July 5, 2012 in Nation/World

Countrywide won influence with VIP loans, report says

Larry Margasak Associated Press
 

WASHINGTON – 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.

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.

“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.

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.”

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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