View Mobile Site
 

Ask the Expert

Signal Photos

 

UPDATE: Report: Countrywide won influence with discounts

Adds response from McKeon; deletes incorrect reference to Cisnerso

Posted: July 5, 2012 10:00 a.m.
Updated: July 5, 2012 5:05 p.m.
 

 

 

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.

Among those who received loans was Rep. Howard “Buck” McKeon, R-Santa Clarita, who has consistently denied any wrongdoing in connection with the transaction.

The House Oversight and Government Reform Committee report, obtained by The Associated Press, said the discounts — from January 1996 to June 2008 — were not only aimed at gaining influence for the company but to help 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 Mae 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 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.

In January, The Associated Press reported McKeon, chairman of the House Armed Services Committee, received a discounted mortgage loan from now-defunct Countrywide under a VIP program.

Thursday’s follow-up report by the same committee alleging the loans were intended to curry favor among legislators prompted a response from McKeon staffers, stating: “Mr. McKeon has been completely upfront and transparent about his loan.

“He was never aware of any Friends of Angelo designation,” the statement said, referring to a favored status for some high-ranking officials’ loans, “and he has provided the media all his loan documentation from the 1998 loan.
“Mr. McKeon shares Chairman (Darrell) Issa’s interest in determining if there was any wrongdoing by Countrywide.”

The report said, “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.”

“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 committee’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,” said Issa, a California Republican who heads the committee. “This preferential treatment — that varied depending on the influence of the borrower — was not routinely offered to the public.”

McKeon’s opponent in his bid for re-election in November, Dr. Lee Rogers, called for action against those named in the House committee report.

“You can’t take a report like this one, two years long in the making, that shows government wrong-doing, and do nothing about it,” said Rogers, who is seeking to unseat the 20-year incumbent in November.

McKeon has consistently denied any wrongdoing in connection with the loan.

Comments

Commenting not available.
Commenting is not available.

 
 

Powered By
Morris Technology
Please wait ...