The clueless CEO is so 2002. Instead, Countrywide had a whistleblower-in-chief.

Another option is that Mozilo was genuinely concerned about where Countrywide was headed but was less interested in changing his company's practices than in getting rid of the bad loans. The SEC complaint gives some reason to think this. In September 2006 and again in January 2007, Mozilo wrote to urge his subordinates to find a way to sell Countrywide's portfolio of toxic pay-option loans, making them someone else's problem. Without a doubt, selling the loans—and ultimately, selling the company—was a genuine goal of Mozilo's. It's a strategy that Countrywide pursued eagerly and which culminated in Bank of America (BAC) purchasing Countrywide and so (amazingly) grabbing the grenade out of Mozilo's shaking hands.

But there's one more option—call it the cover-your-ass-memo theory—to think about if you are willing to consider the possibility that what's going on here is not a bona fide discussion of business options but just another chapter in the bottomless mendacity and cynicism of the housing bubble. It is that Mozilo is perfectly willing to send out a stack of e-mails registering his objections while sitting back, selling $260 million in stock, and letting the game run its course. That would make Mozilo a kind of anti-Ken Lay. Enron's chief, and many others in similar circumstances, pretended to know nothing of what their minions were doing. Mozilo does them one better, putting his gripes on the record, repeatedly and comprehensively, so that if or when the bomb exploded he could say that he was doing his best to defuse it.

In fact, it's hard to find another light in which to view Mozilo's shocked June 2006 e-mail explaining that suddenly—well into the worst excesses of the mortgage boom—he has become aware that most of Countrywide is writing loans without asking borrowers to prove they have the income to repay them. By mid-2006 the whole industry routinely called these low-doc loans by the far less polite nickname of "liar loans," and every mortgage broker in California knew they were a barely veiled way of getting borrowers to take loans they could never, ever afford under any sentient underwriting standard. Yet, there is Mozilo, Mr. Magoo suddenly putting on his glasses and pointedly noting that he'd suddenly observed this obvious fact about the loans that were the very engine of Countrywide's business. And doing so the very day before an audit "reveals" just how many of these loans are essentially fraudulent.

There's one other e-mail that's worth pointing to in the SEC complaint, which comes a lot later in Countrywide's history than most of the rest. It's from November 2007, and in it Mozilo finally announces clearly that Countrywide should put an end—no ifs, ands, or buts—to the toxic pay-option loans. These, you will recall, are the loans about which he had sounded the alarm ("We are flying blind") more than a year earlier. And here, with the housing market well past its peak, the subprime mortgage industry essentially defunct, investors running from mortgages, and his own business sliding into oblivion, Mozilo rides in and says finally, dramatically, "Stop!"

When folks start shutting the doors long after the horse has left the barn, watch out. In this case, the horse had not only left the barn but already galloped into a ditch and broken its leg. What Mozilo's mental calculations might have been as the mortgage market collapsed around him we may find out soon, or never. It's possible that Mozilo preferred to face an accusation of hyping his company's stock than one of running the levers of a mortgage machine guaranteed to produce defaults and foreclosures on a scale not seen since the Great Depression.

Thanks to all the objections he put on the record, Mozilo's exposed himself to the SEC's charges of ripping off shareholders. He's the latest in a long line of chief executives caught this way. But so far, he's escaped prosecution for what really made Countrywide unique: running a company that systematically lured its customers into a mortgage mess that would create misery for millions. The Securities and Exchange Commission's rap on Angelo Mozilo is that he didn't bother to tell shareholders the risks they faced. The deeper problem is that Mozilo and his Countrywide colleagues didn't tell millions of homebuyers that the risks they faced were even worse.