The Joplin Globe, Joplin, MO

Opinion

July 12, 2012

Our View: Legalized bribery

If there’s a difference between bribery and what Countrywide did in the decade leading up to the housing crisis, we can’t see it.

Countrywide’s lending practices helped bring on the economic downturn, and all the while that the company was making these subprime (risky) loans, it offered other loans at discounted rates and waived fees to key people in Washington who were in a position to help Countrywide and its allies.

Former Senate Banking Committee Chairman Christopher Dodd, D-Conn., got a low-interest loan. So did Senate Budget Committee Chairman Kent Conrad, D-N.D., and former Housing and Urban Development secretaries Alphonso Jackson and Henry Cisneros; and former Health and Human Services Secretary Donna Shalala.

According to a new U.S. House of Representatives investigative report, the discounted VIP loans began in January 1996 and continued through June 2008, when the company was acquired by Bank of America. These sweetheart deals were not just aimed at gaining influence for the company itself, but were made also to benefit Fannie Mae. According to reports, Countrywide’s business depended largely on Fannie Mae, which was responsible for buying a large volume of Countrywide’s loans, including the subprime loans. At the time that Countrywide was buying its influence — legally — Fannie Mae was trying to fend off more government regulation.  

“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. “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 Officer Angelo Mozilo.

“These relationships helped Mozilo increase his own company’s profits while dumping the risk of bad loans on taxpayers,” the report said.

In short, Countrywide used its influence to buy regulators, legislators and others at the expense of the American people.

Five years later, there have been no criminal prosecutions. Not one banker or official with this or other companies has gone to jail, although some have paid fines and been banned from working in the industry again. That was hardly a punishment, given that they escaped with millions. Some of these compliant members of Congress quietly retired, but others have been re-elected. That’s because all of this is legal. Therein lies the heart of the scandal.

Nothing has fundamentally changed between Washington and Wall Street, so expect more of the same in years to come.

“Countrywide’s effort to build goodwill on Capitol Hill worked,” the report concluded.

Yes, but for whom?

1
Text Only
Opinion
Local News
Twitter Updates
Follow us on twitter
Poll

A Missouri Senate committee has adopted a state budget provision that would prevent public colleges and universities from offering in-state tuition rates to students living in the country illegally. Do you agree with this?

Yes.
No.
     View Results
Facebook
NDN Video
SKorea Ferry Toll Hits 156, Search Gets Tougher Video Shows Possible Syrian Gas Attack Cubs Superfans Celebrate Wrigley's 100th Raw: Cattle Truck Overturns in Texas Admirers Flock to Dole During Kansas Homecoming Raw: Erupting Volcanoes in Guatemala and Peru Alibaba IPO Could Be Largest Ever for Tech Firm FBI Joining Probe of Suburban NY 'Swatting' Call U.S. Paratroopers in Poland, Amid Ukraine Crisis US Reviews Clemency for Certain Inmates Raw: Violence Erupts in Rio Near Olympic Venue Raw: Deadly Bombing in Egypt Raw: What's Inside a Commercial Jet Wheel Well Raw: Obama Arrives in Japan for State Visit Raw: Anti-Obama Activists Fight Manila Police Motels Near Disney Fighting Homeless Problem Michigan Man Sees Thanks to 'bionic Eye' S.C. Man Apologizes for Naked Walk in Wal-Mart Chief Mate: Crew Told to Escape After Passengers
Sports