In addition to victimizing trusting borrowers, Countrywide also caused its investors to fall prey to some pretty shady schemes; these investors were unaware how much risk they were taking on and bought mortgages directly and indirectly from Countrywide.
And Countrywide’s shareholders were used as well--the shareholders’ money was used to buy back its own stock. And Mr. Mozilow unloaded $138 million of countrywide stock between November, 2006 and August, 2007 – and this was during the months before investors became fully aware of the extent to which Countrywide would be hurt by the subprime mortgage crisis.
This was a betrayal of trust. Executives who cash in just before the company is revealed as failing, have misled borrowers and stockholders alike. Just like Enron. The numbers of victims might be different though. The misled borrowers, homeowners who thought they had a home for life, investors who believed their asset was safe - is even larger.
When we ask, where is the public outcry against such betrayers, we learn that all the relevant Congressional committees are run by those who speak for corporate insiders. The story fades from the news. Malfeasance goes unpunished. CEO paychecks skyrocket.
Malfeasance is encouraged again. The illusion of success shines brightly in the eyes of the public—and a few get rich on the backs of the rest.
Of course, the entire foreclosure problem is much more complicated. Alan Greenspan, the guru of economics whose words are regarded by so many as gospel, assured us that there was no national housing bubble. But people are not going to be fooled forever.
When markets are left to themselves; when regulation is not enforced or non-existent; the markets don’t work to provide the best outcomes for consumers, shareholders or the country. This isn’t a matter of ideology, folks. I don’t buy the idea that market intervention is a form of socialism. The housing industry needs some reasonable regulation and the laws need to be enforced. |
