You (not) Talkin’ to Me?

An Open Letter to Angelo Mozilo, CEO of Countrywide

As a full-time REALTOR and as an owner/partner in real estate based businesses, I have a fairly vested interest in what is going on at Countrywide. To date, your silence has been deafening.

Let’s review Corporate Crisis Management 101 for a moment. The best way to handle a corporate crisis (you’re definitely there in case you missed it) is to execute the following:

1. Ensure clear and accurate information reaches all affected. At this point I would guess that equals 2/3 of the American public between mortgagees, investors and people impacted by the direct actions of Countrywide and it’s ripple effect in the mortgage and real estate industries.

2. Reduce as much tension as possible, and do it quickly. Take notes from Robert Eckert at Mattel on this point, he is handling their recall crisis like a Pro. I have lost count of how many times I have read his comments or seen him talking on television about this issue and the actions they are taking to correct it and protect the public going forward. Your problem is admittedly more complex; it’s only being exacerbated by your continued silence.

3. Demonstrate Corporate Commitment and Expertise. See my comment on Point # 2.

4. Manage your resources effectively. With the credit marketing tightening on an almost hourly basis last week I thought exhausting the $11.5 billion credit line was a smart move. I also realize that I am in the minority on this position; my caveat would have been telling the media I did so because I was concerned that it might dry up and take away a needed safety net. I would not have allowed the speculation to run rampant like it has and let the media define it as a move of desperation needed to meet operating cash flow requirements instead of you defining it as a move to ensure access to existing credit. Even if it the media was right I would have spun the story to soften the blow but hey, I’m not the CEO of Countrywide.

These are all pretty basic points. Countrywide just announced 500 +/- layoffs (to start) in it’s Full Spectrum Lending division and the announcement didn’t come from the top. (See comments on Point #2.)
With campuses in California (Pasadena and Rosemead), Chandler, AZ and Texas (Ft. Worth, Plano & Richardson) there are a lot of people wondering when the other shoe is going to drop. Granted, that division deals primarily in Alt-A paper and since that part of the market is one you are consciously walking away from the market understands that move. I believe the plan going forward is to have 90% of the loans Countrywide originates be conforming so a large division for Alt-A/Jumbo loans doesn’t make sense.

As the proverbial 800 pound gorilla in the industry, Countrywide has a significant responsibility to manage it’s impact on it’s peers, the Market and economy as a whole. As the CEO of Countrywide it is your personal responsibility. Your primary goal was to make Countrywide the biggest and the best; it’s time to convince us we were wise to support your goal.

Yeah, I’m talkin’ to you.

(Disclaimer: I am a fan of Countrywide, just disappointed in the way Management is handling their current difficulties.)