Countrywide CEO Poised to Walk Away With $40M

Angelo Mozilo, the once-celebrated CEO of Countrywide Financial, may well become the deeply tanned face of the mortgage mess.

The man who until recently was honored by charitable organizations and applauded by business magazines is now accused of predatory lending and rapacious greed, and was one of three executives called before a congressional committee today to answer questions about their compensation and about how much their roles in the mortgage crisis.

The criticism of Mozilo started before thousands of his customers went into foreclosure. His lavish compensation raised eyebrows.

Several years ago, when investor Rich Ferlauto raised questions about Mozilo's large pay package, Mozilo personally confronted him.

"We're nose to nose, and he's pointing his finger at me and says, 'Ferlauto, I want to see what you're made of,'" recalled Ferlauto, the director of corporate governance and pension investment at the American Federation of State, County and Municipal Employees.

"He basically says it was his decision to make and the inference was that the board members, the shareholder or myself were not going to interfere with his own judgment of what he was worth," he said.

Ferlauto said that Mozilo was an example of an "imperial CEO" who ran his board and company with "an iron fist."

"He decided how much he wanted to get paid, he decided on a strategy of the company ... and the board of directors, the board of a publicly traded company that supposedly was there to protect shareholders, would just let him run the operation by himself, and that's wrong," Ferlauto said.

Did you know that there are Web sites that track Mozilo and Countrywide? You can learn more at www.responsiblelending.org and www.disinvitemozilo.com.

According to figures from the House Oversight and Government Reform Committee, which conducted today's hearing, over the last two quarters of 2007, Countrywide lost more than $1.6 billion and its stock fell 80 percent from where it had been in February, but Mozilo received $20 million in stock awards on top of his $1.9 million salary.

Critics say that under Mozilo, Countrywide engaged in questionable lending practices such as giving people loans that were higher than the value of their homes and luring borrowers with low teaser rates that soon spiked -- all under the banner of promoting homeownership.

"He was a great promoter, but if you picked up the rock you'd see all kinds of rocks hiding underneath," Sen. Chuck Schumer, D-N.Y., said.

"In his push to be the biggest, the best and the most successful, he took inappropriate risks with shareholders money," Ferlauto said. "He aimed for a large market share and to push everyone else out of the business. ... He took risks by selling to people, selling mortgages to people that he knew could not afford them."

Mozilo has vigorously denied reckless lending.

"It doesn't make any sense for us to make a loan that's going to fail," he said today at a congressional hearing. "We lose. The borrower loses. The community loses. We lose."

Another problem for Mozilo: The government is reportedly investigating his sale of hundreds of millions of dollars of Countrywide stock -- much of it before the company's stock price tanked.

"The reason I'm selling is, is that it is the majority of my net worth. I have a big family, nine grandchildren, five children. I have a lot of education to pay for," Mozilo told CNBC.

But Schumer said he is skeptical.

"I think it would be very hard for him not to know the company was in big trouble as he was selling the stock," Schumer said. "I do not buy it -- $400 million, I mean I'm struggling with two tuitions ... $400 million is not to pay tuition for ... no matter how many grandchildren he has."

Countrywide and Mozilo are now facing protests and lawsuits, and the company is now being sold.

If the deal goes through, Mozilo is positioned to walk away with $40 million, and not one of the corporate titan's homes is in foreclosure.

ABC News' James Wang and Jung Hwa Song contributed to this report.

Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...