All the Devils Are Here [89]
The purchase of the bank also forced Mozilo to leave the board of another bank, a subprime lender called IndyMac, based in Pasadena. IndyMac, which would be taken over by the FDIC during the financial crisis, had begun life as Countrywide Mortgage Investments. Founded by Mozilo and Loeb, it was a real estate investment trust, or REIT, that served as an outlet for Countrywide’s so-called jumbo loans, the ones that were too big for the GSEs to buy. (REITs pay out most of their profits as dividends to their shareholders.) Starting in the early 1990s, it began to aggregate loans from other lenders and turn them into mortgage-backed securities. It also began to originate its own Alt-A mortgages. In other words, the company was starting to compete with Countrywide. Despite the growing conflict, Mozilo stayed on the board (as did Loeb), exercised stock options, and collected some of the company’s rich dividends. His son Mark began working there in 1996. And when Mozilo finally left the board after Countrywide bought a bank, it was because he had no choice. IndyMac also owned a bank, and bank regulations don’t allow anyone to serve as a director on two bank holding company boards. When Mozilo stepped down from the board, IndyMac forgave an outstanding $3.3 million loan and paid him another $3.6 million to cover any taxes he might owe on his stock options.
Taking the money was an outrageous move—and to some at Countrywide, a sign that money was starting to matter too much to Mozilo. In 2000, he owned 2.8 million shares of Countrywide stock (including options) and would take home $6.6 million in compensation—a number that would rise to $10.1 million by 2001 and $23.6 million by 2003. Yet he wanted more. “There are CEOs of companies to whom the most important thing is if they made more than the next guy,” says someone who knew him well. “Mozilo was getting caught up in all of that.”
If Stan Kurland was in charge of Countrywide’s plumbing, a very different kind of executive was in charge of producing all of its loans. His name was David Sambol; he had joined Countrywide in 1985 and become its head of loan production in 2000. (He was named chief operating officer for the home loan division in 2004.) Like Kurland, Sambol had gone to California State University Northridge and had worked briefly as an accountant. For many years, the two men appeared to be friendly. They were both highly intelligent, proud men who cared deeply about Countrywide’s standing and its market share goals. About Sambol, a former executive says, “he bled Countrywide.” But there the similarities ended.
Sambol was a super-aggressive salesman, very much in the Mozilo mode, though he lacked Mozilo’s charm and warmth. He did not always make a good first impression. “His style was one of attack,” says a former executive. “He would attack everything around him that didn’t report to him. He would be relentless, and very convincing until you challenged him with facts. But when you called him out, it never bothered him. It rolled right off his back and he was on to the next thing.” This aspect of Sambol’s character gave rise to an internal nickname: Teflon Dave. Another former executive who was a fan of Sambol’s says, “He loved the details, he loved knowing the details, and he loved putting people through the wringer to see if they knew the details.” People also made fun of his dictatorial nature. Other executives would pretend they were Sambol and say to each other, “You don’t understand. You’re not capable of understanding. I see all of the colors of the rainbow.”
Inside Countrywide, it was very apparent that Sambol was “all about building his own kingdom,” as a former executive puts it. He was dismissive of everything that he hadn’t personally created. And while one former executive