Mozilo To Renounce £19 million From Countrywide BoA Deal

by Stewart Douglas

Story link: Mozilo To Renounce £19 million From Countrywide BoA Deal

The chief executive of the largest mortgage lender in the US has today announced he is forfeiting some £19 million owed to him by the bank, which has been suffering widespread and much publicised liquidity problems as a result of the downturn in the housing market and the sub-prime slump, in an unprecedented move within the banking industry.

Angelo Mozilo, the chief executive officer of Countrywide was in line for the windfall payment following the completion of the sale to Bank of America, which valued the lender at $4 billion, but decided to renounce his rights following the problems experienced by the lender in recent months.

Mr Mozilo became a target for criticism following his role in the sub-prime sector collapse, which saw Countrywide, like so many other institutions, over-leveraged and heavily exposed to now worthless sub-prime debts and securities.  As a result, Countrywide was sent to the end of its financial teather, rumoured to be on the brink of filing for bankruptcy on a number of occasions as a result of its following credit difficulties.

Countrywide is expected to release details of its ongoing exposure to the sub-prime sector as at the end of December over the next week, where it is expected that even further writedowns and liquidity problems will be reported.

The deal with the Bank of America, which will see the company bought for $4 billion worth of shares, has been seen as saving the company from almost certain financial ruin, and has been touted within the industry as the best move to prevent further market problems.

Having renounced his rights to the $37.5 million in recognition of his role in the lender’s recent poor performance, Mozilo will still be in line for a retirement offering in excess of $23 million.