Remember Countrywide? You know the mortgage giant that's failure cost us taxpayers $190 Billion to bail therm out? A new report looks at a unit Countrywide set up for sweetheart mortgage deals for insiders and people Countrywide wanted to owe their corporation a favor. A favor returned crafting dozens of pieces of legislation for Countrywide's benefit in the congress, and cultivate a not too picky buyer at Fannie Mae for many of the junk subprime mortgages Countrywide was cranking out.
Countrywide used a special VIP loan program to influence lawmakers, report says
By Clea Benson and Roxana Tiron, Updated: Thursday, July 5, 2:06 PM
July 5 (Bloomberg) -- Countrywide Financial Corp. gave discount loans to former and current members of the U.S. Congress and executives at Fannie Mae as it lobbied to scuttle legislation that would have diminished its sale of sub-prime mortgages, according to a report released today by House Oversight and Government Reform Committee Chairman Darrell Issa.
Countrywide used VIP program to sway Congress-reportThis gives Americans a glimpse of the tawdry exchange of favors, one hand washing the other that are a part of the rotten heart of the 2008 financial meltdown that threw the economy into a tailspin.
"The VIP loan program was a tool used by Countrywide to build goodwill with lawmakers and other individuals positioned to benefit the company," it stated. The loans often had reduced interest rates and eliminated certain fees, the report added.
In the years leading up to the 2007 housing market boom and bust, Countrywide VIPs were able to "affect dozens of pieces of legislation" being considered in Congress, including measures to reform giant mortgage companies Fannie Mae and Freddie Mac , it said. The two companies, rescued by the government in 2008, have drawn nearly $190 billion in taxpayer funds to stay afloat.
New report ties lawmakers to financial perksCountrywide created a special unit devoted to buying favors backed up by an army of 70 lobbyists swarming the Congress. They and their ilk were enough to overwhelm the public's interests, and get things arranged to benifit their narrow interests. Blinded by their greed, their recklessness brought down the larger economy, to the lasting detriment of their countrymen. This kind of too cozy relationship needs prevented from menacing Americans' economic prosperity ever again.
By Jill Jackson
The report states that the benefits of getting a VIP loan included a half-point off the interest rate and the waiving of junk fees that ranged from $350 to $400. It also revealed that in the period leading up to the subprime mortgage meltdown, Countrywide launched 70 lobbyists on the House Financial Services Committee alone to fight off new subprime lending rules and new regulations governing Government Sponsored Enterprises like Fannie Mae. No legislation ever passed out of the committee. Countrywide, on the verge of collapse, was bought by Bank of America in 2008.
Fannie Mae was the number one buyer of Countrywide's bad subprime loans and eventually needed to be bailed out by U.S. taxpayers. Fannie Mae executives receiving loans included chairmen James 'Jim' Johnson, Franklin Raines, and Daniel Mudd.
Recipients of the special mortgage deals include then-Senate Banking Chairman Chris Dodd, D-Conn., and the current Senate Budget Chairman Kent Conrad, D-N.D