All Global News on One Page

We are missing part of the anger that I think cuts across the political spectrum–and it goes right to the question: why is Angelo Mozilo not going to jail for a very long time? Because the political system still is not willing to jettison our coddling of the vast array of people who committed deep economic crimes on the country and round them up and put them behind bars.
I meant to write about this when the deal Mozilo cut with the government was announced almost two weeks ago:
And:
This guy is a crook. He was a central player in the mortgage scam that has rocked our country and the world, causing millions of people to lose their jobs and their retirement.
Here is a little about Mozilo from my book “The Audacity of Greed”:
On the backs of desperate homeowners, Mozilo made himself a fortune, mainly on huge annual stock option grants; from 1984 through 2007, he pocketed $406 million by cashing in those options.
However, he never showed much faith in his own company, failing to buy a single share in Countrywide after 1987. Instead, he was simply a leech on the company’s equity. Indeed, as the company hit the rocks during the mushrooming subprime crisis in 2007, Mozilo was making sure that he would not personally take the financial hit that hundreds of thousands of his costumers were facing, as he pocketed a third of his $406 million overall stock options in 2006 and 2007.
Mozilo, in fact, kept up his personal enrichment even as his company was falling apart. By the end of 2007, as the Countrywide crisis was spiraling out of control, Mozilo had tucked away $121.5 million by exercising stock options. He also banked $22.1 million in pay in 2007–a year when the company lost $704 million, its shares slid 79 percent and it cut 11,000 workers from its payroll. So, while the customers, shareholders and workers of Countrywide were drowning, Mozilo was flying high.
In his defense, Mozilo offered the usual argument of the failed CEO: that he was just the innocent victim of a market gone bad. “It’s easy to have hindsight” he said in an interview with National Mortgage News in October of 2007. “No one saw this coming. No one.”
That, however, is either an outright lie, or the height of selfdelusion. “In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,” said Ira Rheingold, executive director of the National Association of Consumer Advocates, in 2007. “And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.” More importantly, in many ways Countryside was the mortgage market, since, as the biggest player on the field, it set the standard that other companies followed. As one former executive with the company said, “Countrywide said it was meeting market conditions. But they were the largest mortgage originator in the country. How can you say that
it is not you that is causing it, if in fact you dominate the market?”
It went even deeper than that, as Mozilo encouraged so-called “affordability” loans that helped his company seize greater market share. These types of loans ginned up huge profits for Countrywide, raked in mainly from regular people who had to pay commissions on loans that they should not have been eligible for in the first place. The company was like a drug dealer, hooking people on something they desperately wanted, with no way out once they were addicted.
Among the kinds of loans in this vein that the company gave out where “interest-only loans, which required borrowers to only pay the interest on the loan–they did not have to pay back the principal until later in the life of the mortgage.” Countrywide was the number two originator of these loans in 2006 and 2007 (The top originator was Wells Fargo).Countrywide also provided its customers with what were known as “pay option adjustable rate mortgages” which permitted borrowers to pay only a small percentage of the interest– and none of the principal–during an “introductory” period.
While these loans lured borrowers in, they had serious repercussions. For example, if a borrower made just the minimum payment on his or her loan, their “mortgage would grow in size rather than fall. Another possible negative was that the borrower could eventually owe more than the home was worth.” Pay option A.R.M.’s accounted for just 6 percent of Countrywide’s mortgage originations in 2004; that figure had climbed to 19 percent by 2005. And these loans were where the big money was, as Countrywide made “gross profit margins of more than 4 percent on such loans, compared with 2 percent margins earned on loans backed by the Federal Housing Administration.”
You actually had Countryside salespeople handing out these types of loans to borrowers even if they had twice failed to pay a current mortgage on time or were in bankruptcy or foreclosure on a previous property.
All this was driven by Mozilo’s greed—as well as the greed of his board members. While Countrywide was snaring consumers, shackling them into unaffordable mortgages, the company’s board made no move to harness the clearly out of control Mozilo. Wonder why? In 2006, the directors on Countrywide’s board earned between $345,000 to $539,000 each in cash, stock and other compensation– an incredibly generous payoff that most people would find a sufficient reason to keep their mouths shut.
The day after Mozilo’s deal was announced on October 15th, Gretchen Morgenson of The New York Times–who was one of the only critics of Mozilo in the early says before the collapse–wrote this:
And in September 2006, Mr. Mozilo wrote an e-mail saying the company had no way to assess the risks of holding pay-option A.R.M.’s on its balance sheet. “The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales,” he wrote.
Another Countrywide product that concerned Mr. Mozilo was its so-called 80/20 loan, named for the fact that the combination allowed a borrower to receive money covering 100 percent of a home’s purchase price.
Mr. Mozilo had become worried about these loans in the first quarter of 2006, when HSBC Bank, a buyer of Countrywide’s 80-20 loans, began forcing the lender to repurchase some that HSBC contended were defective.
“In all my years in the business, I have never seen a more toxic product,” he wrote to Mr. Sambol in an April 17, 2006, e-mail cited by the S.E.C. “With real estate values coming down … the product will become increasingly worse.”
Such e-mails suggest that by mid-2006, Mr. Mozilo had recognized how reckless some of his company’s lending had become. And just three months later, according to the S.E.C. complaint, he met with his financial adviser to increase the amount of Countrywide shares he could cash in under a planned executive stock-sale program.[emphasis added]
He clearly knew what was coming–and his only thought was: how do I make sure my own wealth is covered by chasing in stock?
The man was a cancer.
Rather than serving out the rest of his days in prison, however, Mozilo will pay a fine–a large part of which will be paid by the shareholders of Countrywide!!!–and live the life of stupendous wealth–while most of his victims struggle to make ends meet.
Now, it is true that much of the anger bubbling up as anti-government rhetoric is laden with diatribes against “Obamacare” and “big government”. These are ideas that we must fight against.
But, a question worth asking is this: if regular people, who have been hurt deeply by the Mozilo-type scams, had been able to see CEOs like Mozilo led away in shackles, consigned to a future that every regular, non-insider person would face had they perpetrated a vast scam, would that have made a difference in the way people view who is fighting for them, and who isn’t?
Cutting deals with crooks and allowing them to not even admit their guilt simply exacerbates the deep feeling among people that something has gone deeply wrong in America.
And letting Mozilo off the hook is pretty vile proof that the people are right.

Follow Jonathan Tasini on Twitter:
www.twitter.com/jonathantasini

Source:www.huffingtonpost.com

In the end, Angelo Mozilo settled for pennies on the dollar.
The former Countrywide Financial Corp. chief agreed Friday to a settlement that requires him to pay 16 cents out of his own pocket for every dollar federal authorities claimed he had taken out of the company in ill-gotten personal gains.
Let’s do the math:
The government alleged that he added $141.7 million (before taxes) to his personal fortune through corporate misconduct.
Mozillo agreed to personally pay a $22.5 million fine — 16 percent of the alleged ill-gotten gains.
In addition, Mozillo agreed to turn over another $45 million to former Countrywide shareholders, who lost billions when the company’s stock price plummeted as loan defaults soared. But the $45 million won’t come out of Mozilo’s pocket. Under the terms of his employment contract, it will be paid instead by Countrywide’s insurers and by Bank of America, which bought Countrywide in 2008.
The government settled the civil fraud and insider trading allegations against Mozilo for less than it wanted because, one legal analyst said, it would have been a challenge to prove its case. “This is not a slam dunk,” Duke University law professor James D. Cox told The New York Times. “It’s a risky case and it’s got a lot of complexities to it.” Mozilo admitted no wrongdoing, and his lawyers were sure to have mounted a ferocious defense.
The Securities and Exchange Commission said the $22.5 million fine will be the largest penalty ever paid by a senior executive of a public company in an SEC settlement.
Too Easy?
But some observers wonder whether Mozilo got off easy.
David Callahan, author of the book, The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead, writes:
Countywide reaped huge profits — and, eventually, produced huge losses for its shareholders — through a high-wire strategy that focused on selling huge volumes of subprime loans and other risky products.
One of the ironies of Countrywide’s fall was that Mozilo had been hesitant, at first, to jump into the subprime market. As I write in my new book about the subprime debacle, The Monster, Mozilo and Countrywide eventually succumbed to the temptation to follow the example of Ameriquest Mortgage Co. and its billionaire owner, Roland Arnall, an entrepreneur who was in many ways the founding father of subprime.
Countrywide’s Size, Clout
Though Mozilo’s company came late to the party, once it was there, its size and clout deepened the pain that subprime visited upon home owners and the financial system. Countrywide did little to pull back on its subprime push, even in 2006, when there were signs of an impending crash. “You have to make a choice: to get out or not. And they stayed,” a longtime mortgage industry watcher told the Los Angeles Times. “It’s hard when you’re following someone off a cliff to know when to stop.”
In early 2008, Bank of America purchased Countrywide, once worth as much as $26 billion, for a fire-sale price of $4 billion.
Countrywide might have survived if its founder hadn’t become fixated on competing with Ameriquest, Muolo, the National Mortgage News editor, said. “If he hadn’t followed Roland Arnall down the subprime path this would never have happened,” Muolo said. “It’s ego and ambition that sunk him.”
Michael Hudson is a staff writer with the Center for Public Integrity and author of The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America — and Spawned a Global Crisis (Times Books, October 2010).

Follow Michael Hudson on Twitter:
www.twitter.com/michaelwhudson

Source:www.huffingtonpost.com

I read that Angelo R.Mozilo of Countrywide Financial fame is paying a $67.5 million fine of which Countrywide is paying $20 million. It reminds me of the old story that lawyers are wont to tell. A petty thief is charged with stealing a watch. He vehemently denies it. He is convicted and sentenced to probation. As he is walking out of court, he turns to his lawyer and says: “Does this mean that I can keep the watch?” I expect that Mr. Mozilo turned to his lawyer and asked: “Does this mean that I can keep the remaining $100 million?”
There is now talk of a foreclosure moratorium and a criminal investigation, because it appears that papers submitted in support of foreclosures have been submitted without verification or valid notarization. Let us start with the obvious. Foreclosure is a devastating event for anyone. Being forced to move from one’s home because of the inability to meet payments must be one of the most devastating experiences. However, the reaction to the foreclosure process seems to be a little overblown.
Whoever certifies or swears that a mortgage is in default undoubtedly relies on some computer printout indicating how much is due and how much has been paid. It is difficult to envision how there could be any independent verification, particularly since the mortgages have been bundled, resold and resold. Furthermore, foreclosures do not start with a forced sale of the premises. They are preceded by notices of default, threats, court papers, notices and numerous opportunities to object or defend. The foreclosures of the wrong house or paid mortgage are rare. Borrowers know whether or not they are in default. How much may be a matter of dispute, but not the fact of default.
I certainly do not want to appear as an advocate for mortgage foreclosures in these dire times, and I certainly do not intend to condone the use of false notarizations of signatures nor the submission of inaccurate information to obtain foreclosure judgments, but a moratorium may not be warranted and could make matters worse. If it serves to prompt mortgage holders to renegotiate loans and permit persons to remain in their homes it is a good thing. But if it permits persons to remain in their homes without paying or if it permits abandoned homes to remain unsaleable, it is a bad thing. Although foreclosures bring down surrounding property values, abandoned, unkempt and trashed houses do so likewise. Further, allowing millions of mortgages to continue without payment or foreclosure is certain to cause further economic disaster and possibly more bank failures.
Mortgage holders must strive for accuracy and honesty in foreclosure proceedings. Congress should not stoop to “touching up the X-rays” by making illegal notarizations easier to accomplish, an effort which President Obama pocket-vetoed. It is easy to feel no sympathy for the “evil” banks who granted mortgages to people who could not afford to maintain them. But a person who purchases an auto on time should not be able to keep it without keeping up the payments no matter what the sales pitch, and the same must be true for homeowners. While our hearts may cry out to those who are forced to lose their homes because of their inability to make payments, our economic (and legal) system will collapse if promises made are not required to be kept. If purchase money mortgages were involved (loans made by the seller to the purchaser) we would not hesitate to uphold the seller’s right to foreclose. It cannot be different, no matter how angry we are at the banks, because it is an institution rather than a person that holds the mortgage.
Maybe lenders convinced borrowers to take out mortgages they could not pay, or maybe borrowers took out mortgages they knew they could not afford. In either instance, absent a modification by agreement, the right to foreclose cannot be foreclosed. We should do everything humanly and economically possible to aid those who are in danger of losing their homes, but failing that, the dire and sad consequences of a foreclosure are inescapable. A promise is a promise even if made by the good guys to the bad guys.
In the meantime, the guy who stole the watch shouldn’t be allowed to keep it, except possibly in the company of some fellow inmates.

Source:www.huffingtonpost.com

Let’s say a business leader makes hundreds of millions of dollars through criminal practices that end up wiping out the wealth of myriad homeowners and contributing to the biggest economic crisis in 70 years. Then, as punishment, he is forced to fork over $67.5 million — and yet faces no prison time. Has justice been done?
Well, if you listen to the SEC — and plenty of media commentators, too — the settlement just reached with former Countrywide CEO Angelo Mozilo was tough stuff. It was reportedly among the largest fines ever imposed on an individual by the SEC. To be sure, $67.5 million is big money. Except in comparison to the fortune that Mozilo made presiding over one of the shadiest mortgage firms of all time — reportedly a half billion dollars. Time magazine didn’t just name Mozilo one of the “25 people to blame for the financial crisis,” it put him on the top of the list. Countrywide has been sued by nearly a dozen state attorney generals for its predatory lending practices. The company, now owned by Bank of America, has also been hit by a blizzard of other suits.
One reason that Mozilo got away with so much is that he effectively bribed numerous regulators and lawmakers, of both parties, with dirt cheap mortgages through his so-called “Friends of Angelo” program.
Ultimately, Mozilo wasn’t even nailed for his mortgage practices. They SEC got him for insider trading and securities fraud, alleging that Mozilo unloaded Countrywide’s stock on unwitting investors as the company began to tank — all the while saying that everything was fine.
As is common in these cases, Mozilo did not acknowledge any wrongdoing as part his settlement with the government. That outcome is reminiscent of how the corrupt financial analysts, Jack Grubman and Henry Blodget, were let off the hook. Both settled with regulators after playing key roles in the dotcom scandals of the 1990s. When those settlements were reached, many observers predicted — myself included — that the absence of any personal punishment for the analysts would encourage future greed and lawlessness.
Now the cycle is being repeated. It is hard to see how the Mozilo settlement will deter future wrongdoing. Indeed, it could have the contrary effect. If you can make a great fortune behaving badly, get busted, and still end up with most of that future, then you’ve come out way ahead. At least in financial terms.
In defense of the SEC, complex white-collar cases can be difficult to win at trial. Especially when the defendant can spend limitless amounts of money on the best legal team. And that truth, too, is well known among well-heeled criminals.
So in the end, here’s the calculus that might run through the mind of an executive considering breaking the law in order to make a huge fortune: First, they probably will never get investigated. But if they do get investigated, they probably will never go to trial. But if their case does come to court, they stand a decent chance of winning by hiring superior legal firepower. And even if they lose in court, their sentence may be short and they may still end up very wealthy. (See: Michael Milken).
None of this is to say that Angelo Mozilo doesn’t have regrets. Like many central figures in big financial scandals, he doesn’t seem like an especially bad guy. He grew up the son of a butcher and worked his way to the top of the mortgage business over many years. His intentions seemed noble at earlier points in his career, as he talked about making homes more affordable to low-income Americans. Mozilo also raised questions about Countrywide’s practices. As the New York Times describes,
In its complaint, the S.E.C. cited a series of e-mails written by Mr. Mozilo starting in 2006 that decried some of Countrywide’s lending practices even as the company’s executives publicly boasted about its high-quality loans.
“In all my years in the business, I have never seen a more toxic product,” Mr. Mozilo wrote in an April 17, 2006, e-mail to Mr. Sambol [his chief financial officer], referring to loans that allowed borrowers with poor credit histories to buy homes without putting any money down.
Mr. Mozilo also warned his colleagues about the dangers of a popular type of adjustable-rate mortgage that let borrowers pay a fraction of the typical monthly charge. In an April 2006 e-mail, Mr. Mozilo wrote that he had “personally observed a serious lack of compliance within our origination system as it relates to documentation and generally a deterioration in the quality of loans originated.”
And yet Mozilo let Countrywide’s subprime mortgage machine march on — ultimately to disaster. Mozilo’s story is yet more testimony to the seductive power of big money in an age of lax regulation. It would be nice to think that this age has come to a close. But Mozilo’s light punishment, with the clear message that crime pays, will help ensure that is not the case.

Source:www.huffingtonpost.com

Photo by Representational Pictures, Courtesy of Sony Pictures Classics
A new documentary that takes a deep dive into the events and people that caused the global financial collapse opens in Los Angeles this weekend. While it brought in about $42,000 in two theaters during its opening week in New York that may have something to do with its subject being about a home town industry — Wall Street. Will a film about finance resonate in the city of Angels?
After seeing screening of a new documentary, Inside Job, that uncovers how a group of “evil doers” tanked the system I think it’s a must see no matter where you live.
It’s a densely packed film that methodically lays out the, who, what, when and where of the ultimate bank job. “My first choice for a title was Bank Job, but that was taken,” said filmmaker, Charles Ferguson when we sat down to discuss his latest film.
Charles Ferguson, Director
Photo by Mariusz Cichon/Representational Pictures, Courtesy of Sony Pictures Classics
Ferguson’s film is not peopled with a group of charming rogues like The Lavender Hill Mob or sexy, populist, anti-heroes like Dillinger who held up one bank at a time. His characters are the pillars of Wall Street, the banks, analysts, ratings agencies, the regulators, and their lackeys in Congress and academia who together tunneled into the banking system and made off with all the loot. The response to this calamity was to engineer a shake down of taxpayers and depositors in order to fill the banks back up so this gang can do it again.
So far only one of the big players has been charged, the former CEO of Countrywide Financial, Angelo Mozilla. “He’s only being charged with civil fraud not criminal fraud,” said Ferguson.
Ferguson believes the Securities and Exchange Commission (SEC) zeroed in on Mozilla because what he did was “so egregious and he’s not connected.” Mozilla spent most of his career independent of the large financial institutions and brokerage houses. “Anyone else would be able to apply pressure,” from powerful friends.
That’s not to say others shouldn’t be doing the perp walk. “Many people knew this (the financial boom) was going to end badly,” said Ferguson, “and their financial behavior suggests that.”
At the same time they touted the shares of their firms they weren’t investing their own money in the companies. “They took out hundreds of millions of dollars, much of it in cash,” said Ferguson. These actions constitute, “potentially both civil and criminal fraud.”
There’s nothing stopping the SEC from going after these guys but, “for anything else to happen would be due to public pressure,” said Ferguson.
Flag New York Stock Exchange
Photo by Representational Pictures, Courtesy of Sony Pictures Classics
Right now the vocal pressure for reform, however misguided, is coming from the Tea Party whose members, the Republican Party hopes, will support its recently announced “Pledge to America.” This platform is what a friend used to call, “the same old sandwich,” a retread of the same policies that party stalwarts have championed for years — tax cuts, a spending freeze, rolling back health care reform, missile defense and a raid on Social Security as the prescription for what ails the country. There’s no mention in their manifesto of any financial regulatory reform let alone a call to lock up the malefactors who took down the system while lining their own pockets.
They also fail to point out that America’s financial system, once the world’s gold standard (no pun intended), is no longer trusted.
Wall Street news ticker
Photo by Representational Pictures, Courtesy of Sony Pictures Classics
“If you talk to people in Europe, Asia and Latin America, they don’t take seriously what America’s bankers have to say,” said Ferguson.
These countries, all with vibrant, growing economies are looking for other places to put their money besides Wall Street.
“It will reduce the amount of investments and will have an enormous impact on America. America’s impact is declining,” warned Ferguson.
This wasn’t the first time an economy has melted down. The world has experienced numerous financial crashes over the last several centuries, according to Carmen Reinhart and Kenneth Rogoff who took the long view in their book, This Time Is Different: Eight Centuries of Financial Folly. What they found was as far back as the 1300′s elements like rapid deregulation and real estate bubbles coupled with arrogance and ignorance were the sparks that set fire to an economy.
Ferguson agrees with the authors who say that these calamities can be avoided if politicians and regulators step in. “If we don’t fix this it’s going to happen again.”
It’s up to us to apply the pressure. First step. Go see Inside Job. Bring your friends and better yet, bring someone who doesn’t agree with you. Then see it again and bring some more people.
Then let your legislators know that you don’t want any silly, faux fixes you want them to really put some teeth in regulations. Demand someone like Elizabeth Warren be appointed at the SEC and at Treasury and that the ratings agencies be held accountable. And while you’re working yourself up into high umbrage tell them to appoint a special prosecutor and put some of the financial system arsonists behind bars. Nothing like the threat of serious jail time to shake things up in the Hamptons. It’s not going happen without you. Ferguson’s done his job, now it’s up to the rest of us.
Inside Job, narrated by actor Matt Damon, it opened on October 8th in New York and as we said, is reported to have taken in about $ 42,000 in two theaters over the weekend.
The film will open this Friday, Oct 15th in Los Angeles. Then rolls out to additional cities — Chicago, Boston, San Francisco staring Oct 22nd.
To track the financial collapse, follow these links on the Sony Classics website:

http://www.sonyclassics.com/insidejob/site/#/links

Follow Michael Rose on Twitter:
www.twitter.com/MichaellRose

Source:www.huffingtonpost.com