The now defunct Countrywide Financial Corp. issued hundreds of discounted loans to government officials and Fannie Mae employees in order to build clout with influential policymakers, a new House report shows.
The report, issued by the House Oversight and Government Reform Committee, details several Countrywide VIP loans that were given to officials in positions with influence over issues important to Countrywide, which reached the verge of collapse before being acquired by Bank of America in 2008.
The VIP loans program was nicknamed “Friends of Angelo” after Countrywide CEO Angelo Mozilo, who personally ordered some of the loans. The loans were made between January 1996 and June 2008.
“Documents and testimony showed Countrywide used the VIP loan program as a tool to create a favorable impression of the company on Capitol Hill,” the report said. “The documents also showed that senior Countrywide officials and lobbyists explicitly weighed the value of relationships with certain potentially influential borrowers against the cost to Countrywide in terms of forfeited fees and payments.”
According to the report, the primary benefit of being a Countrywide VIP was access to discounted loans in the form of reduced points and waived fees. The most frequent recipients of the VIP loans, other than Countrywide employees, were employees of Fannie Mae, the government-sponsored enterprise that was responsible for purchasing a large volume of Countrywide’s subprime mortgages.
Fannie Mae and Countrywide then lobbied against GSE reform legislation in Congress that could have limited Fannie Mae’s ability to purchase and hold those mortgages.
Among the notable officials in the “Friends of Angelo” group are former Senate Banking Committee Chairman Chris Dodd, D-Conn., who co-authored the Dodd-Frank financial reform bill; Senate Budget Committee Chairman Kent Conrad, D-N.D.; former Democratic Vice Presidential nominee John Edwards; House Armed Services Committee Chairman Buck McKeon, R-Calif; and former Housing and Urban Development Secretary Alphonso Jackson.
The list also includes Congressman Edolphus Towns, who once served as chairman of the oversight committee and is now the ranking Democratic member on the panel.
Dodd claimed to be unaware of his participation in the VIP loan program, but he referred Mary Jane Collipriest, a former communications director for Senator Robert Bennett, to the Countrywide VIP unit in 2002, according to the report.
Congressman Pete Sessions, R-Tex., who chairs the National Republican Congressional Committee, also received a Countrywide loan but requested not to receive a discount from the mortgage company.
“This report sheds new light on Countrywide’s relationship with Fannie Mae and how Countrywide used its VIP Program to cement its ties to its taxpayer backed business partner,” said Congressman Darrell Issa, R-Calif., who chairs the oversight committee. “Even as Countrywide’s CEO Mozilo mocked Fannie Mae and top executives for its crony capitalism business model, he would nonetheless personally intercede to ensure executives had access to discounted Countrywide loans. These relationships helped Mozilo increase his own company’s profits while dumping the risk of bad loans on taxpayers.”
Mozilo agreed to a $67.5 million settlement with the Securities and Exchange Commission in 2010, but did not agree to any wrongdoing.