SEC settlement with former Countrywide Financial CEO provides a nice retirement nest-egg for the disgraced executive
Okay, let’s do some quick math . . .
The SEC contends that former Countrywide Financial CEO Angelo Mozilo “improperly generated profits on insider stock sales even though (he was) aware of Countrywide’s deepening financial woes,” to the tune of $140 million.
In what has been referred to as the “first time that a prominent executive has been penalized personally for financial excesses,”Mozolio agreed to pay a fine of $67.5 million of which $20 million will be covered by his former company.
So that would be (an illegal) personal gain of $140 million minus the $47.5 million share of a $67.5 million dollar settlement and . . . chook – chook – chook (that’s the sound of a calculator by the way) . . . the 71 year old exec cashes out with a $92.5 million windfall. And this does not include the $521.5 million he earned between 2000 and 2008. Next stop . . . banana Daiquiris on some private beach in the Caribbean!
Perhaps I am being a cup is half empty curmudgeon by not acknowledging the fact that “securities fraud cases are complex and often difficult to win,” and thus the settlement represents an important milestone or turning point in the government’s efforts to deal with the perpetrators of the credit debacle that facilitated the most recent economic crisis.
However when I compare Mozilo’s windfall with the punishment that is meted out to everyday mortals such as in the case of 4justicenow radio show host Mary Ellen DiGiacomo, I cannot help but think that there are two distinct sets of rules that govern our society. One for the super elite class and one for the unwashed masses.
Of course the chasm between what John Berling Hardy referred to as being The Players and the vast majority of humans that live, work and eventually die on planet earth is not a new concept. It is just that after someone who the SEC stressed “had deliberately disregarded his duties to investors by concealing what he saw from inside the executive suite — a looming disaster in which Countrywide was buckling under the weight of increasing risky mortgage underwriting, mounting defaults and delinquencies and a deteriorating business model,” walks away ahead of the game because the government blinked first, you have to wonder if the settlement will be seen as a deterrent or just a cost of doing business.
After all, and even if we just focus on the $140 million of ill gotten booty, Mozolio’s net gain of $92.5 million is one heck of a profit by any standard. And at 71, the fact that he has been barred from serving at a public company really doesn’t mean much given that he was likely nearing the end of his career anyway.
As is the case with most stories of this nature, before long another scandal will likely occupy the media penthouse suite and as part of the natural progression of time this case too will fade into a remember what’s his name oblivion who was fined $67.5 million? The likely response will be “I am doing fine and working on both my tan and golf game, thank you for asking.”
One final thought . . . I wonder what happened to the politicians who as part of the financial political loan scandal in 2008-2009, in which it was alleged that they had received “favorable mortgage rates” from Mozolio’s company, fared (nudge-nudge, wink-wink).