Richard Moore criticized Countrywide Financial on CNBC today.
The state treasurer, who is running for the Democratic nomination for governor, appeared on "Squawk Box" with Becky Quick this morning.
He argued that Countrywide, a mortgage lender, loaned too much of its money, especially in hot real estate markets. The company has been in serious financial trouble lately because of defaulted mortgages in the subprime market.
"There's a reason that you don't loan 100 percent," he said. "Because history has told us it will go through a cycle where they can't repay."
He said North Carolina's retirement system owns about $12 million worth of shares in Countrywide — a relatively small amount of its overall $75 billion holdings. But he said he would use the state's authority as a shareholder to push for management changes.
He also criticized ratings agencies for not having more of an "arm's length" relationship with lenders.
"They're supposed to act as a safeguard, an independent referee if you will in the marketplace," he said.
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Re: Moore on Countrywide
It is possible that the Treasurer currently has only $12 million of state money invested in Countrywide Financial Corp. but as of June 30, 2006, when Countrywide was making all those "100% loans" that have been blamed for the current credit crunch, the Treasurer's Office report on investments shows that it held 2,508,005 shares of Countrywide having a market value of around $95.2 million.
Hopefully the investment managers sold before the stock imploded, assuming the Treasurer was accurate today.
Regardless, the bigger question is if the Treasurer wants to "use the state's authority as a shareholder to push for management changes", why didn't he do that last year when it would have mattered? He had more shares. The pension fund had more money at risk. The same loans were being made.
Perhaps profiting off of suspect business practices is ok. Well, as long as there is a profit.