The Wall Street Journal is of two minds about how to deal with the ravages of the sub-prime crisis.
One of its minds was represented on the op-ed page on Tuesday by Andy Laperriere, managing director of the International Strategy and Investment Group (ISG). This position is crystallized in a pull-quote: "Taxpayers shouldn't suffer because some people failed to live within their means." Look for a bailout of debt forgiveness that will reach into the hundreds of billions of dollars just when we're avoiding confronting underfunded Social Security and Medicare.obligations Moreover, people who live on the financial margins of middle class life -- prudent and always worried -- are going to get stuck again. They will pay for the relief given others and for the recklessness of the mortgage sellers.
But there's also the opposite trope in the WSJ mind. And this is the pain at seeing banks, insurance companies, mortgage peddlers loosing billions in real cash and more billions in value. This is never pleasant for the Journal, and so it published an article by Angelo R. Mozilo, CEO of Countrywide Financial, whose stock has fallen from about $45 in March to around $10 now. Countrywide, which ordinarily is hostile to any federal intervention in its business, now wants Fannie Mae and Freddie Mac to underwrite the shortfalls his company and others like it in the lending business have experienced in the last months: "The government can help with the credit crisis." Alas, Fannie and Freddie are in deep doodoo already.
As it happens, Countrywide is probably the greatest offender in snaring borrowers into mortgages they cannot afford. In fact, just this morning, Herb Greenberg, the extremely responsible market journalist, wrote in Market Watch/Dow Jones that Mazilo was "an obvious choice" for the "worst CEO of the year." Greenberg chose some one else. But he noted that Mazilo had become "the poster child for a mortgage market gone wild."
Maybe the editors of the WSJ hadn't heard the news. And maybe Mazilo is not the ideal person to cry "rescue."
I don't know why. But I am on the receiving end for a string of e-mails from Countrywide. Yesterday, I got two, both to the same address. I am not looking for a mortgage. I was hoping to send you all the hype that came from Countrywide, come-ons, really, appealing to those who don't have the income to buy or to pay.
Mr. Mazilo's company is courting new recklessness just as it's trying to get out of the old. This is enticement which is unethical, and it should be illegal.