There’s a shocking story in today’s Post about how Countrywide’s Angelo Mozillo said the company would be profitable in the fourth-quarter and—HOMG—it wasn’t. An investor in Georgia is “a little bit disappointed” that he lost $3,200 and a lot of people are just plain hurt that they were taken for a ride (in AM’s red Iroc, whose plates read: ‘mohazard’). The shocking part is that the paper is supposedly surprised that Mystic Tan man would lie about the mortgage lender’s outlook, even though it’s been established for some time that Ang. would, in his own words, “screw you for a nickel, or a used tanning bed and some UV goggles.” We’d expect this sort of bright-eyed innocence from Andrew Ross Sorkin or Don Klarney but the Post? You guys are supposed to be better—and more versed in jabroni—than that. Oh well. You know we can’t stay mad at you for too long. Not when you’re turning out graphics like that.
No Bottom Yet [NYP]

There’s little in Countrywide’s earnings announcement that seem likely to shake Bank of America from its desire to own the home lending giant. Indeed, shares of Countrywide moved up this morning and the merger arb gap narrowed to 80% or so, implying that traders are getting more confident the deal will eventually close.
This morning the Wall Street Journal carried an interesting article that claims to explain why Countrywide agreed to sell out to Bank of America. Pressure from ratings agencies and regulators threatened to end the way Countrywide did business, the article claims, and this drove the mortgageer into the arms of Bank of America.
But to really understand the article you have to read it backwards, like a teenager spinning a record backwards to hear the hidden demonic exhortation. The real story here is how the government has been funding Countrywide by lending it money through the Federal Home Loan Banks system and guaranteeing deposits in its CDs through the Federal Deposit Insurance Corp. Countrywide CDs had enormous interest rates, and those government guarantees allowed depositors to derive risk free yields of more than 5% in recent months. As those deposits grew, so did its ability to borrow through the FHLB, which allows borrowing on up to 50% of a home loan banks deposit assets.
In short, these government programs allowed Countrywide to escape the discipline of the marketplace for several months. And it was only recent attention from lawmakers and regulator that cast doubt on the willingness of the government to continue these subsidies.
Countrywide Deal Driven by Crackdown Fear [Wall Street Journal]

People always say that hindsight is twenty-twenty but that gives the present moment too much credit. In fact, hindsight is usually just as myopic and cloudy as foresight or, well, uhm, just plain sight. Take the mortgage meltdown. Already it’s started to slip the minds of many just how loose things got in the hey day of the mortgage market.
No doc. Low doc. Stated income. All those commercials assuring us that bad credit shouldn’t stand in the way of the American dream, which apparently involved taking on massive amounts of debt to own a home in Florida or the suburbs of Las Vegas. We remember the words, the catch phrases, the scenes of happy couples in their new home. But it’s started to fade, hasn’t it?
Well, in the interest in memory preservation, we’ve decided to bring you the twenty-first issue of the twenty-seventh volume of National Mortgage News. On Monday, February 17, 2004, the National Mortgage News informed its readers that Angelo Mozilo wanted to eliminate downpayments on mortgages. Actually contributing equity to purchase a home is “nonsense,” Mozilo tells the News. He decries credit score requirements as too high.
“The only way we can have a better society,” Mozillo says, “is to make sure those who don’t have a house have the opportunity to get one.”
Welcome, ladies and gentlemen, to the better society.
Mozilo: End Downpayment Requirement [National Mortgage News; pdf]

Countrywide Financial Corp has said the rumors of a possible bankruptcy filing later today are “absolutely false,” The Wall Street Journal is reporting.
Update: Reuters is reporting that the company won’t return their phone calls.
Update II: We didn’t even bother calling. What are they going to say? And would the spokesperson tell us the truth anyway? Would the spokesperson even know if they were filing?
Developing…
Treasurys Gain After Fed Minutes [Wall Street Journal]

Countrywide plummets as mortgage jitters grow [Reuters]