PARTIAL ABSTRACT: Six years ago, Countrywide Financial Corporation was regarded with awe in the business world. In 2003, Fortune noted that Countrywide was expected to write $400 billion in home loans and earn $1.9 billion. Countrywide’s chairman and C.E.O., Angelo Mozilo, did rather well himself. In 2003, he received nearly $33 million in compensation. By that same year, Wall Street had become addicted to home loans, which bankers used to create immensely lucrative mortgage-backed securities and, later, collateralized debt obligations, or C.D.O.s—and Countrywide was their biggest supplier. Under Mozilo’s leadership, Countrywide’s growth had been astonishing. He was aiming to achieve a market share—thirty to forty per cent—that was far greater than anyone in the financial-services industry had ever attained. For several years, Countrywide continued to thrive. Then in 2007, subprime defaults escalated wildly, and Wall Street bankers abandoned the mortgage-backed securities they had prized. In August, they cut off Countrywide’s short-term funding, which constricted its ability to operate, and in just a few months Mozilo was forced to choose between bankruptcy or being acquired. In January, 2008, Bank of America announced that it would buy the company for a fraction of what Countrywide was worth at its peak.
By Connie Bruck, The World of Business, “Angelo’s Ashes, How Countrywide Financial Went Under” The New Yorker, June 29, 2009, p. 46
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June 29, 2009 Issue