Mortgage Millionaires to Answer to Congress

March 6, 2008 — -- Three CEOs who made millions of dollars off the housing market -- even as homeowners and their companies started to suffer -- are expected to testify before Congress Friday about why they deserved such large compensation packages.

Countrywide Financial Corp. chairman and chief executive officer Angelo Mozilo, former Merrill Lynch CEO E. Stanley O'Neal and Charles Prince, former chairman and CEO of Citigroup, have all been asked to tell Congress whether they believe their pay was justified.

Take Mozilo.

As CEO of Countrywide, the nation's largest lender, he stands to make millions if Bank of America's proposed $4 billion acquisition of his company goes through.

Facing mounting public opposition, Mozilo has already said that he would give up $37.5 million of severance pay, fees and benefits linked to his expected departure after the Bank of America deal closes. He also gave up some other benefits, such as use of the company's aircraft.

But he still won't leave empty-handed. Separate from his severance package, Mozilo will still keep various retirement benefits and deferred compensation already earned. Those add up to about $44 million.

And there is more.

Mozilo sold more than $127 million in stock options early on in 2007. Those sales came before he announced a $388 million write-down on profits and Countrywide's growing problems became apparent. As the company's troubles continued, Mozilo kept selling shares, cashing out an additional $30 million in options.

Now Congress wants to know whether he deserves such payouts, especially given that thousands of Americans have lost their homes and his company's stock has plunged, losing more than 78 percent of its value in 2007.

As the mortgage market has collapsed, Countrywide has foreclosed on 90,000 loans, has laid off more than 11,400 people and has reported a loss of $704 million in 2007, its first annual loss in more than 30 years.

"According to recent press reports, if Bank of America completes its proposed purchase of Countrywide Financial, you stand to collect tens of millions of dollars in severance payments and other compensation," Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government Reform, wrote to Mozilo when asking him to testify.