All The Devils Are Here: Unmasking the Men Who Bankrupted the World by Joe Nocera, Bethany McLean Read Free Book Online

it’s true. Its founder and CEO, a smart, aggressive bulldog of a man named Angelo Mozilo, believed strongly in the importance of underwriting standards—that is, in making loans to people who had the means to pay them back. In the early 1990s, a big competitor, Citicorp Mortgage, was forced to take huge losses, the result of making shoddy loans in a drive to increase market share. Mozilo’s reaction was pitiless. “They tried to take a shortcut and went the way of every institution that has ever tried to defy the basics of sound underwriting principles,” he told
National Mortgage News
in 1991.
    There may have been another reason for Mozilo’s withering dismissal of mighty Citigroup. Citi represented the establishment. Mozilo, Bronx born and Fordham educated, spent his life both wanting to beat the establishment and harboring a burning resentment toward it. “I run into these guys on Wall Street all the time who think they’re something special because they went to Ivy League schools,” he once told a
New York Times
reporter. “We’re always underestimated…. I must say, it bothered me when I was younger—their snobbery and their looking down on us.” When he was starting out, the business was “lily white,” Mozilo’s former partner Howard Levine recalls. Mozilo was an extremely dark-skinned Italian-American, and very sensitive about that heritage. He once told a colleague about returning from his honeymoon with his new wife, Phyllis, and stopping in Virginia Beach on the way home. They went into a restaurant to have dinner. “We don’t serve colored,” the waiter said. “I’m Italian,” Mozilo replied. “That’s what they all say,” said the waiter.
    Born in 1938, Mozilo was the son of a butcher who had emigrated from Italy as a young man. The Mozilos lived in a rental flat. “I saw my dad struggle all his life,” Mozilo later explained. “He lived to be fifty-six and died of a heart attack.” Mozilo’s uncle, who worked for an insurance company, had the only white-collar job in the family. Young Angelo worked for hisfather until he was old enough to ask his uncle to help him find a job. At fourteen, he became a messenger for a small Manhattan mortgage company.
    That’s when Mozilo met Levine, who today is the president of ARCS Commercial Mortgage Company, a subsidiary of PNC Financial, the big Pittsburgh-based bank. “We were very anxious to be successful,” says Levine. “Angelo in particular. This was our break.”
    By the time he graduated from high school, Mozilo had worked in every part of the company, and he continued to work there while attending Fordham. In 1960, the same year Mozilo graduated from college, the company merged with a larger company, United Mortgage Servicing Company, which was based in Virginia and run by a man named David Loeb. Though also from the Bronx, Loeb could not have been more different from Mozilo. “His parents were into ballet and opera,” Mozilo later recalled. “He was fifteen years older, and I was frightened to death of him.” But Loeb took a liking to Mozilo, to his scrappiness and ambition. Mozilo enrolled in night business school at New York University, but dropped out when Loeb decided to send him to Orlando, Florida. He was twenty-three years old.
    Brevard County, on the coast not far from Orlando, was the perfect place to be in the housing business in the early 1960s. A few years earlier, the Soviet Union had launched the Sputnik satellite, and the space boom was on in the United States as America frantically tried to outdo its cold war rival. Brevard County included a small speck of land called Cape Canaveral. Space engineers flocked to the area, only to discover there was no place for them to live. As Mozilo would later tell the story to reporters, he remembered seeing people living in tents on the beach.
    Mozilo met a group of developers who hoped to build one of the first subdivisions in the county. But they needed money. Mozilo wanted