Mozilo: 'No one predicted' current housing bust

Today is Angelo Mozilo's special day to talk to Congress about his paycheck and his company and his unique view of current events. His prepared remarks are here, and this is how CNN/Money is covering the hearing so far:

"Two high-profile former Wall Street CEOs and the head of the nation's largest home lender defended their oversized pay packages to congressional lawmakers Friday, arguing that recent reports grossly exaggerated their compensation in some instances.  'In short, as our company did well, I did well,' Countrywide's Angelo Mozilo (pictured) said."

What struck me in reading Mozillo's prepared testimony was not the stuff about compensation, but his account of the current housing mess: "The problem that we face today was unanticipated and is much more severe than any cycle in the past. ... It bears noting that no one predicted the severity and force of the housing downturn that followed."

Wow. Angelo. What color is the sky in your world? On the planet where I live (nice blue sky today), all manner of people have been predicting a housing crash for years. Lots of them even wrote down their predictions on things called blogs. Have you ever heard of an economist in L.A. named Christopher Thornberg? Books like "Sell Now! The End of the Housing Bubble"? Blogs like Patrick.net?

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Associated Press

Comments

[Lou]

Mozillo just basically admitted that all the execs at Countrywide are mentally retarded.

[areles]

Any man with a fake tan that dark deserves to be flogged, regardless of what nonsense is spilling out of his mouth.

And this, this is nonsense. Obviously.

All the phoney baloney "oh noez we didn't see it coming" bears a striking and uncanny resemblance to "what? no WMDs?" and "what? Hussein didn't take down the towers?"

The housing bubble and subsequent crash was obvious from 2003, just like the dot.com crash was obvious from 1998, just like the outcome of this mess of a war was obvious from 2002.

If I could see it coming, you damn well know the industry did.

Hoping the bubble doesn't burst is not the same thing as not seeing it coming. I am fed up to here with all these lies, and with the lemmings who gobble them up.

If we were Mexico or China, we would've taken to the streets already.

[Jim in San Diego]

Would you expect Mozilo to admit this was foreseeable? Of course not. He has a fortune to protect and a lifestyle that would be crimped by a stint at Club Fed.

I expect any public utterances by Mr. Mozilo will be thoroughly vetted by $500 per hour types.

[Drew]

No one "predicted" the housing downturn.

Just as no one could have "predicted" the 9/11 attacks.

Perhaps we need people in positions of power in business and government that have just a bit more foresight.

[JohnnyB]

Con Artist

A bag of gold and a bag of rice
Both were sold at the same marked price
The merchant told me with the waves of his hands
That gold was of high value in distant lands

I could buy it here from him and now
Then travel afar somehow
And try to sell what I was sold
To learn from him the truth be told

But rice was what I needed and valued
Not some believes that greed has fueled
So I bought the rice with what I had
And dismissed that gold was just in fad

He scolded me for being a fool
Saying “what have you learned in school?”
And offered me a lower price for his gold
In hope that his words could be sold

But I was no fool, I said to him
I recognized friends and foes per diem
With that I went on my way
This argument I saved for another day

Apollo GT

[toby]

Did Mozilo work for the Tobacco Industry?

No? Well he has a bright future with them then.

[Joshua Reyes]

How absurd! Is this guy stuck in the 50's?!

[Cal]

"What color is the sky in your world?"

I'm guessing everything in Angelo''s world is tinted orange. Don't know why ;-)

Well I didn't predict the housing bust, I had a good down, great job and all the recipe to buy. But I didn't understand the market, I learned from 2000 to not participate in a market I didn't understand. So in early 2006 instead of buying, I started learning. I'll have to admit the data I was looking at didn't fit the market place as I was seeing it (the lenders were granting so many exceptions to guidelines, that was the hidden variable) but since I didn't understand it I chose to wait. Early 2007 everything started making a lot more sense.

Now I have a much better feel for what is going on I have a green light to buy in that regard but the data is clearly showing that waiting is the smarter strategy. I might try and cherry pick something along the way but it is really looking like late-2009 and beyond before the effects of having to deal with reality moves the market back into any semblance of normalcy in regards to pricing.

[lefty]

hey guys, this is even better than a sale at neiman-marcus! make some offers in fantastic metro L.A. today, where the sun and the stars play!! then have a nice espresso, good luck everybody!

[phil]

"In short, as our company did well, I did well"

You gambled. Period. You won, then you lost.
In Las Vegas, when you lose, you return what you won.

[Dharma of the Desert]

Any man who insists that all of the window coverings on company windows must be closed at the same height knows only too well that what was going on in the mortgage banking industry. Wasn't he around in the 90's when this happened before? I was an underwriter in on of this Sub Prime Divisions. Along with higher interest rates, the customer had to pay outrageous fees that should be illegal.. Mr. M is definetly the "Ken Lay" of the Industry. He has no shame and is laughing all the way to the bank.

[Guido]

Looks like someone got a little too much sun. It must be making him dizzy, clouding his thought process to the point of oblivion.
No, seriously this is a bold face lie. This whole mess stinks from the top down to the fools who bought $1 mil houses on a $100k a year salary.

[TrojanDLA]

LOL just like when Vanilla Ice was asked, "Don't you think your song 'Ice Ice Baby' bears a striking resemblance to Queen's 'Under Pressure'?" His response was: "They're totally different, totally."

The disingenuous nature of Mozilio's response insults the intelligence of every American.

[IToldu2CashOut]

I feel bad for this guy. He didn't know. Someone in the government please please cut him a check for a few billion dollars.

If we the tax payers of the United States can't take care of the mentally retarded billionaires who will?

[CD]

Good call Peter. Thank god for Patrick.net, I owe my life to that guy....He was laughed out of town when he predicted this mess. They also do not believe we are in a recession. What recession????
I read Nouriel Roubini last night.He just came back from Dubai.....Bad news. Spent $200 at the market this morning and got nothing in my basket....
I am very worried.

[smtula]

I'm quite confident that Mr. Mozillo went to DC well prepared to: (1) not just wash off his hands using the ignorance claim BUT to (2) make sure that you and I will pay for his company's mistakes through a government bailout. His line is simple. The bursting housing bubble is like an earthquake, nobody can be blamed for it, so Congress should dip into pockets of taxpayers, so that unscrupulous overlending can go on. This way we ensure that he always gets paid a lot whether it’s the taxpayers or homeowners who have to come with $$$ to support his ambitions. 'Too big to fail' is what he was telling himself while on a plane to DC. We just can kick back and watch how he talks Congress into using our money to clean up the mess that the likes of Mr. Mozillo created. We’ll be doing this while sitting in houses that we overpaid for thanks to cheap financing that flooded out of Countrywide in the last several years.

[campechano]

I applaud Waxman and other democratic members of Congress for at the very least atempting to hold these people accountable. Shame on them. This ISNT Latin America, this is the United States of America and we want JUSTICE. Make these people pay...on whatver grounds...

[G-mann]

A. Mozilo likes pin striped suits and fancy suites. I say the FEDS aught to reserve a suite for him at club fed and give him a special tailored striped suit. Seriously: He stripped his company of its assets and stole the value of the company from the investors as he screwed the home buyers with over weighted mortgages! I hope the Feds get him before he flees to his castle in Switzerland!

[vultur]

>>.. It bears noting that no one predicted the severity and force of the housing downturn that followed."<<

This is what I read:

.. It bears noting that no one [without a personal vested interest in the value of the mortgages being written who was unaccountable for the ridiculous underwriting standards and who generated enormous fees, commissions and short term profits for their company that resulted in outrageous bonuses that all but ate away at any retained earnings and basically bankrupted the company for future years when the market would return to normal] predicted the severity and force of the housing downturn that followed."

[bode]

All I will note is that much more money appears to have been lost in this crisis than made. That tells me that the crisis has exceeded expectations significantly. Investment banks don't hire dumb people to ignore risks and lose the company's money. It's easy to armchair quarterback it right now -- I just want to know how many people shorted Thornburg Mortgage last week and just made a 10x return in 5 days? Obvious is only easy in hindsight with a bubble.

[CC]

If what he said was true, it confirms my belief that stupid people can do more damages than crooks.

[KenyLayinHel]

Who said Ken Lay was dead??? He just changed his name to Mozilo!

"I Know nuthin, nuthing!!!!"

Who could have predicted that the housing market would tank when only 15% of the population in Metro CA can afford to buy???

I mean, I never saw this coming!! You're telling me that house in South Central ain't worth $800k? But it sold for $800k in 2005 and then $900k in 2006!

[Desmo]

Don't you think your song 'Ice Ice Baby' bears a striking resemblance to Queen's 'Under Pressure'

That song was from David Bowie.

Let's see I sold my house (Valencia) in October 2005 and have rented since. I was shocked prices fell after that including on my old house (20% so far), shocked I tell ya........

[ItJustCameOutOfTheBlue]

"No one predicted' - my ass!!!

Maybe Tangelo Mozilla should have tried reading Housing Panic or the thousands of other housing blogs on the web, or tried listening to some economists like Peter Schiff or maybe read one of Ron Paul's books?!!!

Plenty of people predicted this mess it's just that it wasn't the so called experts and media pundits or the worshipped Fed chairmen Greenspan and Bernanke.

[bottom line]

I thought "The Creature From the Black Lagoon" had passed away recently?