Angelo Mozillo's Corporate Conduct

Back in the spring and summer of last year, Angelo Mozillo made several appearances on CNBC's morning program. At the time, he was viewed as a dynamic, informed and successful architect of the nation's largest independent mortgage lender.

The twenty-year price chart of Countrywide and the S&P500 Index nearby displays how well Mozillo managed to consistently create value for his shareholders during many of these years.

However, upon learning recently that he had formed a special "Friends of Angelo" group of influential industry executives and Senate members for whom he arranged sweetheart loans, my opinion of Mozillo has declined considerably.

The knowledge that past heads of Fannie Mae, as well as Democratic Senators Chris Dodd and Kent Conrad all knowingly received preferential loan terms from Mozillo's company clearly shows that the lender's CEO didn't want to leave his firm's fortunes to chance anymore.

He evidently bought Fannie Mae's allegiance to Countrywide, and its acceptance of the private-sector lender's low- and no-doc loans with bribes to the quasi-government loan packaging entity.

In the case of Senators Dodd and Conrad, Mozillo took care to buy the consent of two members of a key oversight committee to Countrywide's practices during the mortgage lending boom, and, even now, to the bailout of its worst loans during these challenging times for the industry.

It's hard to now view Mozillo as simply a hardworking CEO who built his firm from scratch and ran afoul of tough market conditions.

It's evident now that Mozillo must have known his firm was stoking growth via 'innovative,' a/k/a risky loans, for which he needed to grease some important institutional buyers and Senatorial overseers.

At this point, I hope Mozillo is charged with, and serves prison time for his actions. What he did, based on recently-disclosed evidence, is nothing less than bribery of business associates and government officials. I hope the executives and government office-holders who took the bribes, including Dodd, Conrad and Fannie Mae executives, are also charged, convicted and sentenced to serious hard time in prison for their misdeeds.

Ordinarily, I'm all for the market dispensing justice. But in this case, it appears Mozillo went far beyond what was ethical and legal in his operation of Countrywide. I hope he and those who collaborated with him all suffer for their betrayal of shareholder and public trust.