Who's Smiling Now Angelo?
The Security and Exchange Commission has charged Angelo Mozilo, former head of Countrywide Mortgage, with securities fraud and insider trading. The charges were not accompanied by criminal charges through the Justice Department, but they still carry some weight.
Citing e-mail messages in which Mr. Mozilo referred to Countrywide loan products as “toxic” and “poison,” S.E.C. officials said that he had misled investors about growing risks in the company’s lending practices from 2005 through 2007. During this time he also generated $140 million in profits by selling stock in the company, the S.E.C. said.
“This is the tale of two companies,” said Robert Khuzami, enforcement director at the S.E.C. “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.”
At a news conference announcing its filing of the suit, the most prominent against an executive involved in the mortgage crisis, Mr. Khuzami said the S.E.C. had made it a priority “to pursue cases at the root of the financial crisis.” As the nation’s largest mortgage lender, Countrywide helped fuel the housing boom by offering loans to high-risk borrowers.
Mozilo and Countrywide Mortgage crossed the line like many in the mortgage industry by putting profits above the needs of it’s consumers. The securitization of the mortgage industry allowed Countrywide to offset all of the risk to themselves while selling a product that was detrimental to everyone else. The borrower bought a product that destroyed their financial well being and those that invested in the securitized mortgage got a product that was junk.
If we are going to prosecute mortgage lenders for fraudulent behavior we have to be doubly attentive and vindictive to the companies that created the products that they knew would cause the heartache.
It’s only fair…
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Surprise! Oh wait, no. No surprise. Any guy with a deep tan and a snappy suit with a car salesman smile is probably just that, a cheating car salesman or the like. I figured that guy was making big bucks off of bad biz.
A better businessman would look less dapper.
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