Saturday, November 24, 2007

A view from the soapbox

According to the NY Post, "...late October, when Countrywide CEO Angelo Mozilo said he expected the fourth quarter to be profitable - comments that drove the stock up to $17.11 the next day. But over the last few weeks, investors have begun to believe that Mozilo's pledge could be tough to achieve as Countrywide's mortgage organizations fall and the available capital to fund new mortgages shrinks...The mortgage giant's stock is now trading at nearly half the $18 conversion price for the $2 billion of preferred stock that Bank of America bought back in August. Shares closed at $9.65 [11/23/07]."

And Bloomberg reports on 10/31/07 that "Countrywide Financial Corp. shareholders sued Chief Executive Officer Angelo Mozilo and 19 other company officers and directors, claiming a stock buyback program allowed them to sell shares at inflated prices.
The defendants sold $842 million in company stock while issuing false and misleading statements about the financial health of Countrywide, the biggest U.S. mortgage lender, the New England Teamsters and Trucking Industry Pension Fund alleged in a complaint filed Oct. 29 in Los Angeles Superior Court...Mozilo and the other ``defendants caused Countrywide to engage in unlawful business practices and to disseminate false and misleading statements to the public while simultaneously using more than $2 billion of Countrywide's assets to prop up the price of Countrywide stock via a share repurchase plan,'' the pension fund said in the complaint.
The fund accuses the company's officials of insider selling and breach of their fiduciary duty to both the company and shareholders. They seek unspecified damages."

I know this is a story that many will skip over... But this thing stinks like Enron. I remember the videos and news alerts from Ken Lay saying that Enron was in good standing. All the while, he was selling his Enron stocks while he convinced the suckers to keep their shares. This sounds just like what Mozilo may be doing. I am not saying that Countrywide is a repeat of the Enron scandal and implosion... But these sound so much alike. My feelings for Countrywide went negative as soon as I saw a story on ABCNews about how the company promised those victimized by Katrina could skip some mortgage payments. These customers were sent a letter telling them that they could focus their attention on the effects of the hurricane, and they wouldn't be forced to pay any penalties. The company then reneged on its promise and demanded backpayments from these customers or they would loose their home. The Countrywide twerps forced the people who wanted to keep their homes to take out loans to pay these charges. Luckily, one couple recorded phone conversations with a Countrywide rep who felt bad for the customer and admitted what happen over the phone. I am searching for this story on ABC and I will post the link once I find it. When and if Countrywide goes the route of Enron, then "all hell will hit the fan." Greed once again is going to suck some good people down. And I doubt that Bank of America will ever see any of its $2 Billion again. Even the Australians have an opinion of this...

8 comments:

--Bamboo Blitz-- said...

Oh God, all we need is another Ken Lay. If Mozilo is playing a similar game, hopefully he doesn't embezzle fake cashfrom employee stock portfolios...The whole Enron scandal was just so devastating for all those employees...

The All Seeing Eye said...

You're so right, Bamboo Blitz. Something smells fishy...

dean said...

TJ,

Thanks for the visit over at deansguide. We agree to disagree on the JFK assassination.

I agree with your comparison of Countrywide to Enron-it does stink!

If you want some more of that smell check out the Ed Okun 1031 Tax Group rip off. This guy stole $150 million from mom and pop investors who were trying to execute 1031 exchanges. It is a very sleazy story with a cast of like characters.

dean

The All Seeing Eye said...

Thanks for your comment, Dean. If you ever get the chance, then please try to see that special from the Hitory Channel. And I do have bad feelings about CountryWide... We will see what happens this week.

Debo Hobo said...

All of this is above my head, but I like the view from the soapbox forum. Will this be a regular feature?

Anonymous said...

I just heard that Countrywide management has asked its attorney's to research the bankruptcy angle. One of their attorneys let the cat out of the bag when talking to an attorney friend.

The All Seeing Eye said...

Debo Hobo, thanks for your comments. As for whether "the view from the soapbox" will be a regular feature, I am not sure. I cannot predict what news story will get my mind to connect the dots... But trust me, I will speak from the "soapbox" as soon as a story grabs my attention like this one did.

The All Seeing Eye said...

Thanks for your comments, anonymous. The smell sure is beginning to stink...