Mozilo unbowed says Countrywide was 'world-class company'
Countrywide Financial Corp. co-founder Angelo Mozilo said under oath last year that he had "no regrets" about how he ran the mortgage firm and that he only agreed to a record $67.5 million regulatory settlement in 2010 to protect his children.
Mozilo, who led the lender blamed by lawmakers and regulators for contributing to the housing collapse, said in a June 2011 deposition as part of a lawsuit between his firm, which was bought by Bank of America Corp., and MBIA Inc., according to documents filed this week in state court in New York. MBIA, once the biggest bond insurer, claims Countrywide committed fraud by securitizing loans that were riskier than promised.
The crisis was "not caused by an act of Countrywide," said Mozilo, 73, according to a transcript of the deposition. "This is all about an unprecedented, cataclysmic situation, unprecedented in the history of this country. Values in this country dropped by 50 percent."
Bank of America, the second-biggest U.S. bank by assets, has spent more than $40 billion to clean up mortgages inherited from the 2008 Countrywide purchase. Congressional investigators released emails from Mozilo, the Countrywide chief executive officer, showing that as early as 2004 he was concerned about the decline in quality of mortgages the lender was originating.
Mozilo was responding to questions from an MBIA attorney who asked if he regretted how Countrywide was run after "all the foreclosures and ruined lives and lawsuits." Mozilo called the lawyer's question "nonsensical and insulting."
"I have no regrets about how Countrywide was run," Mozilo said. "We were a world-class company in every respect."
Mozilo sought to defend his company's role in the mortgage mess even before the U.S. housing market showed signs of recovery from the bursting of the housing bubble.
The firm only made loans that it was confident would be repaid, Mozilo said. Countrywide was the third-largest subprime lender in 2006, with about $40.6 billion in the mortgages, compared with $44.6 billion in 2005, according to data from Inside Mortgage Finance.
"We never made a loan knowingly and it would be stupid to do so that we knew the borrower could not pay. Never," Mozilo said. "All our loans had that one standard from 1968 to the end of my rein at Countrywide."
While publicly reassuring investors about the quality of his loans, Mozilo issued "dire" internal warnings and engaged in insider trading accelerating stock sales to reap about $140 million, the U.S. Securities and Exchange Commission alleged in a 2009 lawsuit. In one email, he described a "particularly profitable subprime product as 'toxic.'" He also wrote that Countrywide was "flying blind" and had "no way" to determine the risks of some adjustable-rate mortgages, the SEC said.