Angelo Mozilo, slated to step down as chief executive of Countrywide Financial Corp. on Tuesday, is departing with a devalued reputation partly because he stayed too long and at times ran the publicly traded mortgage lender as if it were his own company.I think this acquisition will hurt Bank of America over the next few years, but if you look out five years or more, Bank of America may dominate America's mortgage industry.
Bank of America Corp. plans to complete its acquisition of Countrywide on Tuesday, and the 69-year-old Mr. Mozilo will retire. Bank of America will become the nation's biggest home-mortgage lender, using Countrywide's loan-processing technology and nationwide presence—but not its brand, which is scheduled to vanish after a transition period.
Until about a year ago, Mr. Mozilo was little known outside his industry. In the mortgage world, he was considered a visionary. He helped found Countrywide in 1969 and built it into the nation's biggest and most efficient mortgage lender. Then came an abrupt fall as defaults surged and investors lost confidence.
Countrywide's reaction to the crisis was to push for more market share in the first half of 2007, aiming to benefit from the collapse of rivals. That backfired when Countrywide could no longer find buyers for many of the loans it had originated, leaving the company stuck with billions of dollars of high-risk mortgages. Former executives say Countrywide, which still accounts for about one in every seven home loans made in the U.S., was so focused on increasing volume that it neglected quality control.
Mr. Mozilo made things worse for himself by postponing his retirement and by making frequent, heavy sales of Countrywide stock. He offered discounts on loans to friends so frequently that FOA—for Friends of Angelo—became a familiar loan type among employees.
If you'd like to wish Angelo Mozilo a fond farewell, you may do so in the comments.
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