Countrywide Gave Special Attention To Lawmakers
Saturday, June 14, 2008
In 2004, Sen. Kent Conrad was hunting for a lender for a $1.07 million mortgage on his vacation home in Bethany Beach, Del., when an old friend handed him the phone number of Angelo Mozilo.
Conrad (D-N.D.) said yesterday that he sees nothing wrong with calling Mozilo, the chief executive of the nation's largest mortgage lender, Countrywide Financial. And the Senate Budget Committee chairman is adamant that he received no special deals.
But by reaching out to Mozilo, Conrad became another VIP enrolled in the "FOA" -- Friends of Angelo -- loan program.
"[T]ake off 1 point," Mozilo instructed a subordinate in a March 17, 2004, e-mail obtained by Condé Nast Portfolio magazine. In another e-mail that April about a Conrad loan, Mozilo wrote: "Make an exception due to the fact that the borrower is a senator."
Before his company's fall from grace, Mozilo looked for influence in Washington however he could get it, through campaign contributions, high-priced lobbyists and easy lending, not just to power brokers but even to financial journalists. Savings offered under the FOA program do not appear to amount to more than a few hundred or thousand dollars.
But as Countrywide emerged this year as a leading player in the subprime mortgage crisis, Mozilo turned politically radioactive, held up by politicians as the personification of a housing meltdown that has shaken financial markets worldwide.
Last month, a federal judge in Los Angeles gave the go-ahead to a lawsuit filed by Countrywide shareholders, who say that the company made bad loans and misled its investors. Mozilo was hauled up before a congressional committee in March to defend his compensation package, which dropped 79 percent last year to $10.8 million but was supplemented by $121.5 million in exercised stock options.
The FOA program has only recently surfaced. Conrad received Mozilo's phone number from former Fannie Mae chief executive James A. Johnson, who was chased from his job vetting potential running mates for presumptive Democratic presidential nominee Barack Obama just four days after the Wall Street Journal reported that Johnson may have received preferential treatment on his own Countrywide loans.
Some familiar with Mozilo's practices say he made no secret of the incentives. "It was something he handed out like party favors. He was fairly forthcoming with it," said Guy Cecala, publisher of Inside Mortgage Finance Publications. "As long as I can remember, he was offering that."
The Portfolio investigation alleges that favorable loans also were extended to Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.); President Bush's former housing secretary, Alphonso Jackson; former United Nations ambassador Richard Holbrooke; and former Health and Human Services secretary Donna E. Shalala.
"Angelo asked me to ensure that we 'knock her socks off' with our great service," a Countrywide executive wrote of Shalala's application in an Aug. 20, 2002, e-mail, according to Portfolio.
"Look for these," a Countrywide manager wrote in a Sept. 27, 2002, e-mail, after receiving applications from Kati Marton, Holbrooke's wife. "These loans are incredibly important to Angelo and as such they are incredibly important to us."