"Tell me about how you always tell the truth, Mr. Mozilo, and so wisely."
did not quite ask this particular question of Angelo Mozilo, the preternaturally tanned chairman and CEO of
, who is apparently on a barnstorming tour to scare the tuna fish out of the public about the economy.
The aim of the orange mortgage leader is apparently to ratchet up pressure on the
to help return his company to Good Time Charlie status by cutting interest rates to ribbons.
Damn the consequences to inflation, Mozilo wants the Fed to paper over the effects of years of goofball loans. He also seems to be setting the stage for some form of federal bailout.
Which is all his right, I suppose.
But while Mozilo goes on his one-man campaign of self-interest, the business media need to do a better job of pointing out his long trail of inconsistencies. You, the savvy investor, need to be aware of the sort of contradictory things he has said and done in the past, lest you take too seriously the things he is saying and doing right now.
Maria Bartiromo do
Thursday? When the subject of
Bank of America's
$2 billion investment came up, Maria's first reaction was to go warm and fuzzy, to flash back decades to when Mozilo and Countrywide got their very first, bouncing baby of a loan ... a $75,000 job.
Said Bartiromo, about how things have come full circle so beautifully: "This on a personal level must be incredible for you, this relationship..."
Aww. ... I could have sworn I even saw Mozilo blanch just a slightly paler shade of orange with surprise.
And though she did put him on the spot over the terms of the deal (Bank of America apparently didn't have the same case of the warm and fuzzies), the investor did not get the sense, which is needed in appraising such a high-profile man who is conjuring up images of the Great Depression, of whether he is full of it.
So let The Business Press Maven weigh in. Let me hold your hand through some rank inconsistencies, noticing how not everything adds up and he seems to want to have it both ways -- trumpeting doom, while holding out the prospect of immediate recovery. If a guy at his level is going to keep yelling "Great Depression" in a crowded theater, and the business media won't put his word to the test, I will. His level of historical analysis is subprime:
Mozilo is a man who was selling his stock in Countrywide as the company was catching a falling knife -- uh, buying back falling shares. In the past five years, he has exercised options and sold stock for hundreds of millions in profit. The pace quickened last fall.
Meanwhile, Countrywide itself was buying its atrophying stock back, a decision the man who all but willed Countrywide into existence called a group decision led by the financial dweebs in the company.
Remember how he exercised options and sold stock, quickening the pace last fall? Just recently, in speaking about this mortgage mess, Mozilo said: "Nobody saw this coming."
Also recently, when asked about whether Countrywide should have been more careful about lending to every chucklehead who asked, Mozilo, who runs the nation's biggest lender, shrugged at the prospect of setting any standards above mob psychology rule: "Our place in the industry would have changed dramatically because we would have arbitrarily made a decision that was contrary to what everything appeared to be -- values going up and no delinquencies, no foreclosures -- and we suddenly stop the music."
That strange quote got added meaning for The Business Press Maven after yesterday's CNBC interview. He is essentially saying that the proper function of a financial institution is not to anticipate. If there were no foreclosures yesterday, assume there will be none tomorrow. Yet on
, Mozilo criticized the Fed for reacting to what has "happened" in terms of financial data, not what is "happening." He said that Countrywide had a better bead on what was "happening."
As recently as March, Mozilo, now busy talking about the Depression and dropping little scare hints about no loans to lower income and minority populations, said the subprime worry was "clearly an overreaction." At the same time, he said the subprime issue was a great positive for Countrywide because "all irrational competitors will be gone."
And while Mozilo is throwing images of the Depression around, he is also saying that the housing market should stabilize in 2008 and recover in 2009. Some Great Depression environment, huh? Similarly, he was busy braying on CNBC about how he sees no "light at the end of the tunnel," while, in the next breath, noting that "something tomorrow can turn it around."
Look, Mozilo did not get to where he is by lacking the gift of blarney. All I'm saying is that the business media should be aware of it as they keep quoting him as a financial prognosticator. He is not. He is a self-interested operator with a history of inconsistent statements. Investors, just beware. And be aware.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.