Ex-Countrywide Execs Making Money Off Misery They Created

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Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.

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“It has been very successful — very strong,” John Lawrence, the company’s head of loan servicing, told Mr. Kurland one recent morning in a glass-walled boardroom here at PennyMac’s spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.

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“In fact, it’s off-the-charts good,” he told Mr. Kurland, who was leaning back comfortably in his leather boardroom chair, even as the financial markets in New York were plunging.

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Unfortunately, there is a proud tradition in finance of bad actors finding profitable employment doing more or less what they did that created a train wreck. Drexel sold S&Ls a lot of the junk that brought them to ruin (and “sold” doesn’t even begin to describe it. A regulator told me that Lincoln Savings would get a daily fax from Drexel of what it had bought, and then when the regulators came a calling, Lincoln realized it was supposed to have filed demonstrating that it had done due diligence on the investments. It hired Arthur Andersen to create the phony paper trail). And the principals of LTCM, having nearly brought the financial system to its knees, started another hedge fund.

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It’s funny how standards vary. If a company with a great technology was seeking funding, and there was outstanding litigation against the principals alleging misconduct, most VCs would pass on the deal. But if you are in the money game, as opposed to the building real businesses game, character might be viewed as an impediment to success.