Arrogant, Volatile and Uninhibited

“Price any loan!”

David Sambol frequently shouted this phrase down the warehouse-style trading floor of Countrywide Financial’s main office.  Sambol was a lesser-known yet equally ambitious corporate executive as Angelo Mozilo, the CEO, at Countrywide Financial from 1985-2008.  A fine-featured, dark-haired man with a sharp gaze, as described in The New Yorker article entitled “Angelo’s Ashes,” Sambol served as Mozilo’s courageous lieutenant during the firm’s heyday of subprime mortgage lending.  By the age of forty, Sambol became head of production, and frequently colluded with Mozilo and other top executives regarding their ultimate vision to gain  30% market share in the U.S. mortgage lending industry.  Just two years after Countrywide opened its 30 offices for Full Spectrum Lending, the subsidiary responsible for originating subprime loans targeted at minorities like African-Americans and Hispanics, Sambol pushed the effort further than anyone could think possible.  Reflecting the Countrywide culture, he pressured his production team to originate more loans in more places, with looser credit standards and via complex products like hybrid adjustable rate mortgages and arcane borrower repayment options.


Countrywide Financial and other large subprime mortgage lenders loosened credit standards to grab market share in the competitive environment

By January 2008, Bank of America (BofA) purchased Countrywide Financial at a sixth of its market value prior to the subprime mortgage collapse.  Sambol, still at the firm’s helm as CEO, was swiftly ousted by BofA’s board in their effort to disassociate the tarnished Countrywide brand image with its own.  After he left, Sambol has felt the wrath of the Securities & Exchange Commission (SEC), investors, friends and the general public.  Even in May 2008, U.S. Senator Charles Schumer labeled Sambol as “Countrywide’s chief cook and bottle washer on the scene.”  While admitting to no wrongdoings and pleading innocent to several charges, Sambol paid $250,000 in fines and $5 million in restitution – At Countrywide in 2007, he earned $10.3 million, and upon leaving BofA, he pocketed $28 million in cash and stock.  Lastly, Sambol agreed to a three-year probation from serving as an officer or director of any public company.  The disbarment expired sometime in 2012.

In my opinion, his punishment should be more severe.  But what kind of punishment is necessary?  The SEC’s 2009 lawsuit charged him and his two colleagues, Mozilo and CFO Eric Sieracki, with “securities fraud for deliberately misleading investors to build and maintain the company’s market share.”  Surely, I believe that he should relinquish more than the mere $5.25 million in the form of civil penalty, disgorgement and prejudgment interest.  This amount represents roughly 12.5% of his wealth earned from Countrywide and BofA.  Should his punishment reflect more than just monetary reparations?  Perhaps he should host, attend or aid organizations like Neighborhood Assistance Corporation of America in Newark, NJ.  I’m sure suffering borrowers like Richard would appreciate that.  I believe that the big guys on the top of the heap shouldn’t be able to simply hop off with a bit less than what they had before, but rather should help those that were trampled on…


5 thoughts on “Arrogant, Volatile and Uninhibited

  1. I really like your point at the end of the post – “I believe that the big guys on the top of the heap shouldn’t be able to simply hop off with a bit less than what they had before, but rather should help those that were trampled on.” We hear about all of these executives going to jail or paying some fine after their wrongdoing, but this hardly helps those that were hurt. These “fallen heroes” should be punished by helping those that need it. In this situation, the subprime mortgage industry targets the most vulnerable borrowers, and often leaves them so far in debt they can’t recover. Sambol and the others should be required to fix their wrongdoings.

  2. Like Michaela, I really liked the last line of your post. The readings that we did this week for class really hit two different sides of the subprime mortgage crisis: on one hand, the company executives, and on the other, the people actually taking out the mortgages. Reading the article about the woman that tried to kill herself because she could not keep up with her payments and was afraid of what would happen to her was absolutely heartbreaking. These executives should have to answer to those people that they harmed while making their fortune. Sambol did pay a small fine (well, small for him…) but where did that money even go? I’m guessing it did not go back to the people struggling to pay their mortgage, where it should go.

  3. When looking at this situation compared to Jeffery Skilling and Enron its surprising that these top executives didn’t receive a little more repercussion for their actions. Maybe I’m missing something here, but didn’t the issuing of these loans deceive investors,cause many people to loose there houses, and play a big part in what later caused the recession. The way I see it is these top executives benefited from something that caused millions of people to suffer financially. At the least what ever money was made during this time should be taken from them.

  4. Very interesting article Scott. I definitely agree with you about his $5.25 million fine not being severe enough for the harm he caused. It is very interested to learn about how the different cases panned out. For HealthSouth, Scrushy was acquitted of all his fraud charges; however, he served seven years in jail for bribing the governor of Alabama. Interestingly, he has now become he now works as a motivational speaker. Although he volunteered to do this, I could definitely see executive punishment going beyond paying fines and restitutions. They should be required to reflect upon their actions and inform the public of their misdoings.

  5. Thanks for telling me that this guy has not even been to the jail. It really surprised me. It seems that his decisions have destroyed millions family’s future, but he only paid $5.25 million fine in the end. This could not even match the amount he made after he was kicked out of BoA. Sometimes I just do not understand why such person can still live in this country after betrayed millions people here, and clearly he would have a good life quality with all his compensations and stock options. It really confused me.

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