Ego and Ambition Got in the Way

We were just speaking about Angelo Mazilo, former Chairman of Countrywide, and darned if I didn't finally get around today to reading a recent profile about him in The Los Angeles Times, a newspaper that, according the article, Mazilo loathes. Buried toward the latter part of that article is one of the best observations I've seen yet about mortgage bankers who may not have been outright crooks, but were something else that doesn't engender admiration.

As the bubble inflated, competition intensified and lending standards grew ever more lax, Mozilo denounced what he characterized as competitors' recklessness but said his firm would continue to compete with them and put them out of business. "I've been doing this for 53 years, and I've never seen that situation sustained," Mozilo said during a February 2006 conference call, condemning as "irresponsible" his subprime rivals, New Century Financial Corp. and Ameriquest Mortgage Co. "Eventually they gag on it."

Although it lasted longer than the pure subprime companies, Countrywide nearly followed them into oblivion before BofA tossed out its $4-billion takeover lifeline last year.

"You have to make a choice -- to get out or not. And they stayed," said Cecala of Inside Mortgage Finance. "It's hard when you're following someone off a cliff to know when to stop."

Certainly, most lemmings know exactly when to stop: when they hit the ocean surface at the bottom of the cliff accelerating at 32 feet-per-second and drown.

After citing some Monday morning quarterbacks (which, as a blogger, I understand is an occupational requirement of all sound-bite donors) to the effect that Mozilo was kept in check by some powerful, more cautious, cohorts until 2006, when heir-apparent and risk-checker Stanford Kurland departed because Mozilo reneged on an earlier promise to retire and hand Stan the reigns, the article concludes with a line that could apply to many a bloated ego masquerading as genius in a land where any mama's baby boy can amass wealth beyond the dreams of Croesus and then blow it all on crack, hookers, and an Option/ARM: ""Angelo was the most charismatic leader I have ever seen," Flamholtz said. "If he had left as planned he would have gone out in a blaze of glory, but ego and ambition got in the way."

Amen.