Countrywide Corruption on Capitol Hill

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American Spectator:

Four years have passed since the financial crisis that for a time threatened to carry America's economy into the abyss. The epicenter of the crash was the housing market. No mortgage lender had a more malign influence than Countrywide Financial Corp., which, a House committee found, bought itself political clout by giving cheap loans to important political and industry officials.

So-called influence peddling on Capitol Hill is neither new nor surprising. Although housing is essential for all Americans, home ownership is not. The industry, from builders to realtors to financers, has sought government support to inflate housing demand. And, not incidentally, their profits.

There were a lot of influential players with a role in the subprime lending debacle. Government simultaneously strong-armed and subsidized financial institutions into providing mortgages to people with ever poorer credit ratings. One of the largest was Countrywide Financial Corp., which developed a special relationship with Fannie Mae. The latter, along with its companion government-sponsored enterprise Freddie Mac, did so much to trigger both the financial crisis and succeeding bail-outs.

Countrywide was swept away by the resulting deluge. The firm's portfolio of bad loans destroyed its finances, causing the company to crash and burn in 2008. The wreckage was taken over by Bank of America.

According to a multi-year investigation by the House Oversight and Government Reform Committee, Countrywide used preferential loans to win political influence. The oversight committee is chaired by Rep. Darrell Issa (R-MI), who explained that "Countrywide lobbyists and CEO Angelo Mozilo used discounted loans as a tool to ingratiate itself with policymakers in an effort to benefit company's business interest."

The company maintained a "VIP Program" which offered mortgages at special terms. "This preferential treatment -- that varied depending on the influence of the borrower -- was not routinely offered to the public," explained the committee's new report, "How Countrywide Used its VIP Loan Program To Influence Washington Policymakers."