It seems every time Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo goes out in public, the first thing he says is that his company won't go bankrupt. He said it again late yesterday on CNBC. According to Reuters he stated, "Bankruptcy is an issue that nobody can ever eliminate, although I don't think it's possible or probable for Countrywide."

The market does not take Mr. Mozilo at his word. The company's stock is off to $10.68 from a 52-week high of $45.26. But more important, over the last month, Countrywide is off almost 30% while Washington Mutual (NYSE: WM) is down only 15%. The market clearly sees much more risk in CFC.

The Treasury's new plan to fix mortgage rates on subprime loans may actually hurt Countrywide. Many loans would have reset higher in the next year, bringing in a better yield on those for the big mortgage company. It now appears that the extra income won't be coming. The government plan may lower foreclosures, but it may not be enough to offset the lower revenue from loans that won't reset at higher rates.

Countrywide is still not out of the woods, no matter what its CEO says.

Douglas A. McIntyre is an editor at 247wallst.com.

Another day, another bad headline for Countrywide Financial (NYSE: CFC). The New York Times is reporting that Countrywide has received a federal subpoena related to possible abuses of bankruptcy laws in Florida.

One of the issues relates to excessive and unwarranted fees that some say Countrywide is charging troubled homeowners. As I blogged earlier this month, one recent study found that roughly half of mortgages going through Chapter 13 bankruptcy contained questionable fees.

Countrywide Financial may have accomplished something pretty unique: exploiting its customers and behaving in an ethically questionable manner while also losing money hand over fist for its shareholders.

It's kind of like a baseball player using steroids and hitting .220 with 3 home runs.

Either way, CEO Angelo Mozilo's tan still looks fabulous.

The Sunday New York Times takes a fascinating look at Countrywide Financial (NYSE: CFC) and Angelo Mozilo, the company's embattled CEO who is under SEC investigation and receiving widespread calls for his resignation. Mozilo has been declining interviews of late, but a Countrywide spokesman was there to provide Baghdad Bob-like assurances that Countrywide has great governance and Mr. Mozilo is a great executive. Right.

According to The Times: To this day, he says his beleaguered company did nothing wrong during the loose-lending craze that is now unraveling nationwide with record foreclosures and mountainous losses. Instead, Mr. Mozilo considers himself and his company to be victims of financial forces beyond their control.

You have to love that attitude: these executives have no problem paying themselves huge bonuses when things are going well, easy credit is driving up home prices and defaults are virtually non-existent. But the second the pendulum swings, these CEOs emerge as helpless victims of forces beyond their control.

The Times piece presents Mozilo as an imperial CEO, hellbent on increasing market share and building his empire -- even when his comments would appear to indicate that he knew the loans were no good.

Expect the calls for Mozilo's resignation to continue -- but the thing that really needs changing is the company's board of directors.

If you had to pick the subprime lender most likely to be messing with its numbers and failing to take proper reserves, Countrywide Financial (NYSE: CFC) would have to be the one. It's already somewhat of a corporate governance pigsty, with the SEC currently investigating stock sales by CEO Angelo Mozilo.

The stock soared last week after the company reported its quarter and Mozilo made optimistic predictions, but according (subscription required) to The Wall Street Journal, "some analysts warn that the nation's largest home-mortgage lender by loan volume hasn't gone far enough in marking down the value of mortgage securities it holds and may have trouble delivering on that profit vow."

A central part of the bear thesis is that Countrywide is offering very high rates on CDs, indicating that the company is desperate for cash, and can only acquire it by paying high interest rates.

With value investor Whitney Tilson offering to eat his hat if the company earns a Q4 profit, I wouldn't be touching the stock. With uncertainty surrounding the company's accounting/future, management integrity is a must. WIth that in question, I just don't think Countrywide Financial is a prudent investment here.

Here's a shock: Countrywide Financial Corp. (NYSE: CFC) is deep in the red. The beleaguered mortgage company lost a whopping $1.2 billion, or $2.85 per share, in the quarter compared with earnings of $647.6 million, or $1.03 per share. It was its first quarterly loss in 25 years.

But wait, the news isn't all bad, according to the company.

"We view the third quarter of 2007 as an earnings trough, and anticipate that the Company will be profitable in the fourth quarter and in 2008," President and Chief Operating Officer David Sambol said in the earnings release. "Over the longer term, we believe that prospects for the U.S. housing and mortgage markets, as well as for Countrywide, remain very attractive."

Chief Executive Angelo Mozilo goes even further, saying, "...during the period we also laid the foundation for a return to profitability in the fourth quarter..... We believe the steps which we have taken position the Company with the necessary capital and liquidity for our operating and growth needs, and will allow us to benefit from opportunities that result from industry consolidation."

Earlier this week, the SEC reportedly launched an informal investigation of Countrywide Financial Corporation (NYSE: CFC)'s CEO Angelo Mozilo's stock sales, specifically the acceleration of his pre-arranged share-selling program.

Now New York Senator Charles Schumer is calling for more blood -- he wants the investigation expanded to include the company: In a statement, he said that the SEC should "expand its informal probe of suspicious stock sales by Countrywide CEO Angelo Mozilo to include the company itself, which may have taken steps to enable Mozilo's stock dumping as the subprime crisis heated up and Countrywide's stock prices plunged... Did Countrywide repeatedly adjust Mozilo's prearranged selling plans at his request, such that the intent and purpose of these plans -- the prevention of insider trading -- was undermined?"

It's a little weird for a Senator to offer advice on an SEC investigation, and it's hard to understand what exactly Schumer's point is -- other than trying to look tough on fraud and go after a company that is deservedly unpopular for its role in the subprime meltdown.

But I think the SEC probably has thing under control, and I'd be surprised if the investigation didn't expand to include the company.

The SEC has begun an informal inquiry into the stocks sales by Countrywide Financial's (NYSE: CFC) CEO Angelo Mozilo. The Wall Street Journal reports that he "sold at least $130.6 million in company stock in the first half of the year through executive sales plans."

Mozilo sold the shares under a standard 10b5-1 which allows insiders, executives and board members, to sell shares on regular schedules without the normal black-out dates for earnings releases and other events. The number of shares and dates are set ahead of time.

Although it is not clear, the issue here may be whether Mozilo altered his plan and accelerated his selling based on his knowledge. He could have kept his plan in place, but made alterations. This would likely have been against both the spirit and wording of these plans when they were first developed. As the Journal pointed out, "If executives pledge they don't have any insider information at the time the plans are established it can be used as a defense against insider-trading charges." That does not cover what happens if they come by the information later and alter the plans.

The investigation is likely to be complex and may take a number of months.

Douglas A. McIntyre is a partner at 24/7 Wall St.

North Carolina State Treasurer Richard Moore has asked the SEC to investigate changes that Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo made to his pre-arranged stock-selling program.

According to The New York Times, Moore wrote, "As an investor and a Countrywide shareholder, I was shocked to learn that C.E.O. Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off. The timing of these sales and the changes to the trading plans raise serious questions about whether this is a mere coincidence."

It sure does. In the past few weeks, I've raised questions about Mozilo's stock sales. Even if there isn't anything nefarious, the fact is that he cashed out at a much higher price than shareholders could now -- $425 million in the past 3 years at an average of $36.50 -- nearly double the current price. But don't worry! Mozilo says he's actually bullish and dumping shares to diversify/fund his retirement. Where is he planning to retire? Mars?

Only time will tell whether anything comes of Moore's request, but Mozilo's stock sales should give investors an idea about whether CFC is a stock they want in their portfolios.

More Countrywide Financial news

Peter Cohan: Why Countrywide (CFC) CEO Angelo Mozilo is like Enron's Ken Lay
Zac Bissonette: Countrywide (CFC) has a new PR campaign, but what about real change?
Eric Buscemi: Countrywide (CFC) showing some class and good business sense
Peter Cohan: Is Countrywide (CFC) too big to fail?
Douglas McIntyre: Could subprime problems hurt search engines?
Peter Cohan: Is Bank of America's (BAC) purchase of Countrywide Financial (CFC) a good bet?
Joseph Lazzaro: The (still) foggy subprime mortgage sector
Peter Cohan: What the mortgage meltdown means to you
Michael Fowlkes: Countrywide Financial (CFC) adds to subprime panic
Peter Cohan: Could Countrywide Financial (CFC) be put down?

A month ago, I suggested that Countrywide Financial Corp. (NYSE:CFC) could be this year's version of Enron. One reason: Enron's Ken Lay and Countrywide's CEO Angelo Mozilo both publicly boosted their companies' prospects as they dumped their shares.

Today's New York Times [registration required] seconds that motion by reporting that North Carolina's Treasurer, Richard Moore, has asked the SEC to investigate Mozilo's $132 million in stock profits -- which he took as Countrywide traded above $40 -- it's now trading at $18.80 -- right before the subprime mess heated up starting in October 2006.

Moore's letter expressed his anger: "As an investor and a Countrywide shareholder, I was shocked to learn that C.E.O. Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off." How is this like Enron's Ken Lay? As I posted before, Ken Lay sold about $100 million worth of shares even as he was telling Enron employees what a great investment its shares were.

Will the SEC investigate? Will Mitt Romney keep Mozilo's campaign contribution? Stay tuned for the next episode.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Countrywide securities.

More Countrywide Financial news

Douglas McIntyre: Countrywide (CFC) CEO stock sales questioned
Zac Bissonette: Countrywide (CFC) has a new PR campaign, but what about real change?
Eric Buscemi: Countrywide (CFC) showing some class and good business sense
Peter Cohan: Is Countrywide (CFC) too big to fail?
Douglas McIntyre: Could subprime problems hurt search engines?
Peter Cohan: Is Bank of America's (BAC) purchase of Countrywide Financial (CFC) a good bet?
Joseph Lazzaro: The (still) foggy subprime mortgage sector
Peter Cohan: What the mortgage meltdown means to you
Michael Fowlkes: Countrywide Financial (CFC) adds to subprime panic
Peter Cohan: Could Countrywide Financial (CFC) be put down?

In the past, I've been critical of Countrywide Financial's (NYSE: CFC) treatment of its shareholders: The company has been running out of cash as its CEO dumps shares, all the while insisting that he really is bullish on the company's prospects

Now the company is attracting the scorn of critics for its treatment of homeowners who are having trouble making their payments. According to The New York Times, Countrywide hasn't been too helpful, and neither has the government, or the industry as a whole:

Lenders, government officials and loan servicers, who take in borrowers' monthly mortgage payments, contend that troubled borrowers everywhere are being helped to stay in their homes by those overseeing their loans. But neither data nor anecdotal evidence supports this view. A recent survey of 16 top subprime loan servicers by Moody's Investors Service found that for the first six months of 2007, an average of only 1 percent of loans experiencing an interest rate adjustment, or reset, had been modified... borrower advocates who work with a broad array of lenders say that none make it harder to modify loans than Countrywide, the nation's largest mortgage originator and loan servicer.

Reading The Times piece and knowing what we already know about CEO Angelo Mozilo, it's hard to think of Countrywide as anything other than a slimy company, dedicated to nothing other than fattening the wallet of it top executive.

Is that the kind of company you want to own shares of?

In the 1946 holiday classic It's A Wonderful Life, George Bailey, the owner of a small savings & loan that provides mortgages to upward moving lower and lower middle class families, sees his business saved by those who know him best. Bailey's good reputation outweighs the lending chaos created by Mr. Potter, the misanthropic owner of a large bank, who is attempting to put his only competitor out of business.

Yesterday's $11.5 billion loan package provided by a syndicate of banks is not too dissimilar to that great holiday tale. For those who have been around the block a few times, Countrywide's CEO and founder, Angelo Mozilo, is one of the great US businessmen of the last thirty years and has an outstanding reputation as a business operator and person.

In the mortgage business, you have Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE) and then Countrywide Financial Corporation (NYSE: CFC). If Countrywide is unable to participate in the market, and with most mortgage trading desks at the large brokerage firms a mess, that would mean the mortgage market will be left to the two GSOs, potentially creating a massive Mr. Potter.

Countrywide Financial (NYSE:CFC) has been in the news more in the past two weeks than it has in the past two months. The CEO, Angelo Mozilo, has been on the television business shows expressing concern over subprime loans and their possible implications, and announcing that CFC is pulling back from the subprime business. The reality, however, may be better than the hype.

Then along comes Merrill Lynch. The senior analyst at Merrill, Kenneth Bruce, upgraded his recommendation of Countrywide Financial and reiterated his price target of $50. The shares closed at $34.39 yesterday. If Bruce is correct, there is a nearly 50% upside in price movement. He cites the underlying strength of Countrywide's balance sheet, which would allow them to weather any potential storm.

Street estimates for Countrywide Financial are $4.38 earnings per share for 2007 and $4.98 earnings per share for 2008.

Of course, there looms the potential of Bank of America (NYSE: BAC) waiting to add Countrywide to its own portfolio. Stay tuned . . .

Georges Yared is the author of Stop Losing Money Today and Baby Boomer Investing. Please visit www.georgesyared.com