Issa Releases Report on Countrywide VIP Program focussing on use of discounted loans to advance business, lobbying goals
House Oversight and Government Reform Committee Chairman Darrell Issa today released a new report following the Committee’s three year investigation into Countrywide Financial’s “Friends of Angelo” and “VIP Program” that issued discounted mortgages to influential Washington policy figures. The report finds that Countrywide used its VIP Program to aid its lobbying efforts as well as to strengthen its relationship with taxpayer backed Fannie Mae. Countrywide partnered with Fannie Mae in a strategic business alliance that also included joint lobbying efforts.
“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.”
“In addition, 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. 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.”
Findings of the report include:
• A log of all loans processed by Countrywide’s VIP unit showed 17,979 loans between January 1996 and June 2008. Borrowers included Members and employees of Congress, the White House, Fannie Mae, Freddie Mac, federal agencies, and other government entities. The log listed hundreds of duplicate loans – the actual number of VIP borrowers was considerably less than 17,979. Lawyers for Bank of America acknowledged that the log may not contain the full roster of VIP borrowers.
• Countrywide established the VIP unit in 1991 to process loans for senior Countrywide officials and their friends. Referred to internally as Branch 850, the unit had 13 full-time employees trained to provide enhanced customer service. According to VIP Loan Unit operating procedures, the suite of benefits available to VIP borrowers included program/underwriting and pricing exceptions.
• [Former Countrywide lobbyist] Jimmie Williams referred Members of Congress and congressional staff to the company’s VIP desk in California to create a favorable impression of the company on Capitol Hill. To better position himself to lobby Members and staff, Williams made sure they received enhanced customer service.
• In approximately 2000, Jimmie Williams began routing Members of Congress and congressional staff who he lobbied to a referral desk in California. Williams understood that the referral desk could handle loans for high-profile clients because the staff there frequently handled loans for celebrities. The referral desk was in fact the VIP unit.
• Countrywide marked documents sent to VIPs in a variety of ways for the apparent purpose of notifying borrowers that the VIP Loan Unit was processing their loans. VIP borrowers received documents in the mail and via fax that clearly identified Countrywide’s “VIP Team” as the point of contact in the company.
In totality, the Committee’s investigation found that the Countrywide VIP unit made 29 loans to 12 different Members of Congress and staff.
Click here for a copy of the report: “How Countrywide Used Its VIP Loan Program to Influence Washington Policymakers."