Countrywide puts lipstick on the pig

As criticism mounts, the mortgage lender takes bold action: Green wristbands for all employees (who are not being laid off).

Published October 3, 2007 4:03PM (EDT)

Maybe Countrywide is justified in feeling a bit aggrieved at the moment. On Saturday, the Los Angeles Times reported that in the process of cashing in $138 million worth of stock options between November 2006 and August 2007, CEO Angelo Mozilo had "adjusted" his preset trading plans to allow him to sell more shares than previously specified -- a big, red-flag-waving no-no. On Sunday, the New York Times' Gretchen Morgenson savaged Countrywide as the mortgage lender least interested in helping distressed homeowners avoid foreclosure. And on Monday, also in the New York Times, in perhaps the most unkind cut of all, Paul Krugman compared Mozilo to Enron's Kenneth Lay and WorldCom's Bernie Ebbers. Countrywide's stock price has fallen from a high of 45 dollars on Feb. 2 to 19 dollars last Friday, it recently announced it would lay off 12,000 of its 54,000 workers, and lawsuits alleging that executives misled shareholders as to the company's financial conditions are piling up.

So whatcha gonna do? How do you fight back when you're certain your competitors are engaging in an unacceptable campaign of "fear, uncertainty, and doubt" [FUD]?

How about green rubber wristbands for all employees willing to sign a pledge to "Protect Our House"?

Seriously, Countrywide is so angry that it plans to give out wristbands. And hire a crisis-management P.R. firm.

The Wall Street Journal got its hands on a copy of the "talking points" for a conference call led by Countrywide executive Drew Gissinger last week with 250 of the company's "best and brightest." It makes for entertaining reading.

Our employees must have the confidence to stand strong in the face of adversity. Let's call it like it is, as I mentioned earlier, it's gotten to the point where our integrity is being attacked. NOW IT'S PERSONAL! The FUD campaign is now questioning our -- yours and mine, ethics, morals and business practices. And, WE'RE NOT GOING TO TAKE IT!

Gissinger announced that Countrywide had hired the Burson-Marsteller public relations firm to perform crisis management. Because, you see, the real problem here is not Countrywide's overly aggressive practice of pushing adjustable rate mortgages on subprime borrowers. The real problem is that a "comprehensive strategy for communicating facts to internal and external constituents" is long overdue.

Burson-Marsteller, as executive Jason Schecter proudly announced during the conference call, is the right agency for the job of taking back "control of the agenda." Burson-Marsteller was Johnson & Johnson's P.R. firm during the Tylenol poisonings, helped the U.S. Postal Service during the anthrax crisis and is now working with "companies involved in current controversies over Chinese-made toys."

That's some pretty great company to be in!

In a fortuitous display of timing, I received a mailing from Countrywide on Monday, pitching home warranty insurance. For a "low monthly fee of just $37.95," Countywide's "TotalProtect" plan will ensure that I never suffer the devastating financial blow of an air-conditioning or water heater system breakdown.

As hard evidence of Countrywide's desperate efforts to raise cash, quickly, it's pretty compelling. Because, who knows, if I wasn't already aware of Countrywide's problems, I might be inclined to take at face value the news that "With homeowners in Berkeley, CA. using their air conditioners so much during the hot summer, the odds of getting through the season without incident are not in your favor."

(Never mind that residential air conditioners in Berkeley are about as hard to find as registered Republicans.)

Included in the mailing is a glossy pamphlet featuring a man bowed over, head in his hands, disconsolately holding a pencil, clearly driven to utter despair by the repair bill crumpled in front of him. "Thought his furnace would last another year. Gambled and lost. $4,208."

As a sample of how a state-of-the-art modern American corporation attempts to manipulate us into buying its services by playing upon our fears of financial woe, the pamphlet is compelling. But if you strip away the marketing message, what you also have is a pretty good depiction of what your average Countywide employee must be feeling right now. Your boss pocketed $138 million last year while 12,000 of your co-workers are about to be fired. And what do you get? A green rubber wristband.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

MORE FROM Andrew Leonard

Related Topics ------------------------------------------

Globalization How The World Works