Excerpts from Mozilo E-Mails

A fascinating look a excerpts of e-mails from Angelo Mozilo, former CEO of Countrywide Financial, as released June 4 by the Securities & Exchange Commission. The SEC has charged Mozilo with insider trading and civil fraud. Civil fraud charges also were filed against Countrywide's former Chief Operating Officer David Sambol and ex-Chief Financial Officer Eric Sieracki. All three have denied wrongdoing.

Sept. 26, 2006—following up a meeting with Sambol the previous day about the pay-option ARM loan portfolio:

"We have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet. The only history we can look to is that of World Savings however their portfolio was fundamentally different than ours in that their focus was equity and our focus is fico. In my judgement [sic], as a long time lender, I would always trade off fico for equity. The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales."