You didn't think that Countrywide's VIP program stopped at Democratic insider James Johnson, did you? Portfolio.com is reporting that two U.S. senators, two former Cabinet members, and a former ambassador to the UN received loans through the "Friends of Angelo" program that waived points, lender fees, and company borrowing rules. That's Angelo Mozilo, Countrywide's CEO and someone we'll probably learn more about in the coming months (the feds are investigating his stock transactions and there are bunches of shareholder suits on the table). Of course, Mozilo is one juicy target of scorn. Just look at him: perpetual tan, Godfather threads, nine-figure take-home pay. He's also the guy who kept insisting that the company's subprime problems would soon be history. Look him up on the CNBC archives - he talked a pretty good game to Maria "Money Honey" Bartiromo. From Portfolio:
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. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.
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. Unless they asked, V.I.P. borrowers weren’t told exactly how many points were waived on their loans, the former employee says. However, they were typically assured that they were receiving the “Friends of Angelo” discount, and that Mozilo had personally priced their loans.
The V.I.P. loans to public officials in a position to advance Countrywide’s interests raise legal and ethical questions. Countrywide’s ethics code bars directors, officers and employees from “improperly influencing the decisions of government employees or contractors by offering or promising to give money, gifts, loans, rewards, favors, or anything else of value.” Federal employees are prohibited from receiving gifts offered because of their official position, including loans on terms not generally available to the public. Senate rules prohibit members from knowingly receiving gifts worth $100 or more in a calendar year from private entities that, like Countrywide, employ a registered lobbyist.
Portfolio was able to reach a few of the VIPs, who basically denied knowing about the special treatment (Conrad says he never met Mozilo). Truth is, hot shots get breaks on a lot of stuff - hotel rooms, jewelry, cars. I recall that Donald Trump of all people once railed at the inherent unfairness of giving stuff to people who don't need any more stuff. Of course, a mortgage lender giving breaks to U.S. senators who are making legislative decisions about the industry would seem to go beyond the usual Hollywood swag. Oh well.