Report: Countrywide won influence with discounts
By Associated Press – 36 mins ago|
WASHINGTON (AP) — The former Countrywide Financial Corp., whose subprime loans helped start the nation’s foreclosure crisis, made hundreds of discount loans to buy influence with members of Congress, congressional staff, top government officials and executives of troubled mortgage giant Fannie Mae, according to a House report.
The report, obtained by The Associated Press, said that the discounts — from January 1996 to June 2008, were not only aimed at gaining influence for the company but to help mortgage giant Fannie Mae. Countrywide‘s business depended largely on Fannie, which at the time was trying to fend off more government regulation but eventually had to come under government control.
Fannie was responsible for purchasing a large volume of Countrywide‘s subprime mortgages. Countrywide was taken over by Bank of America in January 2008, relieving the financial services industry and regulators from the messy task of cleaning up the bankruptcy of a company that was servicing 9 million U.S. home loans worth $ 1.5 trillion at a time when the nation faced a widening credit crisis, massive foreclosures and an economic downturn.
The House Oversight and Government Reform Committee also named six current and former members of Congress who received discount loans, but all of their names had surfaced previously. Other previously mentioned names included former top executive branch officials and three chief executives of Fannie Mae.
“Documents and testimony obtained by the committee show the VIP loan program was a tool used by Countrywide to build goodwill with lawmakers and other individuals positioned to benefit the company,” the report said. “In the years that led up to the 2007 housing market decline, Countrywide VIPs were positioned to affect dozens of pieces of legislation that would have reformed Fannie” and its rival Freddie Mac, the committee said.
Some of the discounts were ordered personally by former Countrywide chief executive Angelo Mozilo. Those recipients were known as “Friends of Angelo.”
The Justice Department has not prosecuted any Countrywide official, but the House committee’s report said documents and testimony show that Mozilo and company lobbyists “may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”
The Securities and Exchange Commission in October 2010 slapped Mozilo with a $ 22.5 million penalty to settle charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis began. Mozilo also was banned from ever again serving as an officer or director of a publicly traded company.
He also agreed to pay another $ 45 million to settle other violations for a total settlement of $ 67.5 million that was to be returned to investors who were harmed.
The report said that until the housing market became swamped with foreclosures, “Countrywide’s effort to build goodwill on Capitol Hill worked.”
The company became a trusted adviser in Congress and was consulted when the House Financial Services Committee and Senate Banking Committee considered reform of Fannie and Freddie and unfair lending practices.
“If Countrywide’s lobbyists, and Mozilo himself, were more strictly prohibited from arranging preferential treatment for members of Congress and congressional staff, it is possible that efforts to reform (Fannie and Freddie) would have been met with less resistance,” the report said.
The report said Fannie assigned as many as 70 lobbyists to the Financial Services Committee while it considered legislation to reform the company from 2000 to 2005. Four reform bills were introduced in the House during the period, and none made it out of the committee.
Hit with staggering losses, Fannie and Freddie came under government control in September 2008. As of Dec. 31, 2011, the Treasury Department had committed over $ 183 billion to support the two companies — and there’s no end in sight.
Among those who received loan discounts from Countrywide, the report said, were:
—Former Senate Banking Committee Chairman Christopher Dodd, D-Conn.
—Senate Budget Committee Chairman Kent Conrad, D-N.D.
—Mary Jane Collipriest, who was communications director for former Sen. Robert Bennett, R-Utah, then a member of the Banking Committee. The report said Dodd referred Collipriest to Countrywide’s VIP unit. Dodd, when commenting on his own loans, has said he was unaware of the discount program.
—Rep. Howard “Buck” McKeon, R-Calif., chairman of the House Armed Services Committee.
—Rep. Edolphus Towns, D-N.Y., former chairman of the Oversight Committee. Towns issued the first subpoena to Bank of America for Countrywide documents, and current Chairman Darrell Issa, R-Calif., subpoenaed more documents. The committee said that in responding to the Towns subpoena, Bank of America left out documents related to his Towns’ loan.
—Rep. Elton Gallegly, R-Calif.
—Top staff members of the House Financial Services Committee.
—A staff member of Rep. Ruben Hinojosa, D-Texas, a member of the Financial Services Committee.
—Former Rep. Tom Campbell, R-Calif.
—Former Housing and Urban Development Secretaries Alphonso Jackson and Henry Cisneros; former Health and Human Services Secretary Donna Shalala. The VIP unit processed Cisneros’s loan after he joined Fannie’s board of directors.
—Rep. Pete Sessions, R-Texas, was an exception. He told the VIP unit not to give him a discount, and he did not receive one.
—Former heads of Fannie Mae James Johnson, Daniel Mudd and Franklin Raines. Countrywide took a loss on Mudd’s loan. Fannie employees were the most frequent recipients of VIP loans. Johnson received a discount after Mozilo waived problems with his credit rating.
The report said Mozilo “ordered the loan approved, and gave Johnson a break. He instructed the VIP unit: ‘Charge him ½ under prime. Don’t worry about (the credit score). He is constantly on the road and therefore pays his bills on an irregular basis but he ultimately pays them.”
Johnson in 2008 resigned as a leader of then-candidate Barack Obama’s vice presidential search committee after The Wall Street Journal reported he had received $ 7 million in Countrywide discounted loans.
The report said those who received the discounts knew the loans were handled by a special VIP unit.
“The documents produced by the bank show that VIP borrowers received paperwork from Countrywide that clearly identified the VIP unit as the point of contact,” the committee said.
The standard discount was .5 waived points. Countrywide also waived junk fees that usually ranged from $ 350 to $ 400.
Insight: Florida man sees “cruel” face of U.S. justice
Fastest Way to Chill a Drink
Y! Big Story: Lesser known truths about Fourth of July
Black Widow Spiders May Have Met Their Match
My Three Daddies: California Eyes Multiple Parenting Law
“It’s a boson:” Higgs quest bears new particle
Fannie Mae‘s Q1 Housing Survey
Dimon: Portfolio Hedging Should be …
Jamie Dimon on the hot seat: 3 key moments …
On Tuesday, JPMorgan Chase CEO Jamie Dimon testified on Capitol Hill for the … Full Story »Jamie Dimon on the hot seat: 3 key moments from his House testimony
The Week (RSS)
Dimon: Portfolio Hedging Should be …
[ [ [['Connery is an experienced stuntman', 2]], ‘http://yhoo.it/KeQd0p’, ‘[Slideshow: See photos taken on the way down]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['Connery is an experienced stuntman', 7]], ‘ http://yhoo.it/KpUoHO’, ‘[Slideshow: Death-defying daredevils]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['know that we have confidence in', 3]], ‘http://yhoo.it/LqYjAX ‘, ‘[Related: The Secret Service guide to Cartagena]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['We picked up this other dog and', 5]], ‘http://yhoo.it/JUSxvi’, ‘[Related: 8 common dog fears, how to calm them]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['accused of running a fake hepatitis B', 5]], ‘http://bit.ly/JnoJYN’, ‘[Related: Did WH share raid details with filmmakers?]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['accused of running a fake hepatitis B', 3]], ‘http://bit.ly/KoKiqJ’, ‘[Factbox: AQAP, al-Qaeda in Yemen]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['have my contacts on or glasses', 3]], ‘http://abcn.ws/KTE5AZ’, ‘[Related: Should the murder charge be dropped?]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['have made this nation great as Sarah Palin', 5]], ‘http://yhoo.it/JD7nlD’, ‘[Related: Bristol Palin reality show debuts June 19]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['have made this nation great as Sarah Palin', 1]], ‘http://bit.ly/JRPFRO’, ‘[Related: McCain adviser who vetted Palin weighs in on VP race]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['A JetBlue flight from New York to Las Vegas', 3]], ‘http://yhoo.it/GV9zpj’, ‘[Related: View photos of the JetBlue plane in Amarillo]‘, ‘ ‘, ’630′, ‘ ‘, ‘ ‘, ], [ [['the 28-year-old neighborhood watchman who shot and killed', 15]], ‘http://news.yahoo.com/photos/white-house-stays-out-of-teen-s-killing-slideshow/’, ‘Click image to see more photos’, ‘http://l.yimg.com/cv/ip/ap/default/120411/martinzimmermen.jpg’, ’630′, ‘ ‘, ‘AP’, ], [ [['He was in shock and still strapped to his seat', 6]], ‘http://news.yahoo.com/photos/navy-jet-crashes-in-virginia-slideshow/’, ‘Click image to see more photos’, ‘http://l.yimg.com/cv/ip/ap/default/120406/jet_ap.jpg’, ’630′, ‘ ‘, ‘AP’, ], [ [['xxxxxxxxxxxx', 11]], ‘http://news.yahoo.com/photos/russian-grannies-win-bid-to-sing-at-eurovision-1331223625-slideshow/’, ‘Click image to see more photos’, ‘http://l.yimg.com/a/p/us/news/editorial/1/56/156d92f2760dcd3e75bcd649a8b85fcf.jpeg’, ’500′, ‘ ‘, ‘AP’, ] ]
[ [ [['did not go as far his colleague', 8]], ’29438204′, ’0′ ], [ [[' the 28-year-old neighborhood watchman who shot and killed', 4]], ’28924649′, ’0′ ], [ [['because I know God protects me', 14], ['Brian Snow was at a nearby credit union', 5]], ’28811216′, ’0′ ], [ [['The state news agency RIA-Novosti quoted Rosaviatsiya', 6]], ’28805461′, ’0′ ], [ [['measure all but certain to fail in the face of bipartisan', 4]], ’28771014′, ’0′ ], [ [['matter what you do in this case', 5]], ’28759848′, ’0′ ], [ [['presume laws are constitutional', 7]], ’28747556′, ’0′ ], [ [['has destroyed 15 to 25 houses', 7]], ’28744868′, ’0′ ], [ [['short answer is yes', 7]], ’28746030′, ’0′ ], [ [['opportunity to tell the real story', 7]], ’28731764′, ’0′ ], [ [['entirely respectable way to put off the searing constitutional controversy', 7]], ’28723797′, ’0′ ], [ [['point of my campaign is that big ideas matter', 9]], ’28712293′, ’0′ ], [ [['As the standoff dragged into a second day', 7]], ’28687424′, ’0′ ], [ [['French police stepped up the search', 17]], ’28667224′, ’0′ ], [ [['Seeking to elevate his candidacy back to a general', 8]], ’28660934′, ’0′ ], [ [['The tragic story of Trayvon Martin', 4]], ’28647343′, ’0′ ], [ [['Karzai will get a chance soon to express', 8]], ’28630306′, ’0′ ], [ [['powerful storms stretching', 8]], ’28493546′, ’0′ ], [ [['basic norm that death is private', 6]], ’28413590′, ’0′ ], [ [['songwriter also saw a surge in sales for her debut album', 6]], ’28413590′, ’1′, ‘Watch music videos from Whitney Houston ‘, ‘on Yahoo! Music’, ‘http://music.yahoo.com’ ], [ [['keyword', 99999999999999999999999]], ‘videoID’, ’1′, ‘overwrite-pre-description’, ‘overwrite-link-string’, ‘overwrite-link-url’ ] ]
Short URL: http://blackgossip.org/?p=14831