Angelo Mozilo's loans to friends: the real story

The Wall Street Journal reports (subscription required) that "Dealings with Countrywide Financial Corp. (NYSE: CFC) are becoming a liability in political circles."

Democratic Senator Kent Conrad of North Dakota is donating $10,500 to Habitat For Humanity, in a nice gesture designed to compensate for the fact that he received a loan under special terms from Countrywide -- part of a program at the company known as F.O.A., meaning friends of Angelo Mozilo, the company's CEO.

Barack Obama advisor James Johnson resigned from the campaign after the media reported that he had received a special loan, and Senator Chris Dodd has come under fire for something similar.

Political corruption is one thing and, as political corruption goes, this hardly seems worth noting, especially in the current climate. But it hasn't gotten any attention as a corporate governance matter, and it should. Angelo Mozilo was paid hundreds of millions of dollars to run Countrywide Financial and he appears to have used shareholder assets to give special deals to his friends. If he wanted to give gifts to friends, he should have done it with his money.

Is it material? No, probably not. It's just more evidence of the fact that Angelo Mozilo ran the company as a personal fiefdom -- the opposite of the way a public company should be run, but not much different from the way most probably are.