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

[Dave]

What a bunch of crap, didn't see it coming. Isn't that what they pay you that 7 figure salary for, to anticipate what the market will do and steer your company so it doesn't crump? Isn't that the first rule of management?

A bigger bunch of crap is when Bush says, we anticipated the recession and passed a stimulus package 3 weeks ago. THREE WEEKS? Again, you and people in Congress should have been monitoring this problem starting FIVE YEARS ago. Isn't that what your job is, seeing where the economy is headed and guiding it so it doesn't crump?

[boz skaggs]

They all knew.

According to one of the congressmen today in th hearing, one of Countrywide's pools of mortgages from 2006 had a default rate of 18% on the very first payment!!! Meaning that of that investment grade rated pool of assets sold to insurance companies, 1 in 5 borrowers failed to even make the very first payment!!!

How in the world wasn't this front page news?

If nothing else, it makes it extremely easy to understand why the market for these pools dried up before the media caught on. It also makes it easy to believe that the banks are in FAR WORSE SHAPE than the market understands.

[joe]

My wife works for Countrywide great programs still and a strong company after aquisition. I have no problems with Mozilo wife is making high six figures. The market will come back in a few years and all will be well again.

[Sweetie Pie]

My spouse worked for Angelo Mozillo. When the sub-primes were being touted as the Next Big Thing, he registered his displeasure every chance he got. He came home from work telling me he thought sub-primes were a BAD IDEA. For his trouble, his review referred to him as 'not a team player.' After the first round of job cuts he was let go. Angelo Mozillo is shocked, shocked about the housing market taking a dive. He's still collecting his winnings.

[areles]

"Obvious is only easy in hindsight with a bubble."

I could not disagree more strongly with this. It was obvious from the beginning, and I've been saying as much for years.

Houses do NOT appreciate in the double digits year over year. Period. If they do, it's a bubble. And bubbles deflate. There's no way they CAN'T deflate.

You don't have to have anything more than a functioning brain stem to see that.

[LookItUp]

Hey Desmo and TrojanDLA, you're both right.

From allmusic.com:

"Memorably (for some) reinterpreted ten years after the fact as Vanilla Ice's breakout single "Ice Ice Baby," "Under Pressure" found two contemporaries -- David Bowie and Queen -- collaborating for the first and only time on a great one-off single."

[LEO]

I can see that all of all the above was written by very smart people, but let me put my two cents, I'm an uneducated person but when I saw people getting overpriced houses with no income verification, no down payment and no credit I knew exactly what would happen, as far as what is going on now, is just a farce. nobody will be punished, I just hope that we taxpayer will not have to pay for all this mess.

[Bob]

I did....for the last ten to fifteen years I could see it coming....I didn't need an economics degree to see it coming..,it was obvious...Housing prices....continually prodded upward by selfish realtors and mortgage bankers...I mean how much higher could the price of a home go up before the balloon busts....across the board...
You don't have to be a genius either to see that we are headed for a DEPRESSION...not a recession...A DEPRESSION...
Check back with me in a few years...when your in a soup kitchen line wondering how it all happened.

[NoWayinLA]

"No one predicted"? I didn't realize "No One" was such a popular name. I must have spoken to at least a half dozen No Ones in the last couple of years.

[Cal]

Hilarious, reading Mozilo speech he wraps himself in the flag and lets everyone know the Countrywide was leading the charge to get African Americans and Latinos into homes.

Then switching to Housing Wire:
"The Illinois probe follows a Chicago Reporter study released earlier in the week that found that the Chicago area led the country in high-cost home loans, for the second year in a row. The study also said it found marked disparities in loan pricing between white and non-white borrowers, with African American borrowers three times as likely as white borrowers to receive a high-cost home loan.

“The difference in cost between the home loans sold to white borrowers and those sold to African American and Latino borrowers is alarming,” said Madigan, noting that income level did not appear to account for the differences in pricing, according to study results.

According to the Chicago Reporter study, the wealthiest African American homeowners within Chicago were still more likely than the poorest white borrowers to get placed in high-cost loans..”"

Any way you cut it putting people into high cost loans isn't helping achieve home ownership. It is setting them up for a life of indebtedness.

[ckdg]

Pa-lease. A 12 year old could have predicted the housing bust. It was clearly obvious to all, save for those who wanted to perpetuate the fantasy that 25% annual home increases were the norm.

[SJ]

Oh Lord, give the self tanner a rest.

If nobody (including yourself) predicted this coming, why did you sell so much of your own company's stock?

[red]

And your skin is *naturally* that tan, right?

Who is this guy kidding. 41 year old stay at home Mom from Thousand Oaks. Former art director with zero background in finance. Wish he'd called me about 4 years ago...that's at least how long I'd been waiting for this bubble to burst. Are there REALLY people out there who didn't see this coming like a semi, high beams on driving on the wrong side of the freeway??? I saw this coming YEARS ago. All you had to do was follow the new SUV Suburbans, drivers carrying their new Coach handbags to their $600K homes, and headed to Hawaii for the summer on the salalry of a receptionist. If you couldn't figure out something was wrong with this picture, you were either lying to yourself because you were in the same boat and didn't want to face reality, or you were really, really stupid.

[arcticblueice]

There were quite a few people who saw this coming....

Job 12:16 With him is strength and wisdom: the deceived and the deceiver are his.

[arcticblueice]

The delusion of prosperity from matchstick construction duped millions of people into believing they became wealthier thru fabricated home equity. The home equity has started to vanish and this guy wants to claim no one knew?!
Yea right.....

[Chris]

No Housing Bubble and We know Iraq has WMD's, and we know right where they are.........

[Geek Seek]

Thank goodness for DVR. The canned speeches don't even get close to what you get from the Q & A.

First off (and totally off topic): Has anyone noticed how much Waxman looks like the late King Hussein of Jordan?

Darryl Issa (Republican congressman Riverside/San Diego) : "Are there bad guys in front of me? I'm not seeing it." "I'm not trying to defend you. I'd make you the victims if I could blame the meltdown on you." Ok... anyone catch that? He means villains. He says "victims." Little flash of truth there congressman?

More...

Unidentified congressman: "I am very proud to be sitting here with such a distinguished panel of people who run the country -- who run the business of the country -- who..." Catch that one?

Other nuggets: Discussion of the contributions in the millions by Paulson & Co. (hedge fund that made the largest single year gain in the history of wall street) to the Center For Responsible Lending. Coincidentally, CFRL was engaged in exactly the kind of lobbying that resulted in Paulson's huge gains. Oh yeah, and then there's Greenspan (the hatchet-man for the meltdown), getting hired by Paulson as an advisor recently.

There was some questioning as well about Goldman Sachs and the response was a rather dour: "They're not here with us today."

[srla]

Apparently, the UCLA Anderson Forecast, Robert Shiller of Yale, and Dean Baker of the Center for Economic and Policy Research are all "nobodies", in the estimation of Mr. Mozillo.

Certainly we shouldn't expect the CEO of the largest lender in America to be aware of such "obscure" economists.

What a pathetic commentary on the state of American business. Either we reign in corporate control over Washington and enact mechanisms to make CEOs directly accountable to stockholders, or this country will devolve into a second rate economic power. It's as simple as that.

[Peter]

First we had the dot-com driven stock market bubble, then we had the housing bubble, now we have the commodities bubble. We're running out of places to hide.

Be afraid. I agree, this is our Great Depression, a seventy year event. We won't be out of this mess for many, many years, regardless of what the feds do.

Icarus

[THOMAS]

Are you kidding me. This guy is a joke and it is CRAZY that any News Organizatiion would listen to his CRAP. Leave it to the L A TIMES MORONS

[blackbox]

Okie Dokie Sparky!

[Susan]

Hey, Mozillo probably figured that excuse worked for former Federal Reserve chairman Alan Greenspan, so he ought to get away with it too.

[Michael Snyder]

joe,
Common Dude! Don't be a Bogart & pass it around! if it's Angelo's stash it should be really good because you're hallucinating your brains out!
The only people who didn't see this coming are fools like "mike" who think they're entitled to a waiver from the laws of physics. Conservation of mass/energy is just the way it is. Matter cannot be destroyed, only converted to energy who's by-product is more mass. For those saddled with a California education let me break it down for you; (take notes mike) There's only so much sh*t. You can shove it around but you can't make more, (unlike Congress) so when all of the sh*t ends up in one pile there's none left for the rest. Trying to add sh*t (mass/money) to the equation only makes for runny sh*t. You can throw it into the air ( sh*t hitting the fan) but no matter how high you fling it, gravity will prevail.
Any questions?

[sfvrealestate]

"Wow. Angelo. What color is the sky in your world? "
Peter, I think the question should be "What color is the SKIN in your world?"

[adoptivefather]

2601 MIDVALE AVE
LOS ANGELES, CA 90064

Anybody have a clue why this house sold for more than $4mil??