Embattled Countrywide CEO to Trim 'Parachute'

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The chief executive of the ailing mortgage lender Countrywide Financial says he will forfeit more than $37 million in severance pay and perks that were part of a retirement package. The Securities and Exchange Commission is probing Angelo Mozilo's sales of company stock.

RENEE MONTAGNE, host:

Falling home prices and rising defaults have battered the nation's number one mortgage lender. The depth of Countrywide's financial trouble is now more apparent. Today the company announced losses of $422 million for the most recent quarter. That compares to a $622 quarterly profit last year. The company now says one in three of its subprime loans is delinquent. And yesterday the company's outgoing CEO announced he'll forego his gold-plated severance package.

NPR's Chris Arnold reports.

CHRIS ARNOLD: As Countrywide's troubles surfaced in recent months, the company's stock crashed about 90 percent. Chairman and CEO Angelo Mozilo now says he'll give up $37 million worth of severance pay and other benefits. He says, quote, "That's the right thing to do."

But consumer advocates are not clapping too loudly.

(Soundbite of laughter)

Mr. IRA RHEINGOLD (National Association of Consumer Advocates): Well, my reaction is obviously to laugh.

ARNOLD: Ira Rheingold is the head of the National Association of Consumer Advocates.

Mr. RHEINGOLD: Come on. This guy profited beyond all imagination from the terrible lending practices that Countrywide was engaged in.

ARNOLD: Before the bottom fell out of his company, according to securities filings, Mozilo sold upwards of $400 million worth of stock by cashing in stock options. Speaking on CNBC last month, Mozilo defended that.

Mr. ANGELO MOZILO (Countrywide CEO): I started this company with David Loeb 39 years ago. I took stock options. The stock is up 25,000 percent. During that period of time all of the shareholders had benefited with me.

ARNOLD: But critics like Rheingold think Mozilo knew or should have known that when he was dumping stock, his company was a teetering house of cards.

Mr. RHEINGOLD: It's amazing that he was able to time his sales better than a lot of the shareholders who stuck with it. And the notion that he can make that much profit, there's something really rotten in Denmark.

ARNOLD: Mozilo has been asked to testify in Congress next month at a hearing on executive compensation.

Chris Arnold, NPR News.

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