If you look carefully at the subprime debacle, it’s obvious that one company saw it coming and they didn’t keep lending like mad. That company is Countrywide Financial , and the CEO, Angelo Mozilo, joined Cramer on the phone to discuss the future of the lending industry and Countrywide, in particular.
Mozilo says about a year ago he mentioned his concern about the margins and overall quality of New Century and Ameriquest. The real problem with the subprime lenders, Mozilo says, was that they had a bad business model, and it just kept getting replicated.
“We began pulling back and changing our guidelines at that time,” he says. He points out that Countrywide is essentially a prime lender, as subprime lending only represented 7-9% of its business in 2006.