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Lori Mozilo defends the indefensible: Her brother

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  • Lori Mozilo defends the indefensible: Her brother

    Lori Mozilo defends the indefensible: Her brother

    by Eric Janszen


    After Madonna's brother recently threw his obnoxious sister under the bus to sell a book, I'm encouraged to see that someone is sticking up in public for an obnoxious sibling for no apparent personal gain. But in the case of Lori Mozilo's defense of her brother, who is as much the embodiment as a symbol of a corrupt credit system, the sentiment is wasted.
    Vilified: What You Don't Know About My Brother, Angelo Mozilo
    July 17, 2008 (Huffington Post)

    Let me start with a confession, well ... two confessions: First, I have always been a big fan of the sensational Congressional inquiry. Even as a child, during the Watergate hearings, I indulged in that secret smugness that comes from watching the rich and the powerful get theirs. Until recently, I have found few things as satisfying as the televised spectacle of some corrupt public figure, titan of industry, or scandalized bureaucrat withering under the relentless attack of my representatives on the Hill. Where the criminal justice system has been unable or unwilling to intervene, the Congress, at least, provided a public forum for getting to the truth and, by extension, stoking my sense of moral outrage. But that was before.

    My second confession is that I am Lori Mozilo, youngest sister of Angelo Mozilo who, up until recently, was Chief Executive of Countrywide Mortgage.

    I am writing because, although the Congressional hearings on the mortgage crisis did indeed stoke my sense of moral outrage, my anger, this time it has been reserved for Henry Waxman and the Democrats on his committee. As for the truth, it has been in very short supply. Like the reporters for a Beltway tabloid, Mr. Waxman and his partisans seemed to lose interest in the truth the moment it got in the way of the story they wanted to tell, a story characterized by handwringing, finger-pointing and shameless self-promotion.

    No doubt Angelo makes a handy target for a Congress that desperately wants a good side show to take the public's attention away from the fact that for 18 years they failed to fund the SEC and other regulatory agencies to enable them to enforce existing securities and banking laws, contributing to the crisis we have today. Still, Lori's sisterly love is clouding her ability to understand why her bro is vilified. This letter from Countrywide to a prospective customer is a good example:
    "With a 40-year home loan, you could possibly have a lower, more affordable monthly mortgage payment than traditional 15 or 30-year loans, as well as the extra cash you need. Call Countrywide today and our Home Loan Consultants will help you apply for a refinance loan to consolidate your debt and get the extra cash you need to do the things you want - like make home improvements, pay for college tuition, or pay off high interest credit card debt!"
    In the letter, Countrywide asks the prospect to violate at least three basic principles of sound household finance that were well understood by every person with a high school education in the US until the 1980s:
    1. Never extract equity from your home except in dire emergencies, such as medical emergencies, and in some cases to pay for education. Home improvements at best return 80 cents on the dollar – for bathrooms and kitchens – so always finance them with cash, never with credit.
    2. Only ever refinance debt to reduce total interest expense, never monthly payments, except in dire emergencies.
    3. Never secure depreciating assets, like appliances purchased with credit cards, against your home: default on your credit cards, take a hit on your credit rating but default on your mortgage, bloated with debt initially on credit cards, and you lose your house.

    If I were in charge of lending regulations, any communication from a lender to a prospect that recommended that consumers violate these common sense rules in consumers' interest would be cause the issuer to lose their license to operate. We can safely say that job is nowhere in my future.

    Why are these household finance basics are known to the majority of Europeans and Asians but are voodoo to most Americans? It's something of a mystery. I'm looking into it for that book I'm writing. So far it looks like classes in household finance got thrown out with the Home Economics course bathwater in the 1970s. Now if Bernanke or anyone in a position of authority were to give few entertaining and informative 30 minute shows on household finance on prime-time TV – don't buy cars or TVs on credit, and so on – the US economy will come to a grinding halt soon thereafter. We are economically stuck in a cycle of financial ignorance and are dependent on ongoing and widespread misuses of credit to maintain it.

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    Last edited by FRED; 07-21-08, 07:29 PM.
    Ed.

  • #2
    Re: Lori Mozilo defends the indefensible: Her brother

    Originally posted by FRED View Post
    If I were in charge of lending regulations any communication from a lender to a prospect that recommended that consumers do these things would be cause the issuer to lose their license to operate. We can safely say that job is nowhere in my future.

    Why are these household finance basics are known to the majority of Europeans and Asians but are voodoo to most Americans? It's something of a mystery. I'm looking into it for that book I'm writing. So far it looks like classes in household finance got thrown out with the Home Economics course bathwater. Now if Bernanke or anyone in a position of authority were to give few entertaining and informative 30 minute shows on household finance on prime-time TV – don't buy cars or TVs on credit, etc. – the US economy will come to a grinding halt soon thereafter. We are economically stuck in a cycle of financial ignorance and are dependent on ongoing and widespread misuses of credit to maintain it.
    Wow, that is very quotable right there. If your book is filled with similar quotes plus some solidifying references, then I'm buying it! I presume you will hawk it on this website at some point...

    Comment


    • #3
      Re: Lori Mozilo defends the indefensible: Her brother

      Just a guess, from someone who has never been in USA. With real salaries stagnating or even loosing purchasing power for last decades, the result of economic policies applied, the only way to let workers keep consuming was to induce them to get more and more indebted.
      Concentrated action from political leaders, business,s and the media have undoubtedly created the artificial needs and fomented reckless taking of greater and greater debt.
      Or as classic Marxism would say: the only way to corner the perennial tendency of salaries to diminish in relative terms.
      Due to historic conditions, such was not the case both in Asia and in Europe.
      Practical death of unions as defenders of salary, competence from other place´s workers through globalization, etc. created in USA conditions for all that to happen. In Europe, till de demise of Socialist block, ther was always the menace to business of ideological competition, thus lowering salaries was dangerous.
      In Asia, penetration of capitalism was a violent fenomenon these last decades.
      That created at the same time a big production overcapacity and new industrial workers demand.
      Credit does not represent a so big necessity in these conditions.
      Some places in Europe, though, are in a similar situation as USA: namely, UK and Spain. Probably, if you check, you´l also find stagnating salaries and growing consumption.
      Southernboy

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