All the Devils Are Here [87]
After posting his confession, Warren tried to flee the country but was arrested at the Canadian border with $1 million in Swiss bank certificates and $70,000 stuffed in his cowboy boots. The case was pending as of fall 2010. (ACC says that Warren was terminated for “egregious acts” and that it has found no research to support his hacking claims. The company also says it is “patently unfair” to use Warren as an example of a typical employee.)
Had Ameriquest been an outlier, that would have been bad enough. But it wasn’t. Its aggressive practices were copied by subprime competitors across the country—because they felt if they didn’t copy Ameriquest, they’d lose the business to someone who had. “I think Ameriquest was the trendsetter,” says Bomchill. “They spewed their slime everywhere.”
“Ameriquest was a problem for us because they were a large company and everyone was trying to compete with them,” says an executive at another large lender. “If we denied a loan, we’d track who ultimately did the loan and a lot of times it was Ameriquest. Every time we rejected a loan, the sales force would call up and say, ‘Well, Ameriquest is doing this.’ I would say, ‘Just because Johnny jumped off a bridge doesn’t mean you have to follow.’”
But they all did jump off the bridge. Including—eventually—the biggest lender of them all: Countrywide.
10
The Carnival Barker
Angelo Mozilo had long had a conflicted attitude toward subprime lending. On the one hand, he looked down his nose at the likes of Ameriquest and Roland Arnall, and didn’t want Countrywide, or himself, to be viewed in the same light. “There is a very, very good, solid subprime business and there is this frothy business,” he once told investors. “[It] is very important that you understand the disciplines . . . that Countrywide has.” On the other hand, Mozilo couldn’t bear to see Countrywide’s market share eclipsed by the subprime companies. And market share remained his obsession. By the middle of 2003, he was promising investors that Countrywide “would get our overall market share to the ultimate 30 percent by 2006, 2007.” At the time, its share of the mortgage market was a little over 10 percent.
Mozilo would later frame the choices Countrywide faced in stark terms. “Ameriquest changed the game,” he said to a friend. “If you had said, ‘Nope, I’m not going to do this because it’s not prudent,’ you would have had to tell shareholders, ‘I’m shutting down the company.’” The reality, however, was never that simple. Mozilo had created a company that had the desire to be not just big and good but biggest and best embedded in its DNA. Taking a pass of a large segment of the business wasn’t Countrywide’s style. And then, as subprime two gained steam, Countrywide was increasingly riven by internal divisions. The way those conflicts played out may have helped influence Countrywide’s future course every bit as much as Ameriquest’s unquenchable thirst for subprime lending.
By the early 2000s, Angelo Mozilo wasn’t remotely the hands-on manager his frequent CNBC appearances would suggest. This wasn’t by choice; he was struggling with a variety of health issues. He had spinal cord problems so serious he had trouble walking at times, according to one person who knows him