Most Active Stories
Thu July 5, 2012
Countrywide Gave Lawmakers, Officials Hundreds Of Discount Loans
Originally published on Thu July 5, 2012 10:40 am
Countrywide Financial Corp., the one-time mortgage giant, may have "skirted the federal bribery statute," but nonetheless used a VIP discount program to gain influence in Washington, a report from the Republican-led House Oversight and Government Reform Committee concludes.
We first posted on this news, broken earlier by The Associated Press and The Wall Street Journal, at 9 a.m. ET. Since then, the committee's report has been released. Read through to see our original post and the update with links and excerpts from the committee's work:
Our original post.
Today's scoop from The Associated Press:
"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 Wall Street Journal has a piece of the story as well:
"A controversial program at Countrywide Financial Corp., offering loans to 'VIPs' on favorable terms, spread to Congress in part because congressional staffers complained about their Countrywide mortgages to the company's lobbyist, according to a new report by a House committee."
The Journal adds that "the findings are part of a final report on the VIP program issued by the House Oversight and Government Reform Committee, headed by Rep. Darrell Issa (R., Calif.). ... The House report, expected to be released publicly Thursday, said the VIP program was used to 'build goodwill with lawmakers and other individuals positioned to benefit the company.' "
The AP says Democrats and Republicans are among those cited in the report as having received the discounts in recent years.
The House committee's website is here. We'll update after the report appears.
Update at 10:30 a.m. ET. The Report Is Out. Did Countrywide "Skirt" The Law?
In a statement now posted on his committee's website, Issa says "the committe's investigation found Countrywide lobbyists and CEO Angelo Mozilo used discounted loans as a tool to ingratiate itself with policymakers in an effort to benefit the company's business interests."
The report goes on to state that Countrywide, which has since by absorbed by Bank of America, may not have broken any laws because it may have "skirted the federal bribery statute":
"According to 18 U.S.C. § 201(b), 'whoever directly or indirectly, corruptly gives, offers or promises anything of value to any public official . . . with intent to influence an official act' shall be fined, imprisoned, or both. The Justice Department has not prosecuted any Countrywide official for actions related to the VIP loan program. Documents and testimony show that Angelo Mozilo and Countrywide's 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."
Mozilo, as the committee adds, responded to its questions in writing. He said he did not recall discussing the VIP loan program with any lawmakers who took advantage of it. Also, he wrote that "it was not the purpose of the VIP program to establish relationships with borrowers who had the potential to influence policy, law and public image. I did believe that high-profile borrowers could enhance the company's public image."
In another response, Mozilo says he "was proud to have people of prominence select Countrywide to be their lender of choice."
Today's report also notes that in March 2009, committee Republicans (then in the minority) issued a report describing:
"Countrywide's effort to establish and develop relationships with potentially influential borrowers in government and industry. Of the 32 people named in the report, 16 had not been previously reported. They included industry lobbyists, law enforcement officials, and employees of Fannie Mae, the Mortgage Bankers Association, and the Los Angeles Times.
"The report also thoroughly examined the loans given to the politically influential borrowers previously reported by Portfolio and other media outlets. In addition to [former Fannie Mae Chairman Franklin] Raines, this group contained notable Democrats such as Chris Dodd, Kent Conrad, and Richard Holbrooke. The report also examined the VIP loans given to Republicans John Potter, Alphonso Jackson, and California State Appellate Judge Richard Aldrich."