I just can't resist.

And I'd apologize in advance, but I don't think these guys deserve an apology.

So, here we go.

Here is a company that has to be either the or very close to the king of inside stock sales. In fact, there is an absolutely outrageous level of selling going on here, as recently as TODAY!

To put this in perspective, over four million shares have been sold in the last couple of years.

Not one share of stock has been purchased by an insider.

Not one.

Now that's bad. What far worse is that the company's board authorized a share buyback that was due to run through sometime in the second quarter of this year. Stock buybacks in and of themselves are not abusive - in fact, they're perfectly legitimate ways to improve your share price when you have an excess of cash laying around in a company and no good place to put it to work at the moment.

But Countrywide Financial did not buy its stock back with cash. It instead issued DEBT - BONDS to buy back its stock! And not a small amount of them either - 2.6 billion dollars worth!

Effectively, the company is robbing the shareholders by encumbering its balance sheet in order to purchase shares while the CEO (and other insiders) are dumping shares into the market. If you boil this all down the CEO is exchanging his shares for cash, which is coming from the corporation and being turned into REAL debt on the firm's balance sheet - plus a whole bunch more.

Now Mr. CEO has said, in public, that he "needs to balance his life" and this is why he's selling. Really? Let me see - in the last month I count twenty million dollars worth of sales, more or less.

TWENTY MILLION BIG FAT AMERICAN SMACKERS - IN ONE MONTH.

Mr. Mozillo, I believe you are one hundred percent full of crap.

Here's what we know - both M&T bank and AHM have said that they can't sell their loans on the market for what they think is a "fair" price - or at a profit. Both have taken significant impairment charges. Over fifty subprime and ALT-A lenders have shut down in the last few months. One public company, New Century, has formally gone***** up. Both M&T and AHM are not subprime companies - they are ALT-A lenders, as is Countrywide. Mr. Sambol, Countrywide's COO, stated under oath just a few weeks ago that had their customers needed to qualify under the fully-indexed rate, sixty percent would not have been able to do so. That, sir, sounded to me like an admission that sixty percent of your loans made during that time were unsafe by traditional underwriting guidelines!

Despite your claim on Cramer's show that "we'll profit from this" I believe your firm is going to be hurt badly, both from defaults (which your own 8K you filed this morning says have doubled in the last year) and from greater spreads which will make it tougher - or impossible - to sell your loans off into the CDO market at a profit. I also believe that reality is that we're looking at a price decline for homes, both new and used, and we are facing higher real interest rates - and no rate cut from the Fed. Finally, I would love to see a real look inside your kimono at that company, including all "off balance sheet" entities and everything your firm has marked to market, including the thousands of REOs that, according to another site, you currently own.

Mr. Mozillo, perhaps you can explain why you're exercising options and immediately selling the resulting stock into the open market - options that do not expire for many years - at a pace which many, myself included, indicates you believe those options might be worth no more than toilet paper within the next few months or years?

Next, let's take a quick look at that 8K you filed today. In it you said:

Mortgage loan fundings for the month of March totaled $43 billion, an increase of 5 percent from March 2006.

Monthly purchase volume was $17 billion, which compares to $19 billion for the year-ago period. (a decrease in business!)

Home equity loan fundings were $4.0 billion, down 5 percent from March 2006. (a decrease in business)

Nonprime loan fundings declined 29 percent from March 2006 to $2.4 billion at March 2007. (a big decrease in business!)

On a consolidated basis, Countrywide funded $3.5 billion in pay-option loans during the month as compared to $8.8 billion in March 2006. Year-to-date fundings for pay-option loans totaled $9.6 billion, as compared to $22 billion for the same prior year period. These amounts include pay-option loans that have a fixed rate for five years, which totaled $1.3 billion in March 2007 and $2.3 billion year-to-date. (a big forking decrease in business!)

It should be noted that the various mortgage loan funding categories listed above are not mutually exclusive and are not intended to equal 100 percent of total fundings." (Like, for instance, all the lines of business that actually increased in volume? Why would you omit that unless its even more dangerous than the PayOption stuff?)

Maybe you can show me how you get an increase of 5% out of this? Is this Government School math? It must be, because for every category of mortgage you identified you showed a decrease in business volume!

Perhaps you can explain how you get a five percent INCREASE in your "headline" number with no positive components? Was that a mistake - an omission somewhere - tricky accounting of some sort - or a lie?

Now let's talk about insiders "magically disappearing." On March 30th, the company announced that two directors - Kathleen Brown and Michael Dougherty - were departing. Kathleen Brown stepped down effective immediately.

Of course the firm said, in their second press release, that both of these individuals had left for what sounded like agreeable reasons. But the initial release included no statement from either of the directors. Oh, and the company apparently doesn't intend to replace them.

FAR more ominously, Tuesday evening a rumor started circulating that James Furash, CEO of Countrywide Bank, had left the company. I patiently waited for a Form 8K announcement or a press release. Neither came. Finally, this morning, I called the company - and was told that indeed he was gone. I immediately put up a posting here on the blog; within a few hours both Marketwatch and DowJones reported confirmation. This evening Bloomberg released this ditty in which your company basically told them to go screw when they asked for more details. That was nice. Where's he going, why did he leave, who's being promoted to take his place, and where is the 8K guys?

You know what I think? I think the company intended to announce this over the weekend, much like AHM warned that their earnings were going to suck on Good Friday, when the markets were closed, in an attempt to blunt the impact on their stock price!

Well, it didn't work this time. Good for the Internet. Score one for the good guys, and score a big fat zero for corporate attempts to play "hide the ball."

But this departure is not just about timing and announcements. Its about what Mr. Furash was to the company. If the bio that Countrywide had up on its web site was to be believed, Mr. Furash basically built the banking side of the firm from nothing to a nice safe place to park mortgages and earn returns from them, instead of selling them into the debt market. Indeed, the bio credits Mr. Furash with turning Countrywide Bank into a lumbering powerhouse with tens of billions of dollars in assets - from a humble beginning. In short, that bio certainly makes it sound like Mr. Furash was Countrywide Bank. If indeed Mr. Fursash was responsible for the success of Countrywide Bank, the two obvious questions are "why would he leave?" and "What leads the company to believe that they can replace Mr. Furash with someone else who can do at least as good a job, given the clear success the firm claims Mr. Furash was responsible for!"

After all, Countrywide does pay quite well (just ask the CEO who seems to think that he needs to be pull $20 million a month out for whatever personal uses he might have!)

So this leads to the obvious question - is this departure entirely voluntary? Is something wrong either with Countrywide Bank or with Countrywide in general? What position did Mr. Furash have offered to him that he is stepping into - a step up from Countrywide Bank?

In short, one of your biggest and most-important division CEOs just walked out the door and isn't coming back! Don't you think you ought to tell your shareholders WHY and put forward some sort of explanation to justify - or at least explain - this unexpected event just two short weeks prior to your earnings release?

The company is silent on this point, other than to say the departure was "friendly."

Hmmmmm....

All this, in my opinion, adds up to one screaming short. Of course Countrywide was a far better short at $45, but still, even here, is this institution worth $33.62 a ticket?

Let me put forward a premise - most of the appreciation in home prices since 2004 was, in fact, crap. It was a consequence of Greenspan essentially creating the ability to borrow money at a net effective negative interest rate. Now discount the crap on the balance sheet that was kicked off by this and put it back on the company, and delete going forward all the business you can't write when you're forced back to responsible underwriting.

What do you end up with?

I think you end up with a fair value for the firm of roughly its 2003 stock price - which, being charitable, means somewhere between $10-20.

That, of course, assumes there aren't any "surprises" under the kimono.

In good time, I'm sure we'll find out.

Disclosure: I'm short and have PUTs, and likely will have more of both. Its damn hard not to ring the register when the officers have been playing ATM machine with the company's stock almost daily while concurrently describing a rough market for the firm's products and services. The firm's latest 8K leads one to wonder if their accountants know how to add. And finally, the D&O departures further leave one wondering - are those folks taking the last parachutes knowing that the plane is about to run out of fuel - over a mountain range?