Mozilo knew what was happening in 2004

The former CEO of Countrywide Financial was sounding upbeat about the mortgage lender's prospects almost until the place imploded in late 2007. But three years earlier he warned company executives about a possible housing market collapse. Via Bloomberg:

"Not only at Countrywide, but also with other lenders, there is a clear deterioration in the credit quality of loans being originated," he wrote to company executives on Sept. 1, 2004. "The type of loans currently being originated combined with the unprecedented stretching of all aspects of credit standards could cause a bump in the road that could bring with it catastrophic consequences."

[CUT]

"I feel strongly that over the next twelve months we are going to be facing one of the most difficult and challenging real estate and mortgage markets in decades," he said in a message released by the FCIC. "I have been in contact with developers who have told me that they are anticipating a collapse in the condo market very shortly" in South Florida, Las Vegas and other "hot" markets.

The disclosure, released this week by the Financial Crisis Inquiry Commission (a lot of this had been previously reported), became a big deal because Mozilo started selling Countrywide shares while indicating publicly that all was well. He agreed to a record $67.5 million settlement to resolve SEC allegations of misleading investors.