Inside, the FT goes deep with a separate story that looks at how CPDOs came to be in the fevered credit bubble of 2006 and includes a graphic showing how they worked. It notes that it quotes plenty of analysts at the time who questioned how the debt securities, which paid an extremely high premium, could be rated so high.

Excellent work by the FT.

Countrywide’s Mozilo is tone deaf

Countrywide Financial CEO Angelo Mozilo didn’t need any more bad press, but he gets it today in the form of a Los Angeles Times story.

Mozilo accidentally copied a Countrywide borrower in a response to the borrower’s e-mail asking Countrywide to refinance his adjustable-rate mortgage, which he can no longer afford and which he’d erroneously thought he could refinance after a year. We might have a twinge of sympathy for Mozilo—the accidental e-mail is one of our Digital Age nightmares—but he called the e-mail “disgusting” because the borrower had used language from a borrower-advocate site.

His original e-mail was sent to 20 Countrywide addresses, including Mozilo’s. Such mass e-mails have overwhelmed e-mail boxes at Countrywide, disrupting its operations and prompting Mozilo’s heated response, the company said.

“This is unbelievable,” Mozilo said in his e-mail. “Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting.”

We’re sorry Countrywide is dealing with overwhelmed e-mail inboxes, but that pain pales next to that of its overwhelmed borrowers, many of whom were screwed by the company’s reps. Disgusting, indeed.

Housing bill may hit taxpayers hard

In other housing news, the Journal on C1 says a recent mortgage-bond sale may show the worst has passed in that dismal market.

And the NYT in a C1 news analysis writes that the housing bill, which Congress says will protect taxpayers, could actually leave them on the hook for billions of dollars and overload Fannie Mae and Freddie Mac, the teetering government-sponsored mortgage companies that support the entire housing market with trillions of dollars in notes.

Airline cuts leave small cities stranded

The Times looks at the effects of airline cuts on smaller cities throughout the country and finds that nearly thirty have had service eliminated altogether since last year, while about 400 have fewer flights. As if small cities needed to be put at an even starker competitive disadvantage.

The paper reports on A1 that since deregulation in 1978, Congress has provided a fund of about $100 million to airlines to subsidize service in 102 small cities, but the money hasn’t kept up with the costs of flying, which have soared in the last couple of years along with energy prices. Hagerstown, Maryland, opened a $61 million runway recently to no traffic—its service shut off completely two months before it was complete. The closest airport with airline service is in Baltimore, an hour and a half away.

It will take much higher air fares—or much higher subsidies—to link these cities back into the economy by air.

AIG raises money, Greenberg faces civil charges

Insurance giant AIG says it will raise $20 billion in new capital to shore up its finances, something that will dilute its existing shareholders’ stakes by 8 percent, Reuters quotes an analyst saying. The company has had huge losses recently on bad credit-derivative investments and the capital raising is 60 percent higher than AIG previously predicted, the FT says.

The Journal on C1 says that AIG’s ex-CEO Hank Greenberg faces civil charges from the Securities and Exchange Commission for his role in the accounting scandal there a couple of years back.

Criminal prosecutors accused four former executives of General Re, a unit of Berkshire Hathaway Inc., and one former AIG executive of inflating AIG’s reserves by $500 million in 2000 and 2001 through fraudulent reinsurance deals by making it look like the company had a bigger cushion against losses, which boosted its stock price. The five defendants were convicted earlier this year in a federal-court trial in Hartford, Conn.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at