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

documentation.” At least, that was the rap. And nonstaff brokers had no skin in the game; once they’d sold their loan to Countrywide and gotten their fee, they were out. “I think it’s going to be a big mistake,” Loeb said, according to
Chain of Blame
.” But with S&Ls closing down by the hundreds, there was a cheap, ready-made workforce: out-of-work loan officers. Using them could help Countrywide grow faster. Loeb’s resistance faded as brokers’ reputation began to change, and as the company got aggressively behind this idea, all its competitors began using independent brokers as well. It soon became standard practice.
    By 1992, just twenty-three years after its founding, Countrywide had become the largest originator of single-family mortgages in the country, issuing close to $40 billion in mortgages that year alone. Just as rising rates had crushed the S&Ls a decade before, so did falling interest rates now turbocharge Countrywide’s growth. Lower interest rates helped more people afford homes, of course. But Countrywide began advertising a technique that allowed people who already owned their home to take advantage of lower rates. Refinancing, it was called. Often borrowers didn’t just refinance their home, they pulled out additional cash against the equity in their homes. For the fiscal year ending in February 1992, refinancings accounted for 58 percent of Countrywide’s business; two years later, they accounted for 75 percent of its business. Although refinancing allowed consumers to take advantage of lower interest rates, it really didn’t have much to do with homeownership. Countrywide wasn’t putting people into homes so much as it was making it possible for homeowners to use their homes as piggy banks.
    During 1991 and 1992, Mozilo served as the chairman of the Mortgage Bankers Association. It was a sign that whatever lingering resentments Mozilo still felt, Countrywide was now part of the in-crowd.
    What everyone remembers about Mozilo was how passionate he was about the business, about its success. He cared deeply about every aspect—hewanted to know everything,
had
to know everything. If he walked into a branch and saw that a fax machine was broken, he would stop everything and try to fix it himself. According to the
American Banker
, the thrift H. F. Ahmanson, desperate to compete with Countrywide, commissioned a report on the company in the early 1990s in an effort to understand its secret sauce. Mozilo, the report concluded, was a “hands-on manager, totally consumed by the business, a perfectionist.” It also said he was a “dictatorial” boss who “is known to fire employees the first time they make a mistake.” If this wasn’t exactly true—longtime Countrywide executives often said that Mozilo’s bark was worse than his bite—it was all part of his aura.
    He did drive his employees incredibly hard, or those who succeeded drove themselves incredibly hard. He was both highly emotional and mercurial, and he operated from his gut. It wouldn’t be uncommon for him to have “an allergic reaction to things,” as a former executive puts it, before eventually coming around. He was perfectly capable of telling an employee that what he’d just said was the stupidest thing in the world. He expected those who worked for him to take whatever he dished out in the heat of the moment— and then do the right thing, even if it contradicted his command. If they did the wrong thing, following orders wasn’t an excuse. Countrywide was not an easy place to work. “It was very, very competitive,” recalls one person who knew the company well. “The politics were brutal. You had to eat, sleep, and drink Countrywide. It was a boys’ club. There were a few women, but it was very autocratic.” But employees took great pride in the company—and Mozilo. At getaways for top producers, people would clamor for a moment with him. He was the classic underdog who had achieved big things, after