There's no way America's well-audited squeaky-clean financial system could come tumbling down, is there?

Just asking. But if it does,
you'll
know
who
to
blame

Will Countrywide Toxic Mortgage's Angelo Mozilo go to jail?

A) Yes
B) No
C) Not soon enough

Here's another couple of stinging exposes of The Orange One by Bloomberg and Krugman at the NY Times. Nice to see (again) the MSM catch up to HP. I especially liked the point that the damage caused by Mozilo to Americans (and foreign investors) is SIGNIFICANTLY worse than anything Ebbers or Lay did. SIGNIFICANTLY worse.

Note I'm short CFC via Oct puts.

Countrywide CEO sold big as stock dropped - Quick changes in Mozilo's trading plan raise red flags, experts say. The mortgage firm says the sales were in line with company policy.

As the mortgage industry swooned in late 2006 and 2007, Countrywide Financial Corp. Chief Executive Angelo Mozilo cashed in stock options valued at $138 million -- vastly expanding his wealth even as his shareholders watched their stock shrink in value.

"There is clearly no legal prohibition of altering your plan," said David Priebe, a Bay Area attorney who has helped set up more than 50 of such plans for executives. "But the more that you modify or add to your plan over a short period of time, the more risk that someone will call it into question. I would not say that you cannot do it. I would say there is a risk if you do do it."

And now here's Krugman highlights:

Enron’s Second Coming?

These days, of course, Mr. Mozilo doesn’t look like such a wonderful guy, after all. Instead, he’s starting to bring back memories of other people who used to be praised not just as great businessmen but as great human beings — people like Enron’s Ken Lay and WorldCom’s Bernie Ebbers.

So far, nobody has accused Mr. Mozilo of breaking the law. Still, what we’re learning from the housing mess is that the crisis of corporate governance, which made headlines in the early years of this decade, never went away.

Still, how can it be that so soon after Enron, WorldCom and other scandals rocked the business world, we’re once again hearing about executives cashing in just before their companies are revealed as less successful than advertised? The answer, of course, is that we never dealt properly with those scandals.

There is one big difference this time: the number of victims — misled borrowers, homeowners whose neighborhoods are being destroyed by foreclosures, investors who thought they were buying safe assets — is even larger.

Angelo Mozilo has sold $355,658,743 in Countrywide Mortgage stock, selling even as Countrywide was buying shares on the open market. Hmmmmm......

The worst part of Angelo's insider dumping is that while he was dumping, as CEO he directed the company to (get this) BUY CFC shares on the open market to keep the price propped up, under the guise that it was "in the best interest of shareholders" to buy back shares (using debt).

Uh, Angelo, bad news, but buying CFC shares on the open market was THE SINGLE WORST THING YOU COULD HAVE DONE FOR SHAREHOLDERS.

From the July 28 CFC call after being questioned on dumping while CFC was buying:

Angelo Mozilo: Yes, well, if you think like that it's -- I don't think like that. The buybacks were done because we thought it was in the best interest of shareholders.

The decision to buy back stock is a collective decision, really emanates from the financial operations of the Company as to what is the best return for the investment of the shareholders, invested capital for the shareholders. So it is totally unrelated to any of my issues relative to the sale of stock.


Disclaimer: F*ck yes I'm short CFC. Just like Angelo, I have no confidence in CFC's ability to continue as a going concern.

Open Thread: HP'ers let Ben Bernanke and the Fed know what's on your mind

And advice for Ben for Monday?

Cut 1/2?
Cut 1/4?
Hold?
Raise 1/4?
Quit?

HP's advice: Hold steady, and send this message to failed flippers, housing gamblers, reckless lenders, stupid builders, ramen eating realtors, immoral mortgage brokers and brain-dead bankers: We're done with bubbles. You made your bed, now sleep in it.

Fed Treads Moral Hazard

Wall Street has a dream: that the Federal Reserve will rescue financial markets with a sharp cut in interest rates.

Behind that dream lurks a problem, something financial people call moral hazard.

Moral hazard is an old economic concept with its roots in the insurance business. The idea goes like this: If you protect someone too well against an unwanted outcome, that person may behave recklessly. Someone who buys extensive liability insurance for his car may drive too fast because he feels financially protected.

Why is Countrywide possibly going bankrupt? Well, for starters, they're now have $2.5 BILLION in "Countrywide-Owned Homes" and growing

Here's three ugly charts - Mozilo 2007 stock dumping, CFC stock price last 90 days (I'm short CFC) and "Countrywide-Owned Home" inventory since January. Anyone see any trends?

Oh dear god, does Orangelo have a mess on his hands. Nice move dumping hundreds of millions in CFC shares before he ENRON'ed, eh? Here's the full list at Angelo's "Properties Owned by Countrywide" page.

Anyone wanna guess how many BILLIONS of dollars of taken-back homes Countrywide (and their partners and receivers) will end up with when it's all said and done? And anyone want to guess if CFC had to mark to market what these homes are REALLY worth today? Someone do us a favor and get a hold of Countrywide on one of these and see what % off they're willing to go!

Wow. Nice work Angelo. Great business ya got there. Sucker born every minute.

Hattips to themessthatgreenspanmade and countrywide-foreclosures for the data...

HousingPANIC's "Angelo Mozilo Stupid Quote of the Day"

``It was impossible to anticipate the credit crisis we've seen on a worldwide basis"

- Countrywide's Angelo Mozilo, after dumping $425,000,000 of CFC shares, either lying, or who must not have had access to HP, Contrarian Chronicles, Peter Schiff, Robert Shiller, The Economist or hundreds of other sources who predicted EXACTLY what we're seeing today.

(Yes, I'm short CFC, and thanks to an HP'er for the new Mozilo get-up!)

As housing prices suffer "sudden, severe and deep" depreciation, "ENRON 2.0" Countrywide Mortgage predictably melts down

Great expose on Countrywide (I'm short CFC) - one of the leading causes of the Late Great Housing Bubble, and soon to be one of the biggest victims (goodbye 61,000...).

Also, isn't it funny that Countrywide is crashing because, as they say, home prices are "depreciating like never before", with "sudden, severe and deep" depreciation, yet the reported median price is supposedly down just slightly?

In other words, Countrywide is now telling you what's really happening out there (now that Orangelo has sold his shares). The NAR and the US Government are not.

Countrywide's message of confidence turned to crisis - CEO forecast the lender would 'shine' as the industry changed. Later, he said the firm knew the bubble would burst.

A year ago, Countrywide Financial Corp. Chairman and Chief Executive Angelo R. Mozilo was boasting that the looming shakeout in home prices and hike in mortgage interest rates would usher in a period of remarkable prosperity for his company.

"I have 53 years of experience. . . and this is nothing compared to 25% prime and 17.5% mortgage rates and 10% unemployment," he told a conference of bond investors last September, pooh-poohing the effect of rising rates.

"This is when we shine," he said, calling Calabasas-based Countrywide "an industry leader" and "a role model to others in terms of responsible lending."

Today, the picture looks much different. Countrywide's financial reports and recent comments by Mozilo and other executives show that the company, the nation's largest mortgage lender, has been less a role model in the home-loan market than a prisoner of competitive trends.

The tone of executives' comments has gone from complacent to almost apocalyptic.

"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression," Mozilo said in a July 24 conference call with securities analysts.The company's traditional frames of reference for the performance of its loan portfolio, he added, may no longer be "a fair comparison in light of what is happening to real estate values."

But the "sudden and severe and deep deterioration" in home values has thrown many borrowers into delinquency because homeowners with little or no equity have been unable to refinance their mortgages to reduce their rates.

Anyone want to guess when Countrywide announces the mass layoff and a hundreds-of-millions of dollars "mark to market" balance sheet markdown?

Orangelo has dumped enough shares, and the cat's out of the bag, so now he's gotta be thinking Sarbanes Oxley, and staying out of jail.

So here comes the huge layoff (20,000?), office closures, and shocking cancer loan portfolio markdown (mark to market CFC auditors? anyone minding the store?)

I've got a feeling the news could be soon, real soon... and yes, I own CFC puts. Do you?

It was all an illusion. And the lenders and homebuilders have to do whatever they can do to keep the illusion going. Otherwise they stop going.

Cramer had an interesting point on his freak-out on Friday. He recommended that companies like Bear Stearns, who are obviously imploding, should just remain quiet

"Just keep your mouth shut during this period - don't say a thing" he said.

Some companies, like IndyMac and Countrywide, are trying the opposite tact - talking aggressively and confidently on how they're well-positioned for the downfall, how they'll gain share as all their competition goes belly-up, how they have great liquidity and funding and business models, blah blah blah.

In the case of Countrywide, that talk is actually corrupt, as their orange CEO desperately dumps $118 Million in shares as fast as he could while the company at his direction was buying back shares to try to hold the price up for him (unsuccessfully).

So why the lies? Why the aggressive spin?

Because they're scared. They're scared because they know that this whole Ponzi Scheme is now dominoing. And if they show any sign of trouble or weakness publicly, they can get American Home Mortgaged out of business right quick.

Then you have Loan Center of California, which is hilariously and stupidly trying to sue anyone who talk bad about them, or expose the truth.

In the end, none of their spin and blather will matter. Funding lines will get yanked. Toxic loans will get recalled. Market demand for buying junk loans is at zero. Business models will have gone kaput. And hundreds of thousands of REIC will be on the streets, box and plant in hand, unable to make their own mortgage payments.

It's over folks. It's all over. Don't listen to REIC lies. Don't listen to realtors on commission. Don't listen to the Investment Banks. Don't listen to homebuilders who call bottom. And especially don't listen to the liars at the NAR.

It's over.

And all of us here saw it coming. Almost all of us.

This quote pretty much speaks for itself

"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression"

-Angelo Mozilo, Countrywide Mortgage CEO, July 2007

FLASH: And today, for all the world to see (including the SEC), we see why Countrywide Mortgage's Angelo Mozilo was dumping shares like rotten oranges

I hope some of you were short Countrywide. HP'ers saw this car crash coming a mile away. Next up - IndyMac.

Yes, I'm short IMB and CFC, and it was all so obvious now. Mozilo is laughing all the way to the bank, but we all know you can't take your money to jail... Good luck Orange Man with the gotta-be-coming-soon SEC investigation.

Countrywide quarterly profit tumbles; shares off 7%
Subprime problems spread to top-rated mortgages, lender says

NEW YORK (MarketWatch) -- Countrywide Financial Corp. reported a 33% drop in second-quarter net income on Tuesday and signaled that problems in the subprime mortgage market have spread to the highest-quality home loans.

The warning pushed Countrywide shares down more than 7%, to their lowest level in almost two years. It also weighed on the broader stock market because investors have been waiting to see if credit problems in the subprime-mortgage sector would spill over into higher-rated, or "prime" home loans.

"The company incurred increased credit-related costs in the quarter, primarily related to its investments in prime home-equity loans," CEO Angelo Mozilo said in a press release detailing Countrywide's second-quarter financial results.

Countrywide's second-quarter net income fell 33% to $485 million, or 81 cents a share, down from $722 million, or $1.15 a share, earned a year earlier, on softening home prices.

Further dampening enthusiasm, Mozilo commented: "During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result."

Psst.. Hey buddy, want a Countrywide Mortgage Foreclosure? There's $2 Billion of 'em and counting! Get 'em while they're hot!

Check out countrywideforeclosures blog, and check out Mozilo's sickening amount of insider transactions.

Wow.

"Hey, Larry, this is a great new house! It wouldn't be a Countrywide ForeclosureTM would it? You lucky gun!"

Note: I'm short CFC now with put options. And for some weird reason, I have a hankering for an orange.

Psst.. Hey buddy - want some Countrywide shares?

Here's desperate insider sales transactions at heap-o-trouble Countrywide, look at just May and June alone

Amazing.

When it happens, if people say "we didn't see it coming" then they were simply blind.

It's coming.

I picked up 5 CFC Oct puts today for fun... Execs pleading guilty to insider trading, a desperate CEO dumping everything he has, and a business model that has gone kaput.

Wow - talk about telling it like it is. DR Horton CEO Donald Tomnitz: "2007 is going to suck, all 12 months of the calendar year"

You got Mozilo out there pumping Countrywide, when we all know what's about to happen there. You have Bob Toll talking bottom, and how he'll easily burn off his inventory and all will be fine in a few months. You have The Corrupt David Lereah, well, let's just forget his BS.

And then you have DR Horton's CEO. Oh, man, do you have DR Horton's CEO. I guess someone has read Sarbanes Oxley. I guess someone doesn't want to do jail time with all the others.

Bravo.

Bleak housing outlook for US firm

The boss of the largest US housebuilder has warned that his company's fortunes are likely to "suck" in 2007.

DR Horton chief executive Donald Tomnitz told investors that the weak US housing market would continue to hit home prices during the year.

"I don't want to be too sophisticated here, but '07 is going to suck, all 12 months of the calendar year," he said.

US housebuilders have been struggling with a glut of unsold new homes in the wake of a wider industry slowdown.

The number of new homes built in the US fell to a near-decade low in January, the US Commerce Department reported last month.

I don't think '08 is going to be a great year, but it's going to be much better than '07 Donald Tomnitz, DR Horton

Mr Tomnitz warned that DR Horton may have to make further write-offs to reflect the number of unsold homes and lower land values.

Anyone know what happened to iamfacingforeclosure.com & Casey Serin?

His website is down (again), and then there was this report yesterday in the MSM where young Casey might have been better off taking the fifth... It's almost like he's begging for a knock on the door. If he still has a door. Poor kid. Another innocent victim of Angelo Mozilo (OK, I made that last part up - funny though, no?)

Central Valley Man Poster Child Of Mortgage Crisis

(CBS 5) SACRAMENTO Casey Serin could be the poster child for a lot of what went wrong in the real estate market.

The 24-year old web site designer bought eight homes in four states with no money down on a $50,000 a year salary.

"It was too easy because you know stated income loans; they call them liar loans in the industry," Serin said. "A lot of them the income is pushed and people state more than they really make in order to be able to qualify."

Serin wanted to buy and renovate run down homes and sell them for a profit.

He manipulated the system again by getting money back on each a sale for repairs and mortgage payments.

Three percent cash back is the max by California law. But Serin always got more.

"I either had to do it under the table, so to speak," Serin said. "Direct side contract with the seller, or do it through a third seller."

The house of cards began to collapse in the fall of 2005. Since then, home foreclosures hit record high levels. And massive loses have forced two dozen lenders out of business and another dozen are in trouble.

"My goal from the start was to create a business out of it. A legitimate business, but unfortunately I made some mistakes with the way I run the loans," Serin said.

It's a mistake a lot of people made and its helping cripple the housing market.

Countrywide's Mozilo takes $140,000,000 off the top - and sends the CFO out to pump up the stock yesterday (so he can sell some more)

The sheer volume and brazenness of this insider selling at Countrywide is staggering. Nearly $600,000,000 in sales, and $73,000 in buys. No, that's not a misprint.

And in the middle of this historic subprime / lending meltdown, instead of coming clean like HSBC and announcing the size of the write-off, Mozilo sends the CFO out yesterday to pump up the stock (so he can sell some more), having him say "We're a top-conditioned athlete" and that they have no problems, unlike all their competitors that are going belly-up.

So, why is the top conditioned athlete selling everything he has then? If times are so rosy ahead, wouldn't he be buying or holding instead?

Note: I'm gleefully short CFC.

Wall Street Journal: How Countrywide CEO Wins Amid Mortgage Mayhem

If you're looking for a big winner in the subprime-mortgage meltdown, try Angelo Mozilo.

The take-no-prisoners chief executive of Countrywide Financial sold $140 million of his personal holdings of Countrywide's stock in the past 14 months -- before last week's news that the delinquency rate on his company's subprime mortgages was soaring.

Even so, he expects shareholders to be grateful.

Mr. Mozilo's company didn't lead the subprime race-to-the-bottom in recent years, during which mortgage companies offered ever-easier terms to ever-more questionable borrowers. But he didn't slam on the brakes, either.

As subprime lending implodes, Angelo Mozilo is selling Countrywide shares as fast as he can

While putting out reassuring words to the street, false rumors of a pending acquisition by BofA, and holding back any information about what's really going on with CFC's imploding portfolio (Sarbanes-Oxley anyone?), this guy is dumping his shares as fast as possible, while his stock, industry and country's financial system melts down

Ah, only in America folks. Only in America.

Here's his soothing words the other day, from one of the largest subprime lenders in the US:

Chief Executive Officer Angelo Mozilo said last month the company pulled back from subprime loans in 2006.

"If you look at our market share, we lost some for the first time in years, but it's all in the subprime area,'' he said in a Feb. 8 interview, adding the company holds only higher- quality prime loans at its bank. ``We were a dominant player, and now subprime is a pretty small portion of our business.''

And here's his trades just this year (note - I'm still gleefully short CFC)

2-Mar-07
46,000
CFC
Option Exercise at $9.60 per share. (Cost of $441,600)
2-Mar-07
46,000
CFC
Automatic Sale at $37.18 per share.(Proceeds of $1,710,280)
1-Mar-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
1-Mar-07
70,000
CFC
Automatic Sale at $37.10 per share.(Proceeds of $2,597,000)
28-Feb-07
46,000
CFC
Option Exercise at $9.60 per share. (Cost of $441,600)
28-Feb-07
46,000
CFC
Automatic Sale at $37.91 per share.(Proceeds of $1,743,859)
22-Feb-07
70,000
CFC
Automatic Sale at $40.45 per share.(Proceeds of $2,831,500)
21-Feb-07
46,000
CFC
Option Exercise at $9.60 per share. (Cost of $441,600)
21-Feb-07
46,000
CFC
Automatic Sale at $40.77 per share.(Proceeds of $1,875,420)
21-Feb-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
15-Feb-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
15-Feb-07
70,000
CFC
Automatic Sale at $41.88 per share.(Proceeds of $2,931,600)
13-Feb-07
46,000
CFC
Option Exercise at $9.60 per share. (Cost of $441,600)
13-Feb-07
46,000
CFC
Automatic Sale at $41.26 per share.(Proceeds of $1,897,960)
13-Feb-07
241,081
CFC
Acquisition (Non Open Market) at $0 per share.
12-Feb-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
12-Feb-07
70,000
CFC
Automatic Sale at $41.19 per share.(Proceeds of $2,883,300)
9-Feb-07
46,000
CFC
Option Exercise at $9.60 per share. (Cost of $441,600)
9-Feb-07
46,000
CFC
Automatic Sale at $43.69 per share.(Proceeds of $2,009,740)
8-Feb-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
8-Feb-07
70,000
CFC
Automatic Sale at $43.47 per share.(Proceeds of $3,042,900)
5-Feb-07
46,000
CFC
Option Exercise at $9.60 per share. (Cost of $441,600)
5-Feb-07
46,000
CFC
Automatic Sale at $44.61 per share.(Proceeds of $2,052,060)
2-Feb-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
2-Feb-07
70,000
CFC
Automatic Sale at $44.52 per share.(Proceeds of $3,116,400)
26-Jan-07
23,000
CFC
Option Exercise at $9.60 per share. (Cost of $220,800)
26-Jan-07
23,000
CFC
Automatic Sale at $40.40 per share.(Proceeds of $929,200)
24-Jan-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
24-Jan-07
70,000
CFC
Automatic Sale at $41.65 per share.(Proceeds of $2,915,500)
22-Jan-07
23,000
CFC
Option Exercise at $9.60 per share. (Cost of $220,800)
22-Jan-07
23,000
CFC
Automatic Sale at $41.27 per share.(Proceeds of $949,210)
19-Jan-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
19-Jan-07
70,000
CFC
Automatic Sale at $41.24 per share.(Proceeds of $2,886,800)
18-Jan-07
23,000
CFC
Option Exercise at $9.60 per share. (Cost of $220,800)
18-Jan-07
23,000
CFC
Automatic Sale at $40.35 per share.(Proceeds of $928,050)
11-Jan-07
23,000
CFC
Option Exercise at $9.60 per share. (Cost of $220,800)
11-Jan-07
23,000
CFC
Automatic Sale at $42.18 per share.(Proceeds of $970,140)
10-Jan-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
10-Jan-07
70,000
CFC
Automatic Sale at $42.12 per share.(Proceeds of $2,948,400)
8-Jan-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
8-Jan-07
70,000
CFC
Automatic Sale at $42.05 per share.(Proceeds of $2,943,500)
5-Jan-07
23,000
CFC
Option Exercise at $9.60 per share. (Cost of $220,800)
5-Jan-07
23,000
CFC
Automatic Sale at $42.37 per share.(Proceeds of $974,509)
4-Jan-07
70,000
CFC
Option Exercise at $9.60 per share. (Cost of $672,000)
4-Jan-07
70,000
CFC
Automatic Sale at $42.22 per share.(Proceeds of $2,955,400)