House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) released a report today finding that Countrywide Financial’s “Friends of Angelo” and “VIP Program” to boost its lobbying efforts in Washington and strengthen its ties with Fannie Mae.
“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 former lobbyist for Countrywide testified that Members of Congress, staff, and other government officials were directed to the company’s VIP program as part of an effort to create a favorable impression of the company on Capitol Hill. This preferential treatment – that varied depending on the influence of the borrower – was not routinely offered to the public.”
The report details the findings of a three-year probe into the company’s use of discounted mortgages to curry favor with influential Washington policy figures.
In 2006, Countrywide financed 20 percent of all U.S. mortgages, but by 2008 Bank of America purchased the failing Countrywide for $4.1 billion.
The committee’s investigation found that the Countrywide VIP unit made 29 loans to 12 different members of Congress and staff, including former Sen. Chris Dodd (D-Conn.) and Sen. Kent Conrad (D-N.D.) and Reps. Edolphus Towns (D-N.Y.), Buck McKeon (R-Calif.), Pete Sessions (R-Texas), and Elton Gallegly (R-Calif.).
“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,” Issa said. “Other than Countrywide, no other entity’s employees received more VIP loans than Fannie Mae. 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,” Issa added.