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Mozilo Regrets Nothing at Countrywide as Government Closes In

SEP 2, 2014 1:34pm ET
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Angelo Mozilo cannot believe it.

Six years after he lost control of the largest mortgage lender in the U.S., and days after news that the U.S. Attorney's Office in Los Angeles plans to sue him, the Countrywide Financial Corp. founder is baffled by a new effort to punish him, proud of past triumphs and incensed by criticism.

"You'll have to ask those people, 'What do you have against Mozilo, what did he do?'" he said in a 30-minute call with Bloomberg News before Labor Day, one of his few interviews since the firm's downfall. "Countrywide didn't change. I didn't change. The world changed."

Interviews with Mozilo, 75, and three friends show what retirement looks like for a chief executive officer linked to the worst financial crisis since the Great Depression. Remaining out of public view like Lehman Brothers Holdings Inc.'s Richard Fuld or Jimmy Cayne of Bear Stearns Cos., Mozilo has submitted plans for Old West-style offices in California, taught students in Italy about finance, invested in a building in the Arizona desert that houses a Taco Bell and written about his life so that his grandchildren will "know the truth."

He remains a defender of Countrywide, even after Bank of America Corp., which bought it in 2008, agreed last month to pay more than $16 billion to end probes into mortgage-bond sales on top of about $55 billion in fines that came before. Mozilo doesn't understand why he and his firm, blamed by lawmakers and authorities for lax underwriting and predatory lending, have been seen as villains.

"No, no, no, we didn't do anything wrong," he said, adding that a real estate collapse was the root of the crisis. "Countrywide or Mozilo didn't cause any of that."

Mozilo, who lives in a 12,692-square-foot house in Santa Barbara, Calif., defended the size of a lender that did $408 billion of originations in 2007 and had a $1.5 trillion servicing portfolio.

"What's wrong with that?" he said. "Should Amazon be condemned for being the biggest in their space?"

Mozilo won't be the CEO of a public company again under terms of a $67.5 million settlement in 2010 with the Securities and Exchange Commission. According to regulators, Countrywide didn't tell investors it was creating increasingly risky mortgages, while Mozilo expressed doubts to colleagues. "We are flying blind on how these loans will perform in a stressed environment," he wrote in an email about one product.

Still, with no major executives imprisoned for roles in the crisis, the Justice Department created a team to probe mortgage-security fraud. The U.S. Attorney's Office in Los Angeles is preparing to bring a civil case against Mozilo over the excesses of the subprime-mortgage boom, two people familiar with the plans told Bloomberg News last month.

He focused on his career’s highlights in the interview, recounting one business magazine calling Countrywide "The 23,000% Stock" and another naming him one of the most respected CEOs in the world.

"Go back and you'll see that Countrywide was one of the most admired companies in the country," he said. Mozilo added that he has "no idea" why the government is going after him again. "It's unfortunate, but I try to make the best of it."

Mozilo, who earned more than $500 million from 1999 to 2008, according to compensation-research firm Equilar Inc., has been paying attention to markets.

"I don't have a job, so I have to earn some money, and I do it through investments," he said. Real estate is still the best option, he said. "Tides go in and out. This is just another tide."

Public records provide evidence of his faith. One investment is a stake in a building that houses a Taco Bell outside Phoenix. Mozilo said he hasn't eaten there because he stays away from chicken and beef.

Another is a project in Templeton, a small Southern California town where he's requested permits to build a two- story retail and office building on a vacant lot. Architectural sketches show a style suited for a quaint Western main street.

"It's a throwback to a century ago," Mozilo said. "I love America. I love everything about America."

He talks investments with his friend Ken Langone, a founder of Home Depot Inc. "Equities, asset-backed deals, railroad cars, oil and gas," said Langone, 78. "Private equity, structured finance, you name it."

Mozilo decided to teach undergraduates what he knows about finance last year. The former trustee of Gonzaga University in Spokane, Washington, said he spent about two weeks in Italy at Gonzaga-in-Florence, housed in the Mozilo Center overlooking a 16th-century Medici garden.

"I taught them the basics of finance based on my own experiences," he said. "I really enjoyed being among them. It was very refreshing for me."

Even if Mozilo isn't ready to publish a book about his career, he has written about his life for his five children and 10 grandchildren. David Remnick's Muhammad Ali biography "King of the World" and Laura Hillenbrand's "Unbroken," about a runner-turned-war-prisoner, are recent favorites. Mozilo, known for a deep and seasoned tan, said he's playing less golf.

Two of his friends, former Countrywide director Robert Donato and fellow mortgage-industry veteran Howard Levine, praised his spirit. Levine, a friend for at least 50 years, said Mozilo gives a $5 bill to each homeless person he sees on New York's Fifth Avenue when they visit from California.

His lawyers have told prosecutors that Mozilo is ill, The New York Times reported last month.

"I'm 75, so I have some health issues that I'm managing," he said in the call. "I have not gotten my death notice yet."

He excused himself after half an hour to tend to guests. Asked for a word that describes the state of his life, he offered one before hanging up: "Peace."

Comments (2)
He fears no one. Has not yet been humbled enough. He knew then and he knows now what was happening. He may not have started it all, but he could have stopped much of what went out of control at Countrywide.Anyone that feels this powerful does so for a reason. It is not just money, it must also be friends in high places and also what he may know about others in high places. All speculation on my part, but the odds point in this direction. At the same time this guy did much good for the industry and for many people for many years. He was an innovator, a hard worker and a visionary. In many ways a great man. What he accomplished far outweighs any negative he participated in.
Posted by ROBERT R | Thursday, September 04 2014 at 1:37PM ET
Monday morning quarterbacking is as they say, providing 20/20 clarity around the obvious. Deep inside any man or woman with the money and power that he/she has held, is a person that later in life, in this case, is a grandfather. Any grandfather that I know, is quite reflective and I have little, in fact no doubt that Angelo has replayed many conversations (informal and otherwise) from his later industry days of sub-prime, pick-a-pay, stated income/asset, etc., just as I would hope Dick Fuld has replayed his poor judgement related to securitizing less than stellar paper during the latter part of his career at Lehman Brothers Holdings. Most people in our industry know the story about Angelo and David starting the business in a garage in I believe 1969 when products were far from exotic. In fact, long before they founded IndyMac it was far more like it is today, quite vanilla with government products playing a much larger role. The point Robert R brought up about him being an innovator is obviously true and he responded not only to market need but also to government demand. Clearly some of the drive was for the buck (did we forget that we are supposed to be a free market/enterprise country!) and while I am not defending either party in this article, remember that the government has been driving the industry to do more with outreach and product to satisfy the CRA Act, and avoidance of redlining since the mid 1980's. The countless lessons have been learned, but America is resilient, if not forgetful and while the pendulum has swung too far related to regulation and the toying with the GSE's, we are once again adding new acronyms to our conversations, not the least of which is...Non-QM. Yes, we have short memories, but responsible lending for individuals that can afford the "American Dream" STILL does make sense. Angelo is not a friend, but for the sake of full disclosure, I did work for his company for less than six months, and feel as though it is time to move on and it is not our role to determine who nor how much he fears, how humble he is or is not. After all, by contrast, the decisions made by Dick Fuld, Joe Gregory and others at Lehman actually brought countries to their knees, but even in that circumstance, the former Head of Goldman Sachs, Henry Paulson was the Treasury Secretary who allowed LBH to fail, while saving so many others. America and its economy are not simple, and as a movie once said, it is "advanced citizenship" and to survive takes intelligence, innovation, ethics, tireless effort, skilled determination, people skills, luck and so much more. Yes, these days you can add to that the need for an uncanny ability to dance with the largely attorney led career politicians in government that don't understand business and who the over-regulation actually hinders, the consumer. That by itself should be cause for consternation no matter what side of the aisle you prefer. And if you don't play nicely with others, the government will make sure that you find yourself on the outside looking in as was the case with the former President of GM. There is plenty of blame to go around and having the government pursuing someone like Angelo, despite his ego and wealth is a bit hypocritical in my view.
Posted by Pete B | Friday, September 05 2014 at 10:52PM ET
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