“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.
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…