October 16, 2010 / 12:00 AM / 9 years ago

Angelo Mozilo: From housing hero to subprime foe

LOS ANGELES (Reuters) - Few in the U.S. business world can claim to have risen so far, then fallen so quickly as Angelo Mozilo.

Former Countrywide Financial Corp Chief Executive Angelo Mozilo testifies before the House Committee on Oversight and Government Reform on Capitol Hill in Washington in this March 7, 2008 file photo. REUTERS/Kevin Lamarque/Files

The former head of mortgage lender Countrywide Financial was once among America’s best-paid CEOs. But on Friday, he agreed to settle fraud charges with the U.S. Securities and Exchange Commission that will see him pay a record $67.5 million fine — the highest ever for an executive of a public company.

The son of a Bronx butcher who embodied a rags-to-riches success story, Mozilo became the burned face of the mortgage meltdown when the subprime crisis surfaced in 2007.

Mozilo was dubbed “Tangelo” by the business media because of his rich tan. He also sported a flamboyant wardrobe and earned a reputation for aggressive risk-taking as he built Countrywide Financial into the top U.S. home lender.

A golf enthusiast, Mozilo’s compensation package with Countrywide at one point included payment of his annual dues at three country clubs, including one near his home at the Sherwood Country Club in Thousand Oaks, California.

Born in 1938 to Italian immigrants and raised in the Bronx in New York City, Mozilo evangelized home ownership for everyone. His philosophy paid off for himself and Countrywide.

In 2007, Mozilo took in $121.5 million from exercising Countrywide stock options and was awarded another $22.1 million of compensation.

Forbes magazine in 2006 ranked Mozilo the 10th highest paid chief executive, with total compensation of $68.95 million.

But Mozilo lost his aura as Countrywide Financial’s role in the subprime mortgage crisis was exposed.

In 2006, at the height of its success, Countrywide originated $461 billion worth of loans — close to $41 billion of which were subprime. Subprime loans poisoned the U.S. mortgage market, and Countrywide’s own finances.

Last July, Bank of America Corp bought Countrywide for $2.5 billion, less than 10 percent of what the company was worth in early 2007. Ten months later, Bank of America scrapped the Countrywide name.

And U.S. regulators accused Mozilo of making more than $139 million in profits in 2006 and 2007 by exercising 5.1 million Countrywide stock options and selling the underlying shares.

The sales were under four prearranged stock trading plans Mozilo prepared during the period, the SEC said in the lawsuit.

Last year, the business magazine Conde Nast Portfolio named Mozilo the second worst U.S. chief executive of all time, behind Dick Fuld, the former head of Lehman Brothers.

It was a stunning fall for an someone who as recently as 2007 was ranked among America’s best CEOs by weekly financial newspaper Barron’s.

Mozilo also took heat for what was known inside Countrywide as the “Friends of Angelo” loan program, which granted favorable mortgages to political officials and others including former CEOs of housing finance giant Fannie Mae.

But even at the height of the crisis, Mozilo did his best to deflect blame.

In 2008, with the housing market in a shambles, he told executives at a mortgage bankers’ conference, “You’ve got to be careful here about blaming ourselves too much.”

The real culprits, he argued, were the Federal Reserve raising interest rates for too long, crooked real estate speculators, falling housing prices and regulators’ attacks on interest-only and other risky subprime mortgages.

Reporting by Alex Dobuzinskis: Editing by Richard Chang

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