About five million Americans have lost their homes, or are facing imminent foreclosure since the huge housing/credit/banking bubble began popping in 2007. Ten million Americans have lost their jobs because of the fake prosperity that made trillions of dollars for a relatively small group of people. Fraud, corruption, immoral business practices, and buying off of politicians were the order of the day as pretend "free-markets" and fake "capitalism" allowed America to be looted. The absolute worst criminal, who more than any other person caused the near total collapse of our economy, walks free simply because he still has the political protection of the paid for henchmen we call our elected government. His name is Angelo Mozilo.
Angelo Mozilo founded the two companies that caused the most damage to our economy and our people; Countrywide Mortgage and IndyMac bank. From 1999 to 2007 Countrywide sold HALF of all the fraudulent NINJA loans sold in America. Mozilo knew that his people were selling bogus mortgages because he openly encouraged - even demanded - that his salespeople (posing as mortgage lenders and brokers) openly falsify applications for mortgages, misrepresent those mortgages to consumers, and then knowingly sell those bad loans to investers as good investments called "mortgage backed securities". He did this in collusion with Wall Street bankers who KNEW they were packaging garbage, KNEW the fake loans would blow up in the face of the borrowers, and KNEW that sooner or later the trillions of $$$ of bogus loans would cause irrepairable damage to our economy! Why did he do it? How did he get away with it? And why isn't he in jail right now?
The necessary element for Mozilo's crimes was supplied by politicians. A wave of euphoria swept across the political right after the fall of communism. According to the mythology "capitalism" defeated "communism" and thereby proved that ALL government oversight and regulation was detrimental to prosperity. The idealogues took their euphoric misinterpretation of reality even further. Government wasn't just an impediment to prosperity, it was downright EVIL. These new economic philosophers soon joined hands with a tiny - but extremely powerful - group of extremely wealthy and well connected patrician families ( like the Bushes) that believed that America had become a "socialist" state way back in the 1930s under FDR. These elitists desired more than anything else to return America to the Gilded Era where they and theirs ruled our nation without having to deal with other, competing power centers ( like unions, citizens advocacy groups, or even voters allowed real participation in our political process).
Mozilo recognized that new rules applied. He understood, without being born to the elite or believing in the ideology of the NeoCon men, that the pendulum had jumped back to the far right. He knew that the government would have NO interest in interfering in business no matter how criminal their behavior. He understood that the new politics of the elitists would keep the EVIL gumment from overseeing or regulating his business even when his crimes became obvious. Mozilo devised an amazing scheme to become one of the richest men in America!
In 1969 Mozilo had created Countrywide Mortgage. For years the business remained relatively small, until Mozilo recognized that the foxes were now guarding the henhouse. Good government, common sense, and valuing anything except profit had been tossed aside in favor of a new economic model molded by the greed shysters and ideologues and elitists who believed anything they did not be measured as the little people are measured. Mozilo's scheme was brilliant.
This man recognized several very important facts about the new economic model. First, Alan Greenspan was creating vast amounts of money through the Federal Reserve and lending it out to the elitists under extremely generous terms. Money would not be the limiting factor in his con! Next - as I stated above - the government regulators and the criminal justice system had been hobbled. Mozilo would need not fear any punishment if his crimes became public because the new philosophy tagged all gumment as evil and Mr Mazilo as a GIANT who created jobs, enriched investors, and magnified the wealth of our nation. As part of the second realization, Mozilo knew it would be important to use some of his profits to buy protection from politicians from BOTH political parties. Politicians had - with the connivance of the elitists - recreated American politics into a system of graft whereby they got so-called campaign contributions in return for political protection and the furthering of their fraudulent business schemes.
Mozilo also realized that the loosey-goosey monetary policies of Greenspan's Federal Reserve, America's trade imbalance, and the massive tax cuts given the wealthiest of Americans would create a glut of money chasing after the most profitable "investments". The rich and powerful, Chinese banks flush with $$$, and the few men who control the nation's investment funds would flock to whoever promised them the greatest returns. The big investment banks like Goldman Sachs and Bear Stearns would line up potential investors no matter how shady the deal, as long as they were given a piece of the action. Their participation would legitimize the schems and provide extra political protection through the politicians those firms owned as lackeys. Finally, everyone knew the ratings firms like Moody's and S&P would give any investments sold through the big investment banks a fantastic rating, no matter how risky, out of greed and fear of losing business.
Mozilo had all the pieces he needed to perpetuate the greatest fraud in history! All except one...
Countrywide specialized in non-standard mortgages. After the Savings & Loan fiasco that cost taxpayers $200 billion during the Reagan and Bush Sr years, banks were encouraged to sell variable rate mortgages and other non-standard loans. The belief was that banks were vulnerable during times of inflation if their investment portfolio was full of low interest, fixed mortgages. The sensible practice of offering some vaariable rate loans to hedge against inflation was soon mutated into a wide variety of very risky mortgages that could pay huge commisions to the originating firm up front, then get sold off to investors who would get left holding the bag when the economy dipped. Mozilo and Company were the masters and architects of the newest massive con. Here's how it works:
Countrywide advertizes for people who cannot get a traditional mortgage. Either their credit/income makes them a risky customer or they live in a state where housing prices puts them over of the maximum that Fannie Mae/Freddie Mac would insure. Countrywide would sell a mortgage to such people and toss all the mortgages into one huge pool. The firm would then chop hundreds of thousands of these mortgages into tiny bits where no one investor would own any complete mortgage (just a tiny bit of thousands) and sell off $5,000,000 blocs of this mortgage jello to investors through the big investment banks. Originally deemed a good business practice spreading risk among many investors, this had a wonderful side benefit for con men like Mozilo. Investors didn't own mortgages that they could check up on, but slices of unverifiable loans that investors had to trust were good loans.
The final piece of the scam was buying what was called an "insurance policy" for investors who bought the $5,000,000 shady deals! Countrywide would go to a firm like AIG who would pretend to calculate the extra risk of non-standard loans and provide insurance against default. Countrywide would also charge a small fee to administer these mortgage backed securities and dole out the huge profits when they started rolling in! Here also Countrywide could scam their investors by shifting money from performing mortgages to cover when some of their instruments went bad, and the investors would never know.
Everyone would make lots and lots of money it was promised. Certain people really would, especially those who knew they were engaging in fraud. Countrywide got to make money from customers buying their mortgages and the investors to administer them. Employees of Countrywide made great salaries with huge bonuses to sell them. The investment banks like Goldman Sachs got to skim a percentage off of every "mortgage backed security" they sold off to unwitting investors. The rating agencies got paid to falsely rate the investments much higher than they deserved. AIG and others got to sell worthless insurance policies/derivatives they knew they would never be able to cover if the whole scheme exploded. AND hundreds of thousands of real estate firms/agents could make great commissions steering customers to Countrywide and sell homes they could never sell without a swindle going on. Employees of thousands of companies - most suspecting or even knowing of the swindle - all got a piece of the action in the form of quick commissions and huge salaries/bonuses!
Politicians too got a big reward. The massive swindle pumped lots of fake money into the economy and made it look as if times were good. Builders got to build homes, appliances and furnishings were sold to new homeowners. The real estate industry saw lots of people making lots of money by sending people to Countrywide and other copycat shysters for loans they knew were fraudulent. The economy APPEARED to be booming and the whole philosophy of the NeoCon men and their ultra-conservative elitists seemed to be prophecy! Politicians could boast of the good times, take lots of corrupt campaign money from the con men for protection, and get reelected as geniuses!
Another HUGE disaster occurred when Countrywide decided that originating and tending bad loans wasn't enough. Mozilo decided to circumvent Freddie Mac because (back then) that agency refused to insure loans beyond $450,000 and threatened to actually do their job in assuring the loans were good. So Mozilo created IndyMac to be able to replace Freddie Mac as a clearing house for his loans AND make MORE money. During the Bush administration Mozilo (and many others) pushed to loosen Freddie Mac's standards so they could push fraudulent loans and securities through an agency that had worked wonderfully for four decades. Mozilo and others bribed dozens of public employees and elected officials to make Freddie Mac more "business friendly." The entire Republican Party sold out as well as half the Democratic Party in a wave of "deregulation" that allowed Mozilo and a thousand other titanic thieves to steal trillions.
Countrywide did more damage than just the trillions of dollars of garbage securities sold across the world. Hundreds of copycats saw them openly getting away with criminality and decided to emulate them. Even honest brokers were pushed towards shady practices when investors demanded profits that only corruption could provide (or else lose their job/business). Competition without government providing a level playing field turned into the chaos of greed turned into the sour reality of economic bust. A healthy economy growing at a decent rate was replaced by a decade of lost opportunity, followed by another of recovery. A generation of America's efforts to build a better nation were lost to the greediest and most smug few.
Homeowners weren't lacking in greed and corruption either. Many people willing signed forms they knew contained false information. Half of the sub prime loans were written for speculators, either neer-do-wells looking to cash in on the boom or dilletantes who watched too many episodes of "Flip This House'. Others wanted to buy a home far beyond what they could truly afford, believing they could somehow profit or deserved the best. Many more went to those who foolishly sucked every penny of equity out of their homes to finance lifestyles falling wages would not cover. Lots of people though were forced into these loans when speculation and fraud drove the price of housing far beyond what an honest market would have seen. Others were tricked by liars looking for the quick commisions. Many later lost out when jobs disappeared after the bubble burst.
All of this was needless. Mozilo, his henchmen, and the copycats could have made lots of money staying within the bounds of morality and the law. They got greedy. Nearly everyone associated with them got greedy as well. An indispensible element though was the loss of our governmet to ideologues and elitists who believed they were entitled to destroy a system that had worked for generations, where government PROPERLY regulated the marketplace, insisted on transparency, and punished those who strayed beyond the wide grey line dividing good business practices from outright theft. Instead Mozilo DEMANDED that his employees engage in fraud to push sails. The only limiting factor for Mozilo and his gang of thieves was that more money was available to loan out than credit worthy people could borrow. The only answer was to drag in anyone willing to sign a deceptive bottom line!
Now we have MILLIONS of people who know they were thieves and conmen, like Mozilo and his employees. None want to admit the part they played in destroying our prosperity, destroying the economic well being of millions in the US and the world. Instead they prefer to find scapegoats, claiming bad gumment was to blame and therefore no government is the answer. Others falsely charge that poor,poor bankers were FORCED to write bad loans by the Community Reinvestment Act. Politicians refuse to admit their culpability out of fear of the truth being discovered; that they knowingly and willingly were co-conspirators in a monumental series of frauds perpetuated on the little guys of the world ( and even some BIG players like Chinese Banks). The very thieves were protected and bailed out by the politicians they paid so handsomely. Instead of hundreds or thousands of thieves languishing in prisons and their ill gotten gains confiscated, they were rewarded with bailouts.
These same thieves and conmen today still operate the same way, own the same political system, lie through media owned by their co-conspirators, and are free to keep and spend the trillions of dollars they stole from us all. Mozilo, the very worst of the conmen ( with the possible exception of the Directors of Goldman Sachs) has and never will face one day in prison despite PROOF of his crimes. The SEC did fine him $67 million for his fraud(out of over a half trillion he looted), but most of that was paid for by Bank of America that bought his company! He flits in rich retirement while MILLIONS of people suffer due to his theft. He owns numerous estates while taxpayers foot the bill. Bernie Madoff sits in prison, yet Mozilo is a thousand times the thief Madoff is. By my reckoning Mozilo should be in a deep and dark cell, with his ill gotten gains confiscated to cover a small part of what he has cost this nation. After Mozilo, many more should be charged as well, but that will never ever happen. He owns too many politicians from both parties. Under our corrupt system, if a man steals a thousand dollars from a bank with a gun he is a criminal. If he steals half a trillion through fraud, corruption, and coercion then it is merely a civil matter deserving only a slap on the wrist.
