All the Devils Are Here [19]
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 all.
He instilled something akin to fear in the investment community. Mike McMahon, a Wall Street analyst who followed Countrywide for more than twenty years, once took a group of investors to see Mozilo. During the meeting, one of them said that Countrywide’s stock would be valued more highly if Mozilo disclosed more about its operations. Most CEOs would have dismissed the questioner with a platitude. Not Mozilo. He had a bad back that day, so he had to stiffly turn his whole body toward the man—“like Frankenstein,” McMahon recalls. “No,” Mozilo replied. “Fuck ’em.” Then, ever so slowly, he turned his body back, almost menacingly, as if to say, “Who else wants to take me on?”
What everyone could see, though, was that Mozilo drove himself harder than anyone. For a long time he had a classic case of entrepreneurial paranoia—that gnawing fear that, someday, everything he had built would suddenly vanish. That’s why he couldn’t relax, even for a second. The company, after all, was in a boom-and-bust business, one that hit hard times when interest rates rose. It competed not just against other mortgage brokers but against giants like Wells Fargo and Bank of America. Margins were always tight. Securitization may have made the business possible, but it didn’t make it easy. McMahon says that mortgage origination was a “negative cash flow business,” meaning that the slim profits were eaten up by costs and commissions. There was profit in servicing mortgages, but that was realized over time. “The more they originated, the less cash they had,” he says. In addition, because Countrywide had to appease the rating agencies in order to borrow money at a good rate, the company actually had to put aside more capital than banks did. “They were in a really, really, really competitive, low-margin commodity business with one hand tied behind their back on capital,” says McMahon. Is it any wonder Mozilo’s motto was “We don’t execute, we don’t eat”? According to The New Yorker, he once told a Countrywide executive, “If you ever stop trying to make your division the biggest and the best, that’s the day you die.”
Over time, Loeb faded into the background. Early on, Mozilo had moved Countrywide to California; the state represented a huge percentage of the mortgage market and accounted for as much as 50 percent of Countrywide’s revenues in some years. Loeb, however, often worked from one