Sanford Kurland, who was Angelo Mozilo`s right-hand man at Countrywide Financial through 2006, has a new business, PennyMac
, which buys dubious mortgages for pennies on the dollar that the Federal Deposit Insurance Corporation has wound up with from taking over collapsing banks.
It all makes perfect sense. Who knows more about toxic assets than Countrywide executives?
Interestingly, one of the largest banks to be "resolved"
by the FDIC last year was IndyMac.
IndyMac, PennyMac. Hmmhmm ... Must be just a coincidence.
Except, that IndyMac was another
spinoff of Countrywide. Wikipedia says:
IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 by David S. Loeb and Angelo Mozilo as a means of collateralizing Countrywide Financial loans too big to be sold to Freddie Mac and Fannie Mae. In 1997, Countrywide spun off IndyMac as an independent company. "Mac" is an established contraction for "Mortgage Corporation," usually associated with Government sponsored entities such as "Freddie Mac" (Federal Home Loan Mortgage Corporation) and "Farmer Mac" (Federal Agricultural Mortgage Corporation). Indymac, however, had always been a private corporation with no relationship to the government.
PennyMac is also a private corporation, although it does a lot of business with the federal government. Perhaps, though, this whole distinction between private for-profit businesses versus government entities has become academic in the Bush-Obama Era.
For 20 months now, I`ve been reading about how it`s completely beyond the power of human comprehension to untangle mortgage backed securities and figure out about what they are really worth, that no mortal man could possibly understand their complexity, that not enough computing power exists to make sense of them. I guess I kind of believed that when I heard it back in August 2007, but that was a long time ago.
I suspect that insiders have been working hard on this question for some time, and Tim Geithner`s new "legacy asset"
plan has come along at just the right time for them to cash in.
Funny how investors with less than $10 billion are not allowed to bid