The Power of Procrastination

One of the advantages of not getting work done on a reasonable schedule is that new material keeps popping up. For example, while I was working on my new VDARE.com article about mortgage-meister Angelo Mozilo of Countrywide Financial last night, at midnight The New Yorker happened to post a new article on the defendant in a new SEC fraud and insider trading suit that confirmed my interpretation.

Here's an excerpt from my VDARE.com piece on Mozilo:

Over the decades, the federal government changed the entire culture of the mortgage industry from penny-pinching skeptics to politically correct pollyannas.

Nobody took less persuading, however, than Mozilo. He always felt discriminated against by the old WASP financial elite. Jeff Bailey’s 2005 NYT article about Mozilo begins:

"A touch of resentment—based on income, education, social class—motivates countless ambitious people, though few will admit to it once they become successful. An exception is Angelo R. Mozilo …

Connie Bruck’s fairly sympathetic new article, Angelo’s Ashes: The man who became the face of the financial crisis, in the June 29, 2009 New Yorker (an abstract is online here) documents just how driven Mozilo always has been by his Commitment to Diversity. Mozilo’s sister told Bruck:

"He was always this Italian guy people didn’t want to accept. When he tans he gets really dark. My mother told me that when he worked in Florida he was asked to sit in the back of the bus."

(Actually, in many photographs, Mozilo looks less brown than orange, more like an Oompa-Loompa in Willy Wonka and the Chocolate Factory, or the victim of a bad spray-on tan.)

Bruck notes:

"Mozilo always saw himself as providing mortgages to many who were like him -- disenfranchised. ('So they’re not upper-middle-class white people—so what?' he would say. 'They’re Hispanics, and maybe their money is not in a bank—but they are responsible.')'

Bruck’s article suggests that Mozilo actually believes what he told Congress in 2008:

"By the early 1990s, the government had recognized the obvious truth that our housing finance system was leaving major segments of society behind. In 1992, a landmark study by the Federal Reserve Bank of Boston made it clear that there were systemic underwriting issues relating to the treatment of African American and Hispanic borrowers. Policymakers called upon the mortgage industry to change their practices and redouble their efforts to better serve minorities and underserved communities. While many in the industry discounted the Boston Fed study as flawed, at Countrywide, we stepped up to the challenge by creating our affordable lending initiative known as 'House America.' "

Bruck’s New Yorker article supports Mozilo’s sincerity—or self-delusion:

"… In 1992, shortly after Mozilo became chairman of the Mortgage Bankers Association, the Federal Reserve Bank of Boston issued a report stating that it had found systemic discrimination by mortgage lenders against African-American and Hispanic borrowers. … Mozilo was appalled. He ordered that all Countrywide’s records on rejected minority applicants be sent to him, and he retroactively approved about half of them. …"

In 2002, a UCLA business professor named Eric Flamholtz suggested to Mozilo the disastrous strategy of trying to grow Countrywide’s share of the mortgage market from ten percent to an oligopolistic 30 to 40 percent. But to pursue its goal of market dominance, Countrywide’s marginal customers would inevitably have to be drawn increasingly from the ranks of those who had never qualified for a mortgage before: in other words, they’d be largely minority.

Result: Mozilo grew into the ultimate embodiment of the type of financial executive the federal government had been cultivating: a monster of ambition combined with a diva of diversity.

Bruck goes on:

"By 2004, Countrywide had become a leading U.S. mortgage lender to what it called ‘multicultural market communities.’ Mozilo always described Countrywide’s inclusion of minority and immigrant populations as both business and mission, and he had become perhaps the single most important advocate of those who believed in advancing homeownership as a means of achieving a more equitable society."

According to The New Yorker, my kind of thinking about origins of the Mortgage Meltdown is personally and politically offensive to Mozilo:

"Several years ago, at the Midwinter Housing Conference, in Park City, Utah, after hearing some mortgage bankers saying that minorities didn’t deserve loans, he declared in a speech, ‘Homeownership is not a privilege but a right!’ Now he abhors the idea that the retrograde view has gained credence. As the Fox Business Network anchor Neil Cavuto said last September, 'Loaning to minorities and risky folks is a disaster.'"

Sorry about that, Angelo.

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My published articles are archived at iSteve.com -- Steve Sailer