Op-Ed Columnist
China to the Rescue? Not!
By THOMAS L. FRIEDMAN
Published: December 20, 2008
I had no idea that many of those oil paintings that hang in hotel rooms and starter homes across America are actually produced by just one Chinese village, Dafen, north of Hong Kong. And I had no idea that Dafen’s artist colony — the world’s leading center for mass-produced artwork and knockoffs of masterpieces — had been devastated by the bursting of the U.S. housing bubble. I should have, though.
“American property owners and hotels were usually the biggest consumers of Dafen’s works,” Zhou Xiaohong, deputy head of the Art Industry Association of Dafen, told Hong Kong’s Sunday Morning Post. “The more houses built in the United States, the more walls that needed our paintings. Now our business has frozen following the crash of the Western property market.”
Dafen is just one of a million Chinese and American enterprises that constitute the most important economic engine in the world today — what historian Niall Ferguson calls “Chimerica,” the de facto partnership between Chinese savers and producers and U.S. spenders and borrowers. That 30-year-old partnership is about to undergo a radical restructuring as a result of the current economic crisis, and the global economy will be highly impacted by the outcome.
After all, it was China’s willingness to hold the dollars and Treasury bills it had earned from exporting to America that helped keep U.S. interest rates low, giving Americans the money they needed to keep buying shoes, flat-screen TVs and paintings from China, as well as homes in America. Americans then borrowed against those homes to consume even more — one reason we enjoyed rising wealth without rising incomes.
This division of labor not only nourished our respective economies, but also shaped our politics. It enabled China’s ruling Communist Party to say to its people: “We will guarantee you ever-higher standards of living and in return you will stay out of politics and let us rule.” So China’s leaders could enjoy double-digit growth without political reform. And it enabled successive U.S. administrations, particularly the current one, to tell Americans: “You can have guns and butter — subprime mortgages with nothing down and nothing to pay for two years, ever-higher consumption and two wars, without tax increases!”
It all worked — until it didn’t.
With unemployment now soaring across the U.S., said Stephen Roach, the chairman of Morgan Stanley Asia, Americans — “the most over-extended consumer in world history” —can no longer buy so many Chinese exports. We need to save more, invest more, consume less and throw out most of our credit cards to bail ourselves out of this crisis.
But as that happens, we need China to take our discarded credit cards and distribute them to its own people so they can buy more of what China produces and more imports from the rest of the world. That’s the only way Beijing can sustain the minimum 8 percent growth it needs to maintain the political bargain between China’s leaders and led — not to mention pick up some of the slack in the global economy from America’s slowdown.
However, if I’ve learned one thing here, it’s just how hard doing that will be. China’s whole system and culture nourish saving, not spending, and changing that will require a huge “cultural and structural” shift, said Fred Hu, chairman for Greater China for Goldman Sachs.
In China, for instance, to buy a home you have to put at least 20 percent down, and the average is 40 percent. If you try to walk away from the mortgage, the bank will come after your personal assets. Moreover, China can’t just shift production from the U.S. market to its own consumers. Not many Chinese villagers want to buy $400 tennis shoes or Christmas tree ornaments.
Also, China has no real Social Security, health insurance or unemployment insurance. Without that social safety net, it’s hard to see how Chinese don’t end up saving most of their stimulus. “You open up the newspaper every day and you hear about this factory shutting down or that supplier going belly up,” said Willie Fung, whose company, Top Form International, is the world’s leading bra maker. “You can never be too careful in this financial climate.”
As such, “the world should not have a false hope that China can cushion the global downturn,” by stimulating its domestic demand in a big way, said Frank Gong, head of China research for JPMorgan Chase. “The best thing China can do is keep its own economy stable.”
It’s good advice. China is not going to rescue us or the world economy. We’re going to have to get out of this crisis the old-fashioned way: by digging inside ourselves and getting back to basics — improving U.S. productivity, saving more, studying harder and inventing more stuff to export. The days of phony prosperity — I borrow cheap money from China to build a house and then borrow on that house to buy cheap paintings from China to decorate my walls and everybody is a winner — are over.
Sunday, December 21, 2008
Thursday, December 18, 2008
Are you kidding me? Extend Cobra? Outrageous!!
How does this help with the cost of a Cobra plan? Are you kidding?
'...Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means health subcommittee, is lobbying to expand COBRA insurance and provide subsidies to people who cannot afford the premiums. Currently, unemployed people can purchase health coverage through their previous employer, but it expires after 18 months and the individual must pay the full price plus an administrative fee. "When people lose their jobs, they lose their health insurance," he said. "Not having health care is right up there with food and shelter." ...'
Obama, Lawmakers Expanding Health Measures in Stimulus Plan
By Ceci Connolly
Washington Post Staff Writer
Friday, December 12, 2008; 12:03 AM
President-elect Barack Obama and Democratic leaders in Congress are devising plans to significantly expand the health provisions in next month's economic recovery legislation, arguing that pouring billions of dollars into an array of health programs will not only boost the economy but also make a down payment on promises of broader health-care reform.
In a stimulus bill that could exceed $500 billion, Obama has already pledged to increase federal Medicaid spending -- perhaps by more than $40 billion over two years -- and to make a large investment in health information technology. Talks are underway about also adding money to retrain medical workers, extending the State Children's Health Insurance Program, and expanding the law that allows unemployed people to purchase health insurance through a previous employer's plan, known as COBRA.
At a Chicago news conference yesterday to introduce Thomas A. Daschle as his choice for health and human services secretary, Obama said major reform of the health-care system "has to be intimately woven into our overall economic recovery plan."
"It's not something that we can sort of put off because we're in an emergency," he said. "This is part of the emergency."
Daschle, a former Senate majority leader, said that "addressing our health-care challenges" offers the best hope for reducing personal bankruptcies, improving American competitiveness and helping "pull our economy out of its current tailspin."
Their comments came just hours after the government announced that the number of Americans filing for unemployment benefits for the week ending Dec. 6 was 570,000, the highest in 26 years.
"It's hard to overstate the urgency of this work," Obama said.
Part of the political rationale for adding more health-care projects to the recovery package is to "get a running start" on the larger goal of broad health reform, said Nancy LeaMond, an executive vice president at the seniors' lobby AARP. "This builds momentum."
Additionally, including health-care reform measures in the context of the economic recovery bill would keep Congress from having to deal with those debates and expenditures in the later, larger discussion, said Senate Finance Committee Chairman Max Baucus (D-Mont.).
"We're going to be very busy here in Congress," he said in an interview. Baucus aims to begin marking up a stimulus bill the first week of January in hopes that it can be ready by Inauguration Day. He is pressing to include provisions that would steer money into health technology, such as adoption of electronic medical records, and reauthorization of the SCHIP program for two to three years.
"It's very important that health IT be part of the economic recovery," he said. "It represents the beginning of health-care reform."
During the campaign, Obama spoke of spending $50 billion on modernizing the health-care system by helping doctors and hospitals install and use computers. Sources involved in preparing the stimulus package said it might include $10 billion of that as a down payment.
"Investing in the health of the American people is a crucial part of the nation's economic recovery," said Sen. Edward M. Kennedy (D-Mass.), chairman of the Health, Education, Labor and Pensions Committee. "Modernizing our health-care system through better use of information technology is the key to easing the heavy burden of health-care costs."
Physicians have consistently complained that moving to electronic medical records or electronic prescribing involves spending money to purchase equipment and train workers. Several Democrats yesterday said the money could help defray the cost of those capital expenditures, pay for training programs or fund ongoing research on developing standards.
Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means health subcommittee, is lobbying to expand COBRA insurance and provide subsidies to people who cannot afford the premiums. Currently, unemployed people can purchase health coverage through their previous employer, but it expires after 18 months and the individual must pay the full price plus an administrative fee. "When people lose their jobs, they lose their health insurance," he said. "Not having health care is right up there with food and shelter."
In addition to his Cabinet post, Daschle will be head of the new White House Office of Health Reform. His deputy will be Jeanne Lambrew, a veteran of the Clinton administration who co-wrote a book with Daschle on health-care reform.
In making the announcement, Obama described his friend Daschle as "the original no-drama guy."
'...Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means health subcommittee, is lobbying to expand COBRA insurance and provide subsidies to people who cannot afford the premiums. Currently, unemployed people can purchase health coverage through their previous employer, but it expires after 18 months and the individual must pay the full price plus an administrative fee. "When people lose their jobs, they lose their health insurance," he said. "Not having health care is right up there with food and shelter." ...'
Obama, Lawmakers Expanding Health Measures in Stimulus Plan
By Ceci Connolly
Washington Post Staff Writer
Friday, December 12, 2008; 12:03 AM
President-elect Barack Obama and Democratic leaders in Congress are devising plans to significantly expand the health provisions in next month's economic recovery legislation, arguing that pouring billions of dollars into an array of health programs will not only boost the economy but also make a down payment on promises of broader health-care reform.
In a stimulus bill that could exceed $500 billion, Obama has already pledged to increase federal Medicaid spending -- perhaps by more than $40 billion over two years -- and to make a large investment in health information technology. Talks are underway about also adding money to retrain medical workers, extending the State Children's Health Insurance Program, and expanding the law that allows unemployed people to purchase health insurance through a previous employer's plan, known as COBRA.
At a Chicago news conference yesterday to introduce Thomas A. Daschle as his choice for health and human services secretary, Obama said major reform of the health-care system "has to be intimately woven into our overall economic recovery plan."
"It's not something that we can sort of put off because we're in an emergency," he said. "This is part of the emergency."
Daschle, a former Senate majority leader, said that "addressing our health-care challenges" offers the best hope for reducing personal bankruptcies, improving American competitiveness and helping "pull our economy out of its current tailspin."
Their comments came just hours after the government announced that the number of Americans filing for unemployment benefits for the week ending Dec. 6 was 570,000, the highest in 26 years.
"It's hard to overstate the urgency of this work," Obama said.
Part of the political rationale for adding more health-care projects to the recovery package is to "get a running start" on the larger goal of broad health reform, said Nancy LeaMond, an executive vice president at the seniors' lobby AARP. "This builds momentum."
Additionally, including health-care reform measures in the context of the economic recovery bill would keep Congress from having to deal with those debates and expenditures in the later, larger discussion, said Senate Finance Committee Chairman Max Baucus (D-Mont.).
"We're going to be very busy here in Congress," he said in an interview. Baucus aims to begin marking up a stimulus bill the first week of January in hopes that it can be ready by Inauguration Day. He is pressing to include provisions that would steer money into health technology, such as adoption of electronic medical records, and reauthorization of the SCHIP program for two to three years.
"It's very important that health IT be part of the economic recovery," he said. "It represents the beginning of health-care reform."
During the campaign, Obama spoke of spending $50 billion on modernizing the health-care system by helping doctors and hospitals install and use computers. Sources involved in preparing the stimulus package said it might include $10 billion of that as a down payment.
"Investing in the health of the American people is a crucial part of the nation's economic recovery," said Sen. Edward M. Kennedy (D-Mass.), chairman of the Health, Education, Labor and Pensions Committee. "Modernizing our health-care system through better use of information technology is the key to easing the heavy burden of health-care costs."
Physicians have consistently complained that moving to electronic medical records or electronic prescribing involves spending money to purchase equipment and train workers. Several Democrats yesterday said the money could help defray the cost of those capital expenditures, pay for training programs or fund ongoing research on developing standards.
Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means health subcommittee, is lobbying to expand COBRA insurance and provide subsidies to people who cannot afford the premiums. Currently, unemployed people can purchase health coverage through their previous employer, but it expires after 18 months and the individual must pay the full price plus an administrative fee. "When people lose their jobs, they lose their health insurance," he said. "Not having health care is right up there with food and shelter."
In addition to his Cabinet post, Daschle will be head of the new White House Office of Health Reform. His deputy will be Jeanne Lambrew, a veteran of the Clinton administration who co-wrote a book with Daschle on health-care reform.
In making the announcement, Obama described his friend Daschle as "the original no-drama guy."
Sunday, December 14, 2008
Our Disinformed Electorate
Our Disinformed Electorate
December 12, 2008
by Kathleen Hall Jamieson and Brooks Jackson
We saw more aggressive fact-checking by journalists in this election than ever before. Unfortunately, as a post-election Annenberg Public Policy Center poll confirms, millions of voters were bamboozled anyway.
More than half of U.S. adults (52 percent) said the claim that Sen. Barack Obama’s tax plan would raise taxes on most small businesses is truthful, when in fact only a small percentage would see any increase.
More than two in five (42.3 percent) found truth in the claim that Sen. John McCain planned to "cut more than 800 billion dollars in Medicare payments and cut benefits," even though McCain made clear he had no intent to cut benefits.
The first falsehood was peddled to voters by McCain throughout his campaign, and the second was made in a pair of ads run heavily in the final weeks of the campaign by Obama.
These aren’t isolated examples. One in four (25.6 percent) of those who earned too little to have seen any tax increase under Obama's plan nevertheless believed that he intended to "increase your own federal income taxes," accepting McCain's repeated claims that "painful" tax hikes were being proposed on "families." Nearly two in five (39.8 percent) thought McCain had said he would keep troops in combat in Iraq for up to 100 years, though he’d actually spoken of a peacetime presence such as that in Japan or South Korea. Close to one in three (31 percent) believed widely disseminated claims that Obama would give Social Security or health care benefits to illegal immigrants, when in fact he would do neither.
We’re not surprised. As we wrote in "unSpun: finding facts in a world of disinformation," the same thing happened in 2004 when majorities of voters believed untrue things that had been fed to them by the Bush and Kerry campaigns.
One reason is obvious: Political ads run thousands of times and reach far more people than articles on FactCheck.org. On our best day, we were read by 462,678 visitors. By contrast, the Obama campaign aired two ads claiming that McCain planned to cut Medicare benefits a total of 17,614 times at a cost estimated to be more than $7 million – which is several times more than FactCheck.org's entire annual budget.
There are deeper reasons as well. We humans all have a basic disposition to embrace our side's arguments and reject or ignore those offered by an opponent. Our polling reflects that. After taking differences in age, race, gender and education into account, Republicans were still 4.4 times more likely than Democrats to believe that Obama would raise taxes on most small businesses, and Democrats were 3.2 times more likely than Republicans to believe that McCain would cut Medicare benefits. Simply put, partisanship trumps evidence.
This also helps explain why so many people accept the most preposterous claims circulated by chain e-mail messages and ignorant or irresponsible bloggers. Our poll found nearly one in five (19 percent) falsely think Obama is a Muslim, and even more (22 percent) find truth in the claim that he’s nearly half Arab. Republicans were 2.8 times more likely than Democrats to buy the Muslim claim, and just over twice as likely to swallow the half-Arab notion.
This is "group think" in action. We humans tend to marry, date, befriend and talk with people who already agree with us, and hence are less likely to say, "Wait a minute – that’s just not true."
Consultants also dupe us by exploiting our partisan preconceptions. People tend to believe Democrats are more likely than Republicans to raise taxes, so McCain was pushing on an open door when he repeatedly claimed Obama would raise taxes on ordinary voters, and not just the most affluent. By the same token, Obama found it easy to sell his bogus claim that McCain planned to cut Medicare benefits by 22 percent, because Republicans have a reputation as opponents of social programs.
Voters aren’t highly knowledgeable about government to begin with. Our poll shows that nearly one in three (31 percent) think Congress or the president, not the Supreme Court, have the final call on whether laws are constitutional. Nearly one in 10 (9.9 percent) think Republicans still control the House of Representatives, even though they’ve had two years to catch up on results of the 2006 elections.
And voters, once deceived, tend to stay that way despite all evidence. Nearly half in our poll (46 percent) agreed that Saddam Hussein played a role in the attacks of September 11, even though no solid evidence has ever emerged to support this notion.
None of this bodes well for the future, in our view. Spending hundreds of millions of dollars on campaigns that systematically disinform the public can only make the task of governing harder for the eventual winner. But are we discouraged that our efforts didn’t prevent this? Not at all. If we hadn’t tried, it might have been worse.
Kathleen Hall Jamieson is director of the University of Pennsylvania’s Annenberg Public Policy Center. Brooks Jackson is director of the APPC project FactCheck.org. They are co-authors of "unSpun, finding facts in a world of disinformation."
The Annenberg post-election poll was conducted by Princeton Survey Research Associates International, which interviewed 3,008 adults in the continental United States by telephone from Nov. 5 through Nov. 18, 2008. The margin of sampling error for the complete set of weighted data is ±2.3 percent.
December 12, 2008
by Kathleen Hall Jamieson and Brooks Jackson
We saw more aggressive fact-checking by journalists in this election than ever before. Unfortunately, as a post-election Annenberg Public Policy Center poll confirms, millions of voters were bamboozled anyway.
More than half of U.S. adults (52 percent) said the claim that Sen. Barack Obama’s tax plan would raise taxes on most small businesses is truthful, when in fact only a small percentage would see any increase.
More than two in five (42.3 percent) found truth in the claim that Sen. John McCain planned to "cut more than 800 billion dollars in Medicare payments and cut benefits," even though McCain made clear he had no intent to cut benefits.
The first falsehood was peddled to voters by McCain throughout his campaign, and the second was made in a pair of ads run heavily in the final weeks of the campaign by Obama.
These aren’t isolated examples. One in four (25.6 percent) of those who earned too little to have seen any tax increase under Obama's plan nevertheless believed that he intended to "increase your own federal income taxes," accepting McCain's repeated claims that "painful" tax hikes were being proposed on "families." Nearly two in five (39.8 percent) thought McCain had said he would keep troops in combat in Iraq for up to 100 years, though he’d actually spoken of a peacetime presence such as that in Japan or South Korea. Close to one in three (31 percent) believed widely disseminated claims that Obama would give Social Security or health care benefits to illegal immigrants, when in fact he would do neither.
We’re not surprised. As we wrote in "unSpun: finding facts in a world of disinformation," the same thing happened in 2004 when majorities of voters believed untrue things that had been fed to them by the Bush and Kerry campaigns.
One reason is obvious: Political ads run thousands of times and reach far more people than articles on FactCheck.org. On our best day, we were read by 462,678 visitors. By contrast, the Obama campaign aired two ads claiming that McCain planned to cut Medicare benefits a total of 17,614 times at a cost estimated to be more than $7 million – which is several times more than FactCheck.org's entire annual budget.
There are deeper reasons as well. We humans all have a basic disposition to embrace our side's arguments and reject or ignore those offered by an opponent. Our polling reflects that. After taking differences in age, race, gender and education into account, Republicans were still 4.4 times more likely than Democrats to believe that Obama would raise taxes on most small businesses, and Democrats were 3.2 times more likely than Republicans to believe that McCain would cut Medicare benefits. Simply put, partisanship trumps evidence.
This also helps explain why so many people accept the most preposterous claims circulated by chain e-mail messages and ignorant or irresponsible bloggers. Our poll found nearly one in five (19 percent) falsely think Obama is a Muslim, and even more (22 percent) find truth in the claim that he’s nearly half Arab. Republicans were 2.8 times more likely than Democrats to buy the Muslim claim, and just over twice as likely to swallow the half-Arab notion.
This is "group think" in action. We humans tend to marry, date, befriend and talk with people who already agree with us, and hence are less likely to say, "Wait a minute – that’s just not true."
Consultants also dupe us by exploiting our partisan preconceptions. People tend to believe Democrats are more likely than Republicans to raise taxes, so McCain was pushing on an open door when he repeatedly claimed Obama would raise taxes on ordinary voters, and not just the most affluent. By the same token, Obama found it easy to sell his bogus claim that McCain planned to cut Medicare benefits by 22 percent, because Republicans have a reputation as opponents of social programs.
Voters aren’t highly knowledgeable about government to begin with. Our poll shows that nearly one in three (31 percent) think Congress or the president, not the Supreme Court, have the final call on whether laws are constitutional. Nearly one in 10 (9.9 percent) think Republicans still control the House of Representatives, even though they’ve had two years to catch up on results of the 2006 elections.
And voters, once deceived, tend to stay that way despite all evidence. Nearly half in our poll (46 percent) agreed that Saddam Hussein played a role in the attacks of September 11, even though no solid evidence has ever emerged to support this notion.
None of this bodes well for the future, in our view. Spending hundreds of millions of dollars on campaigns that systematically disinform the public can only make the task of governing harder for the eventual winner. But are we discouraged that our efforts didn’t prevent this? Not at all. If we hadn’t tried, it might have been worse.
Kathleen Hall Jamieson is director of the University of Pennsylvania’s Annenberg Public Policy Center. Brooks Jackson is director of the APPC project FactCheck.org. They are co-authors of "unSpun, finding facts in a world of disinformation."
The Annenberg post-election poll was conducted by Princeton Survey Research Associates International, which interviewed 3,008 adults in the continental United States by telephone from Nov. 5 through Nov. 18, 2008. The margin of sampling error for the complete set of weighted data is ±2.3 percent.
Saturday, December 13, 2008
Fortune magazine ranked Mozilo as the 13th-highest-paid male executive in 2006,
Big Payday Awaits Chairman After Countrywide Sale
By Frank Ahrens
Washington Post Staff Writer
Saturday, January 12, 2008; Page D01
Angelo R. Mozilo has pocketed $410 million in salary, bonuses and stock-option gains since he became executive chairman of mortgage lender Countrywide Financial in 1999, according to the executive compensation company Equilar.
Now, the man at the center of the national mortgage crisis stands to collect an additional $112 million in severance when Bank of America buys the company he helped found.
Equilar's numbers are based on Countrywide's most recent proxy statement, which is a year old. According to the statement, if Countrywide is acquired and Mozilo leaves, he is entitled to a cash severance of $88 million. He would also receive a retirement package worth $24 million.
Equilar said that most of Mozilo's compensation since becoming chairman -- $285 million -- has come from stock options. Mozilo has been criticized for selling pieces of his stake in Countrywide, cashing in tens of millions of dollars in options as the housing market dropped.
Mozilo, 69, is a native New Yorker and son of a butcher. He graduated from Fordham University in the Bronx in 1960. While in high school, he took a job at a mortgage company and learned the trade as a messenger and file clerk.
Mozilo went to work full time in the mortgage industry right out of college. His first success came during the population boom at Cape Canaveral, Fla., in the 1960s after President John F. Kennedy's announced goal of putting a man on the moon. He wrote loans for aerospace engineers who descended on the cape to work for NASA, and eventually underwrote home loans across Florida.
In 1969, Mozilo launched Countrywide in Calabasas, Calif., with David Loeb, a former boss and mentor. They had a novel storefront business plan that tried to simplify the mortgage process and replace salesmen with bank-like customer service.
Mozilo said that every American who wanted to buy a home ought to be able to buy one -- a sentiment that led to millions of borrowers in recent years getting mortgages they could not afford.
Fortune magazine ranked Mozilo as the 13th-highest-paid male executive in 2006, with a total compensation of $43 million. He does not crack Forbes's list of the 400 richest Americans, however, meaning that his net worth is less than $1.3 billion.
His contract as chairman of Countrywide runs through the end of next year, and he is expected to continue as a non-employee chairman of the board until the end of 2011. During that time, he will receive a director's salary, plus $200,000 a year, office space and the use of the corporate jet for business trips. His country-club dues will also be paid.
Even if Mozilo is fired as chairman, he would receive $400,000 a year to consult until the end of 2011.
Mozilo can expect pressure from shareholders and members of Congress to part with some of his compensation.
In a written statement yesterday, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Mozilo, "who will be profiting from this transaction personally," should "donate a substantial portion of the $150 million he has collected over the last several years to nonprofits and other institutions that are helping us deal with the problem he helped to create."
Countrywide's stock price has fallen 79 percent in the past year, and the Securities and Exchange Commission has been looking at Mozilo's stock sales during the decline. He has said he did nothing wrong.
Mozilo holds an honorary doctorate from Pepperdine University, has been on the board of Home Depot and is a member of the board of trustees of Gonzaga University.
Staff researcher Richard Drezen contributed to this report.
By Frank Ahrens
Washington Post Staff Writer
Saturday, January 12, 2008; Page D01
Angelo R. Mozilo has pocketed $410 million in salary, bonuses and stock-option gains since he became executive chairman of mortgage lender Countrywide Financial in 1999, according to the executive compensation company Equilar.
Now, the man at the center of the national mortgage crisis stands to collect an additional $112 million in severance when Bank of America buys the company he helped found.
Equilar's numbers are based on Countrywide's most recent proxy statement, which is a year old. According to the statement, if Countrywide is acquired and Mozilo leaves, he is entitled to a cash severance of $88 million. He would also receive a retirement package worth $24 million.
Equilar said that most of Mozilo's compensation since becoming chairman -- $285 million -- has come from stock options. Mozilo has been criticized for selling pieces of his stake in Countrywide, cashing in tens of millions of dollars in options as the housing market dropped.
Mozilo, 69, is a native New Yorker and son of a butcher. He graduated from Fordham University in the Bronx in 1960. While in high school, he took a job at a mortgage company and learned the trade as a messenger and file clerk.
Mozilo went to work full time in the mortgage industry right out of college. His first success came during the population boom at Cape Canaveral, Fla., in the 1960s after President John F. Kennedy's announced goal of putting a man on the moon. He wrote loans for aerospace engineers who descended on the cape to work for NASA, and eventually underwrote home loans across Florida.
In 1969, Mozilo launched Countrywide in Calabasas, Calif., with David Loeb, a former boss and mentor. They had a novel storefront business plan that tried to simplify the mortgage process and replace salesmen with bank-like customer service.
Mozilo said that every American who wanted to buy a home ought to be able to buy one -- a sentiment that led to millions of borrowers in recent years getting mortgages they could not afford.
Fortune magazine ranked Mozilo as the 13th-highest-paid male executive in 2006, with a total compensation of $43 million. He does not crack Forbes's list of the 400 richest Americans, however, meaning that his net worth is less than $1.3 billion.
His contract as chairman of Countrywide runs through the end of next year, and he is expected to continue as a non-employee chairman of the board until the end of 2011. During that time, he will receive a director's salary, plus $200,000 a year, office space and the use of the corporate jet for business trips. His country-club dues will also be paid.
Even if Mozilo is fired as chairman, he would receive $400,000 a year to consult until the end of 2011.
Mozilo can expect pressure from shareholders and members of Congress to part with some of his compensation.
In a written statement yesterday, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Mozilo, "who will be profiting from this transaction personally," should "donate a substantial portion of the $150 million he has collected over the last several years to nonprofits and other institutions that are helping us deal with the problem he helped to create."
Countrywide's stock price has fallen 79 percent in the past year, and the Securities and Exchange Commission has been looking at Mozilo's stock sales during the decline. He has said he did nothing wrong.
Mozilo holds an honorary doctorate from Pepperdine University, has been on the board of Home Depot and is a member of the board of trustees of Gonzaga University.
Staff researcher Richard Drezen contributed to this report.
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