All right. Welcome back to the Deep Dive. So
today, we're opening up a file that, honestly,
I think a lot of us think we know the story of.
Oh, it's so much deeper. I mean, this is really
the definitive story of the American economy
for, what, a 30 -year span? It really is. It
has everything. You've got massive ambition.
You've got this incredible growth story. But
then systemic corruption and a collapse so huge,
it... It almost took the entire world down with
it. It's the whole package. We are, of course,
talking about countrywide financial. And to kick
things off, I want to just throw a number at
you. I found this researching the episode and
I had to like read it three times because I thought
it was a typo. I think I know which one you're
talking about. And it is it is staggering every
single time. OK, so if you invested in countrywide
stock in 1982 and you just held on to it until
2003. What do you think that return was? It sounds
like something from, you know, the dot -com bubble
or the crypto craze. But this was a mortgage
company, a boring mortgage company. 23 ,000%.
There it is. 23 ,000%. I mean, that beat Walmart
during its rocket ship growth phase. It beat
Warren Buffett's Berkshire Hathaway. Fortune
magazine literally called it the 23 ,000 % stock.
It was an absolute machine for two decades. It
wasn't just, you know, a successful company.
It was a money printing operation. And you have
to understand that context, that high point to
really get how catastrophic the fall was. Right.
Because by 2006, at their peak, Countrywide wasn't
just a lender. They were the lender. They were
financing one out of every five mortgages in
the United States. Stop and think about that.
One in five. You drive down any suburban street
in America in, say, 2006 and every. The fifth
house you pass was financed by these guys, by
Angelo Mozilla. Exactly. The value of the loans
on their books was something like three and a
half percent of the entire U .S. GDP. That's
insane. No single lender had ever, ever had that
kind of power over the American housing market.
And yet today, I mean, the name Countrywide,
there's basically a swear word in finance. It's
just synonymous with toxic, with fraud. It went
from this Wall Street darling to, you know, facing
bankruptcy rumors almost overnight. And then,
of course, it was swallowed by Bank of America.
But we're going to get to the deal, often called
the single worst acquisition in banking history.
It's definitely in the running. So that's our
mission today. We want to bridge that gap. How
does a company go from a 23 ,000 percent return
to being the absolute face of the financial crisis?
We're going to unpack the business model, which
is way more complex than just lending money.
Right. We're going to get into the scandals,
the infamous friends of Angelo lists and the
just. massive, massive financial hangover that
Bank of America inherited. So let's rewind. Let's
go back to the beginning. Where did this monster
come from? It wasn't born a giant. Not at all.
It started actually very humbly in 1969, founded
by two guys, David Loeb and the man himself,
Angelo Mozilo. Angelo Mozilo. He's the main character
in this whole tragedy. Even his name sounds like
he's out of Scorsese film. You see the pictures,
the permattan, the flashy suits. He was a character,
a larger than life, very aggressive, very, very
ambitious guy. But in the beginning, Countrywide
was, it was not a rocket ship. Their IPO, their
initial public offering, was actually a flop.
Really? Yeah. It was described as less than successful.
The stock traded over the counter for pennies,
you know, less than a dollar a share. It was
a penny stock, basically. Essentially, yeah.
It took them until the mid 80s to really get
their footing and get listed on the New York
Stock Exchange. But once they hit their stride,
they just perfectly rode this huge wave of baby
boomers buying houses and interest rates going
down for 20 years. And just to set the stage
for everyone listening, because corporate names
change and brands are designed to make us forget.
But when you see Bank of America home loans today,
that is countrywide. That's the show. Bank of
America bought the chassis, right? They painted
it red, slapped their logo on it. But the engine,
the infrastructure, the DNA of that operation,
that was the machine that Angelo built. Precisely.
And that machine was something special. I think,
you know, a lot of people have this misconception
that a mortgage lender is like the bank for Mary
Poppins. Right. You put your tuppence in an account.
Yeah. And they lend that tuppence to your neighbor
to buy a house and they collect the interest.
Simple. They hold the loan. That's portfolio
lending. Right. They keep the loan on their own
books. Exactly. But that is not what Countrywide
was at all. They were built on a totally different
model called originate to distribute. They were
a factory. Their job was to originate the loan.
get you to sign the papers, and then almost immediately
sell that loan on what's called the secondary
market. All right, secondary market. This is
the key. This is the engine of the whole story,
really. It sounds technical, but the concept
is. It's actually pretty simple. Think of it
like a conveyor belt. You, the home buyer, come
to Countrywide. They give you the money. Now
Countrywide is holding your IOU, your mortgage.
They don't want to sit on that IOU for 30 years
and collect your little payments. They want their
cash back now. Right now. So they can go lend
it to the next person in line. So what they do
is they take your IOU, they bundle it with thousands
of other IOUs. And they create something called
a mortgage -backed security, an MBS. And then
they sell that big bundle, that security, to
big investors. We're talking pension funds, insurance
companies, foreign governments. Anybody with
a ton of cash looking for a return. So Countrywide
is just the middleman. They're just connecting
Wall Street money to Main Street homebuyers and
taking a fee for doing it. That's the core of
it. Yeah. Yeah. But Angelo Maslow was not content
with just being a middleman. He wanted to capture
every single dollar related to that transaction.
And this brings us to their real genius and their
real downfall. Vertical integration. Vertical
integration. Okay, business school buzzword.
Yeah. Usually means like Ford owning a rubber
plantation for their tires. You own the whole
supply chain. That's exactly what it was here.
They wanted to own every single step of you buying
a house. Let's just walk through a hypothetical.
It's 2005. You go to Countrywide for a loan.
They say, great, first thing we need is an appraisal
on the house to make sure it's worth what you're
paying. So who do you think they hire to do the
appraisal? An independent appraiser, I would
hope. You know, a neutral third party, to keep
everyone honest. You would hope. But no. They
hire a company called Landsafe. And Landsafe
is? A wholly owned subsidiary of Countrywide
Financial. Wait, wait, wait. So the lender owns
the appraiser. Isn't that a massive, glaring
conflict of interest? It's huge. If I'm the lender,
my whole business depends on making loans. I
want the appraisal to be high so the deal goes
through if I control the appraiser. You see the
problem immediately. The checks and balances
are just gone. It's a closed loop. If a land
safe appraiser starts coming in with low ball
appraisals and killing deals, who do you think
his boss at Countrywide is going to hear from?
It's not going to go well for him. Not at all.
And it didn't stop there. OK, we need a credit
report. Land safe pulls the credit report. We
need title insurance. Land safe provides the
title services. So they're literally paying themselves
to verify their own deals. It's like a student
getting to grade their own exam. 100%. And then,
once the loan is all signed, they say, great,
now you need homeowners insurance. And guess
who sells that? A company called Balboa Life
and Casualty? Let me guess. Also owned by Countrywide.
You got it. Another subsidiary. They'd sell you
property insurance, casualty insurance. They'd
even try to sell you life insurance. Every slice
of the pie. If a dollar was changing hands related
to that house, they wanted it to end up in a
countrywide pocket. It's brilliant from a purely
cynical business perspective. It's ruthlessly
efficient. But it also means you are so, so exposed
if the housing market ever turns. And we haven't
even gotten to the top of the food chain. The
final piece of this vertical machine was their
own capital markets division. OK. Remember we
said they sell those bundles of loans to Wall
Street. Well, eventually they just became Wall
Street. They set up their own broker dealer so
they could underwrite and trade their own mortgage
backed securities. Unbelievable. So let's recap
the flow. They find the borrower. They originate
the loan. Their own company appraises the house.
Their other company insures the house. Then they
bundle the loan into a security. And then their
other company sells that security to investors.
It's a completely self -contained, self -eating
financial ecosystem. And this whole factory,
this whole machine was incredibly, incredibly
profitable as long as one simple condition was
met. Volume. They needed a constant, never -ending
river of new borrowers walking in the door to
keep the fees flowing and the machine running.
And this is where the story starts to get really
dark. Because by, what, 2004, 2005, the pool
of good borrowers was starting to dry up. It
was tapped out. Everybody with a good credit
score, a stable job, 20 % for a down payment.
Yeah. They already had a house. They'd already
refinanced. The low -hanging fruit was gone.
So if you're Angelo Mozzillo. And your stock
has delivered 23 ,000 percent. And Wall Street
expects you to keep growing. But you've run out
of prime customers. What do you do? You lower
your standards. You widen the net. And this is
where Countrywide's super aggressive multi -channel
strategy came in. I saw this in the notes. They
broke it down into four different divisions.
And one of them was called full spectrum lending.
Right. That name sounds so corporate and clean.
We serve the full spectrum like a like a happy
rainbow. It's one of the great corporate euphemisms
of all time. Full spectrum was their internal
code for subprime. The source material is very
clear. This division focused on customers with
less than prime quality credit. This is where
they really started pushing the the exotic products.
Explain what an exotic product is in the mortgage
world. What made these loans so toxic? We're
talking about things like option ARAMs, which
are adjustable rate mortgages or interest -only
loans. But the worst were the negative amortization
loans. Negative amortization. Imagine taking
out a loan where for the first two or three years,
your monthly payment doesn't even cover the full
interest that's due. The unpaid interest just
gets tacked onto your loan balance. Exactly.
You make your mortgage payment every month, and
at the end of the year, you actually owe more
money than when you started. Your debt is going
up even though you're paying the bank. That seems
fundamentally broken. It's a time bomb. And it's
fine maybe if you're a sophisticated real estate
flipper who's going to be out of the house in
six months. But it is an absolute catastrophe
if you're a regular working family who just told,
don't worry about it. You can just refinance
in two years when your house is worth more. And.
Countrywide was pushing these hard. Extremely
hard. I mean, look at this number. In 2006, 45
% of all the loans they made were conventional
non -conforming loans. Okay, non -conforming.
Translate that for us. Conforming loans are the
safe ones. They meet the strict standards set
by the government -sponsored entities Fannie
Mae and Freddie Mac. Non -conforming means they
were too big or too risky. Basically, they were
loans that were too toxic for even the government
-backed giants to buy. So almost half their business
in 2006 was stuff that Fannie and Freddie wouldn't
touch with a 10 -foot pole? Exactly. And because
Fannie and Freddie wouldn't buy them, Countrywide
had to rely 100 % on private investors, Wall
Street banks, hedge funds to buy this risky paper.
And that's a key point. Because when those private
investors got nervous and walked away, Countrywide
had no safety net, no plan B. So we have the
machine, we have the risky products. But how
do they get so many people to sign on the dotted
line for these terrible loans? The research talks
about a practice called steering. This gets to
the real ethical rot at the heart of the sales
culture. Countrywide eventually had to settle
a major lawsuit with the New York attorney general
over this. That's the one. The investigation
found evidence that countrywide's loan officers
were systematically steering borrowers, specifically
black and Hispanic borrowers, into these high
cost subprime loans, even when those same borrowers
actually qualified for cheaper, safer prime loans.
So wait. I walk in the door. I've got a 750 credit
score. I qualify for the nice, simple 30 -year
fix at 5%. But the salesperson actively convinces
me to take the exploding ARM at 8 % instead.
Yes. Why on earth would they do that? Simple.
The incentives were perverse. The loan officers
and brokers were paid much higher commissions.
They were called yield spread premiums for selling
the riskier, more expensive loans. The worse
the deal was for you, the borrower, the bigger
the payday was for them. That is just... It's
pure predatory behavior. You're taking advantage
of people who trust you as an expert and deliberately
selling them a product that's bad for them because
it's good for you. That was the accusation. And
the evidence was pretty strong. I mean, internal
documents showed they were approving loans for
families that had as little as $1 ,000 in disposable
income for the whole year. $1 ,000? That's not
even one emergency. That's a flat tire. Exactly.
They were just trying to get the deal closed,
collect the fee, and pass the hot potato up the
chain. And what's so wild is that at the time,
there was this whole conflicting narrative around
this, right? It wasn't framed as predatory. He
was framed as inclusive. Oh, absolutely. This
is the complexity of it. An economist named Stan
Lebowitz pointed out that before the whole thing
blew up, Fannie Mae actually gave countrywide
awards. They called them a paragon of nondiscriminatory
lending for using flexible underwriting criteria.
Flexible underwriting. Another one of those great
euphemisms. It's a very polite way of saying
we ignore the traditional rules about income
and credit scores. Right. At the time, Angelo
Mazzillo would go on CNBC and he was very charismatic
and he would say. They were democratizing the
American dream. They were helping minorities
and working class families get into homes that
the old stuffy traditional banks would have turned
down. And, you know, on some level they were.
But they were doing it by strapping these families
to financial time bombs. It's that classic tension
between access and safety. If you take all the
guardrails off the highway, sure, more people
can get on. But you're going to have a lot more
catastrophic crashes. And the crash was coming.
But before we get to the explosion itself, we
have to talk about the Friends of Angelo. Because
while Countrywide was squeezing every last penny
out of subprime borrowers, there was a completely
different set of rules for the rich and powerful.
The VIP program. This is the part of the story
that just makes my blood boil. It's the smoking
gun that proves this wasn't just, you know, market
excess. This was outright corruption. It's a
stunning contrast. The story was broken by reporters
at Condé Nast Portfolio and The Wall Street Journal.
They uncovered this internal program for FOAs,
Friends of Angelo. And who was on this friends
list? It was a who's who. of Washington, D .C.
and the finance world. And this program gave
them access to special treatment waived fees,
lower interest rates, basically white glove service
that no normal person could ever get. OK, give
us some names. Senator Christopher Dodd. At the
time, he was the chairman of the Senate Banking
Committee. Wait, hold on. The actual chairman
of the committee in charge of regulating the
entire banking industry was getting a sweetheart
mortgage deal from the biggest mortgage lender
in the country. That's correct. Also on the list,
Senator Kent Conrad, who is chairman of the Senate
Budget Committee, and maybe the most damning
of all, James Johnson and Franklin Raines. Who
were they? They were both former CEOs of Fannie
Mae. Fannie Mae. The biggest buyer of Countrywide's
mortgages, the entity they needed to keep the
whole machine running. And here are their former
top executives getting millions of dollars in
loans on very favorable terms. Franklin Raines
alone reportedly got over $3 million in loans
through the program. It just screams payoff.
It looks like, hey, you keep the regulations
light, you keep buying our risky loans, and we'll
take care of your personal finances on the side.
It greased the wheels. It created this cozy relationship
at the absolute highest levels of power. And
the irony is just it's suffocating. Because later
on, Senator Dodd was one of the key figures proposing
the government bailout of the mortgage industry.
The guy writing the bailout bill was a VIP client
of the company that needed the bailout. Yeah.
You can't make this stuff up. You really can't.
He just paints this picture of a system where
the rules are for the little people. The smart
money knew they were playing a different game.
This scandal actually forced James Johnson to
resign from Barack Obama's vice presidential
search committee in 2008. It was a huge deal.
So you've got this two -tiered system, predatory
lending for the masses at the bottom and crony
capitalism for the elites at the top. It's just
a perfect storm waiting to break. And in August
of 2007, the storm finally hit. That was the
month the music stopped. Completely. Walk us
through the mechanics of this, because most people
think of the crash as 2008. They think of Lehman
Brothers in September. But for countrywide, the
heart attack happened a full year earlier. Right.
Remember that secondary market we talked about?
The investors who were buying up all those bundles
of risky loans? In August 2007, the market for
those nonconforming securities. It just froze
solid. What does froze mean in practical terms?
It means there were zero buyers at any price.
Countrywide traders would call a hedge fund or
a big bank and say, hey, we've got a billion
dollar package of Altay mortgages. You want it?
And the line would just go dead or they'd get
a ridiculous offer like 50 cents on the dollar.
So Countrywide has already paid out the cash
to the homeowners. They're holding all this paper,
these IOUs, and they desperately need to sell
that paper to get their cash back so they can
fund their own operations. And they can't. It's
a classic liquidity crisis. Suddenly, they are
stuck holding billions and billions of dollars
in toxic assets that are losing value by the
hour. And this is when the panic starts. The
panic starts on August 6th when a smaller competitor,
American Home Mortgage, suddenly collapses and
files for bankruptcy. And everyone in the market
knew they were playing the same game as Countrywide,
just on a smaller scale. So all eyes immediately
turned to Countrywide. And they had to file a
disclosure with the SEC. Right. Yes. They had
to publicly admit that these market disruptions
could seriously harm their financial condition.
In the world of banking, admitting you might
have a liquidity problem is like yelling fire
in a crowded theater. It started at the stampede.
And it led to an actual physical bank run. People
lining up with their branches. It did. It wasn't
just Wall Street investors. It was regular people
who had their life savings in a countrywide bank
savings account. On August 17th, there were lines
around the block. Billions of dollars were pulled
out. The stock price was in free fall. The cost
to insure their debt against default shot up
22 percent in a single day. So they were bleeding
out fast. What did they do? What were their emergency
measures? They pulled the ripcord on everything
they had. They had a massive $11 .5 billion credit
line with a group of other big banks. They drew
down the entire thing in one go. They maxed out
their credit card. Every last cent. It was a
signal to the market that they were hoarding
cash, preparing for a siege. And even that wasn't
enough. The Federal Reserve had to step in and
start emergency lending operations just to calm
the markets. And this is when Bank of America
first gets involved. This is August 2007. Right.
Bank of America makes a $2 billion investment
in Countrywide. They bought a special kind of
preferred stock. At the time, BOFA's CEO, Ken
Lewis, he thought he was being the hero, the
white knight. He thought he was getting a bargain
on a fundamentally great company that was just
having a temporary liquidity squeeze. A $2 billion
Band -Aid on a mortal wound. I mean, what a catastrophic
miscalculation. One of the biggest in history.
But while all this financial chaos was happening
inside Countrywide, things were getting truly
bizarre. We have to talk about the Protect Our
House campaign. Oh, this is my favorite detail.
It feels like it's ripped from an episode of
The Office, but like a much, much darker version.
It's September 2007. The company is on fire.
The stock is collapsing. They're in the middle
of laying off 20 percent of their entire workforce.
And what does management decide is the solution.
A loyalty oath. A loyalty oath. They rolled out
this internal PR campaign. They literally asked
all remaining employees to sign a pledge to tell
the countrywide story and defend the company
from bad press. And if you signed it, you got
what, a wristband? I got a bright green rubber
wristband that said, protect our house. And what
if you didn't sign it? If you didn't wear the
bracelet? Senior managers reportedly made it
very clear that if you weren't wearing the green
wristband, you weren't on the team. And if you
weren't on the team, eh. They were still laying
people off. Can you imagine the atmosphere in
that office? Your friends are getting fired.
You know the loans you're processing are garbage.
The news is saying your company's going bankrupt.
And your boss is making you wear a piece of rubber
jewelry to prove you're still loyal. It's dystopian.
It shows a leadership team that was completely,
utterly detached from reality. They thought they
could fix a solvency crisis with a pep rally.
But, you know, the math always wins in the end.
And by December 2007, the game was up. It was
over. That's when Angelo Mozilla made the call
to Ken Lewis at Bank of America. And according
to Lewis, Mozilla was ready to throw in the towel.
Let's talk about the valuation here. This is
the wealth destruction part of the story. It's
breathtaking. Just one year earlier, in early
2007. Countrywide's market value was about $24
billion. Okay. When Bank of America announced
the plan to buy them in January 2008, the price
tag was roughly $4 billion. From $24 billion
down to $4 billion, 85 % of the value just evaporated.
And it got even worse. Because the deal was an
all -stock deal, BOFA was paying with its own
shares, and BOFA's stock was also falling because
of the crisis. So by the time the deal actually
closed in July 2008, the final acquisition was
closer to $2 .5 billion. $2 .5 billion to buy
the biggest mortgage lender in America. On paper,
that sounds like the steal of the century. It's
like buying a mansion for the price of a tool
shed. That is exactly what Ken Lewis thought.
He famously said, and this quote will haunt him
forever, we weighed the short -term pain versus
what we think will be a very good deal. He sent
a team of 60 analysts to Countrywide's headquarters
to go through their books. They thought they
understood the risk. But they made a fatal mistake.
They analyzed the credit risk, the risk that
the homeowners would default. They completely
and totally underestimated the legal risk. 100%.
When you buy a company, you don't just buy its
assets and its branch offices. You buy its liabilities.
You buy its past sins. Bank of America inherited
the legal responsibility for every single fraudulent
loan, every predatory practice, every false statement
Countrywide had made for the past decade. And
the bill for those sins. They're tallying it
up because Bank of America Home Loans was born,
but the ghost of Countrywide haunted them for
a very, very long time. The legal bills were
astronomical. Almost immediately, in October
of 2008, they had to settle that massive predatory
lending lawsuit brought by a bunch of state attorneys
general. That settlement alone required them
to modify loans worth up to $8 .4 billion. $8
.4 billion. Let's just pause on that. They paid
$2 .5 billion for the entire company, and their
first act is to pay an $8 .4 billion settlement.
They are $6 billion in the hole from day one.
They're already massively underwater. And that
was just the appetizer. The main course came
in 2014 when Bank of America finally reached
a settlement with the U .S. Department of Justice
over the sale of all those toxic mortgage backed
securities. What was the price tag on that one?
Nearly 17 billion dollars. Yeah. 16 .65 to be
exact. 17 billion. It's a number so big it's
hard to even process. And a huge percentage of
those toxic securities that led to that fine
originated at Countrywide. If you add it all
up, the purchase price, the dozens of settlements,
the legal fees, the loan write downs. Most analysts
estimate that the countrywide acquisition ultimately
cost Bank of America more than 50 billion dollars.
$50 billion in losses on a $2 .5 billion purchase.
It was a black hole that sucked capital out of
Bank of America for years. It destroyed Ken Lewis's
career. It permanently damaged their brand. It
is the textbook case study in what happens when
you let deal fever blind you to the real risks.
And what happened to the men at the top? What
about Mozilo? Did he face any real consequences?
Not jail time, no. The SEC did charge him in
2009 with insider trading and securities fraud.
The accusation being what? The accusation was
that he was aggressively selling his own shares
of countrywide stock. He made almost $300 million
in profit between 2005 and 2007. At the exact
same time, he was publicly telling shareholders
that the company was rock solid and the loan
portfolio was sound. So the captain was filling
his own lifeboat with gold while telling the
passengers the ship was unsinkable. That's a
pretty good analogy. He eventually settled with
the SEC. He paid a fine of about $67 million,
and he agreed to a lifetime ban from ever being
an officer or director of a public company again.
$67 million is a lot of money, but compared to
the $300 million he made? It's a fraction. He
never admitted any wrongdoing, and he walked
away a very, very wealthy man. Countrywide, he
even paid for his legal defense. Of course they
did. Before we wrap, there's one other little
footnote in this story that's worth mentioning.
IndyMac. Ah, yes. Countrywide's evil twin. IndyMac
started as a spinoff from Countrywide, right?
It did, way back in 97. It became its own independent
bank, but it had the same DNA, the same aggressive
culture, the same focus on those risky alte and
subprime loans. And in July of 2008, at the exact
same moment, Bank of America was finalizing the
Countrywide deal IndyMac collapsed. And that
was a very ugly failure. It was. The biggest
bank failure in a generation at that point, federal
regulators had to seize it after a massive bank
run. You saw those pictures on the news. People
lined up for blocks in the hot summer sun in
California, desperate to get their life savings
out. It was this really visceral, terrifying
preview of the wider chaos that was about to
hit that fall with Lehman Brothers. It really
proved that the business model itself was fundamentally
broken. It wasn't just a few bad managers at
Countrywide. The whole philosophy of originate
to distribute without any skin in the game was
just a suicide pact. It was a model built entirely
on one flawed assumption that home prices on
a national level would never, ever go down. Once
that one assumption broke, the whole machine
went into reverse. And instead of printing money,
it started destroying capital at a rate the world
had never seen before. So let's try and synthesize
this whole epic story. You have a company that
starts small, delivers a 23 ,000 % return, becomes
the absolute center of the American housing market,
seduces Wall Street, corrupts Washington, and
then implodes in the most spectacular fashion
imaginable. And I think the key lesson, if you're
trying to make sense of it all, is to look past
the complicated acronyms, you know, the MBSs
and the CDOs. That's all just noise. The core
story is incredibly simple. It's about misaligned
incentives. If you pay a salesman a huge commission
to sell a bad product. he's going to sell a lot
of that bad product. And if you pay a CEO in
stock options that reward short -term gains,
he's going to take massive long -term risks to
juice the stock price now. And if you give powerful
politicians VIP treatment and special deals,
they are probably going to look the other way
when it's time to enforce the rules. It all comes
down to the human element. We can talk about
risk models and algorithms all day, but this
was a story about greed and fear and ambition
and who had the power. And the victims of that
were real people. We talk about borrowers and
subprime, like they're just abstract data points.
But these were families who lost their homes.
These were employees who were forced to sign
loyalty oaths and then lost their jobs and their
careers. These were retirees who had their pension
funds invested in countrywide stock that went
to zero. That's the part that really sticks with
me. The friends of Angelo and the executives,
they all had a soft landing. But the regular
people at the bottom of the pyramid just hit
the pavement hard. Which leaves you with a pretty
provocative thought to mull over. We're always
told that our financial system is supposed to
be this rational risk -based meritocracy, right?
You get a loan based on your credit score. But
when you pull back the curtain on a company like
Countrywide, you see that the people at the very
top, the ones writing the laws and setting the
rules, were playing a completely different game
with a completely different set of rules. So
when the whole system finally broke, was it really
because of lax standards for poor people trying
to buy a home? Or was it because the people on
the penthouse were too busy enjoying the party
to ever check the building's foundation? I think
when you look at the evidence, the answer becomes
pretty clear. So the next time you look at your
own mortgage statement, take a second to think
about the long, strange journey that piece of
paper has taken through the global financial
system. It's never just a piece of paper. Thanks
for listening to The Deep Dive. We'll see you
next time.