Friends of Angelo
June 14th, 2008While many Americans struggle in this economy and are losing their homes, it appears that their representatives in Washington, D.C. have been given favorable treatment by the nation’s #1 home loan lender, Countrywide.
Two U.S. senators, two former Cabinet members, and a former ambassador to the United Nations received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.
Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents and emails and a former employee familiar with the loans.
Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke.
This isn’t a partisan discount program, since both Democrats and Republicans benefited. It’s another prime example of the Hostile Takeover detailed by David Sirota in his book of the same name. This is a blatant attempt by Angelo Mozilo and his associates to influence public policy, and to subvert campaign finance laws. Just take a look at what Angelo does for his “friends”.
Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as “F.O.A.’s”—Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo. While the V.I.P. program also serviced friends and contacts of other Countrywide executives, the F.O.A.’s made up the biggest subset.
According to company documents and emails, the V.I.P.’s received better deals than those available to ordinary borrowers. Home-loan customers can reduce their interest rates by paying “points”—one point equals 1 percent of the loan’s value. For V.I.P.’s, Countrywide often waived at least half a point and eliminated fees amounting to hundreds of dollars for underwriting, processing and document preparation. If interest rates fell while a V.I.P. loan was pending, Countrywide provided a free “float-down” to the lower rate, eschewing its usual charge of half a point. Some V.I.P.’s who bought or refinanced investment properties were often given the lower interest rate associated with primary residences.
So while the people who make the laws get special treatment from Angelo’s company, our friends and neighbors struggle to keep their houses. Make no mistake, our friends and neighbors are paying, so that Chris Dodd, Kent Conrad, Alphonso Jackson, Donna Shalala, Richard Holbrooke and others like them can benefit.
The scenario is this: Average people pay higher costs for their mortgages, so that Angelo can dole out discounts to powerful people who regulate his business, in the hope that they’ll regulate him a little less so he can turn out higher profits.
Don’t think that the average customer isn’t paying so that Angelo’s “friends” can get a break.
Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided. One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide. [emphasis mine]
The next time you’re voting, think about who you’re voting for. Are your representatives doing what you expect of them? Do they represent you and your friends and neighbors, or are they on the corporate payroll like these five public servants? If the answer is the latter, it’s time for a change.

