Angelo Mozilo Quotes

Reich would soon back a request from Angelo Mozilo, Countrywide’s white-haired, unnaturally tanned CEO. Mozilo wanted an exemption from the Section 23A rules that prevented Countrywide’s holding company from tapping the discount window through a savings institution it owned. Sheila and the FDIC were justifiably skeptical, as was Janet Yellen at the Federal Reserve Bank of San Francisco, in whose district Countrywide’s headquarters were located. Lending indirectly to Countrywide would be risky. It might well already be insolvent and unable to pay us back. The day after the discount rate cut, Don Kohn relayed word that Janet was recommending a swift rejection of Mozilo’s request for a 23A exemption. She believed, Don said, that Mozilo “is in denial about the prospects for his company and it needs to be sold.” Countrywide found its reprieve in the form of a confidence-boosting $2 billion equity investment from Bank of America on August 22—not quite the sale that Janet thought was needed, but the first step toward an eventual acquisition by Bank of America. Countrywide formally withdrew its request for a 23A exemption on Thursday August 30 as I was flying to Jackson Hole, Wyoming, to speak at the Kansas City Fed’s annual economic symposium. The theme of the conference, chosen long before, was “Housing, Housing Finance, and Monetary Policy.

On Friday, July 11, Americans saw an actual bank run--not a metaphorical run, like the digital withdrawals that had crushed Bear, but a physical run on a physical bank, as in It's a Wonderful Life. That afternoon, the Office of Thrift Supervision and the FDIC shut down and seized IndyMac, a California thrift that was once part of Angelo Mozilo's Countrywide empire. IndyMac had flourished during the bubble by providing exotic mortgages to buyers without much in the way of income or assets. Its balance sheet was loaded with option adjustable-rate mortgages (ARMs), an almost comically irresponsible product that let borrowers choose their monthly payments, adding to their future obligations if they wanted to pay less at the moment.