by virtue of pulling him out of school and bringing him to this event, Mozilo was teaching his son about pride in hard work and a job well done.

So why is Angelo Mozilo now in the news, testifying before Congress? Why has he become, almost overnight, the scourge of the industry? Why is his name suddenly synonymous with all that is wrong in housing finance? Well, it's simple really. Greed.

You see, the scandal that unfolded is the fact that Mozilo dumped a lot of his stock in Countrywide --- just before the subprime mortgage bless exploded. He dumped a lot of his stock --- and took a lot of profits --- just before Countrywide's stock nose-dived and its shareholders lost a fortune. Mozilo walked away unscathed, with hundreds of millions of dollars.

Immediately thereafter, Mozilo took some obscene compensation. Between 2002 and 2006, Angelo paid himself $250 million in salary and took $414 million profit from stock sales. During this time, Countrywide was also playing dangerously in the subprime lending market, engaging in predatory (immoral) lending practices. And the company was starting to write off billions in losses from these poor lending practices. And still Mozilo paid himself even more.

Angelo hired three compensation consultants --- and fired the first two who thought his compensation was bloated at the time. He asked the board to pay the income taxes on his wife's personal travel aboard the corporate jet. He asked the board to pay him a retirement income --- but didn't want to retire. In fact, there is a litany of requests and demands ... and even threats, from Mozilo, trying to extract more wealth from his company. It would seem that Angelo Mozilo had become the enemy of his shareholders --- intent of shifting their wealth to himself.

So here's what I think happened. Angelo Mozilo was the scrappy, admirable entrepreneur who did what he believed. He risked a lot and worked his butt off. There was much accomplished and much to be proud of. But at some point he came to the conclusion that money mattered more. Mind you, he already ranked among the wealthiest people in the world. He wanted more though. Hundreds of millions more. And in his quest for massive, obscene wealth, Angelo Mozilo completely destroyed the legacy he had spent his whole life building.

Let this be a lesson for us all.

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