It is hard to imagine a time when law was more important to managers. The rapid growth of unregulated subprime mortgages and financial derivatives fueled a real estate bubble from 2001 through 2006, during which time executive compensation in the financial services companies soared. When the bubble burst in 2007, many executives of these companies walked away unscathed, leaving employees, stockholders, and taxpayers holding the bag. For example, Countrywide Financial Corporation CEO Angelo Mozilo sold almost $200 million of Countrywide stock while overseeing layoffs of more than 10,000 Countrywide employees and a loss of more than $20 billion in shareholder equity. The subsequent distress sale of Bear Stearns, the bankruptcy of Lehman.
