Report: Vast Extent of Congressional 'VIP' Loans from Countrywide Financial Before Crash
Countrywide Financial Corp sold 'VIP' loans to members of congress in exchange for influence in Washington according to a report released on Thursday by the U.S. House and Government Oversight Committee, Associated Press reports.
In an ongoing bid to kill any legislation that could hurt the company's profits, Countrywide granted hundreds of loans between 1991 and 2008 through the VIP program, which included reduced interest rates and discounted fees, to lawmakers, their staff, top government officials and executives of government-controlled mortgage company Fannie Mae, according to the committee's report.
"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 states.
The central findings in the report were also revealed by news reports directly after the crash, but the three-year committee investigation now shows the vast extent of the VIP program, nicknamed “Friends of Angelo” for the company’s chief executive Angelo Mozilo, how it came into existence and how it eventually became one of the biggest scandals of the recession, reports Talking Points Memo.
Countrywide, acquired by Bank of America Corp in 2008, was a major player in the mortgage business during the housing boom leading up to the mortgage crisis, Reuters reports. The company and its chief executive, Angelo Mozilo, were well known for the risky lending practices which lead to the housing market crash.
The report, obtained by the Associated Press, shows how the discounts were not only aimed at gaining influence for Countrywide but also were used to help other mortgage giants.
"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.
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Countrywide's chief executive Angelo Mozilo (Photo: AP)
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