Barack Obama has tried to score serious populist mileage from the subprime meltdown, explicitly naming Countrywide Financial as one of the villains of the economic turbulence caused by the credit crisis. Unfortunately, one of his own advisers had to resign as a result; Jim Johnson got millions in sweetheart loan deals from Countrywide CEO Angelo Mozilo under a “Friends of Angelo” program that coincidentally favored the powerful and the politically connected. Today, Conde Nast reveals a few more of Angelo’s friends — and Obama may have to find another villain quickly:
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. 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.
Nancy Pelosi and Harry Reid promised us the “most ethical Congress ever” in 2006. How’s that working out? This is practically a who’s who of Democratic power brokers, in Congress as well as the Clinton administration. The Bush administration gets zinged here with Alphonso Jackson, who already resigned under an ethical cloud.
Angelo picked his friends well. Dodd chairs the Banking Committee, and the $58,000 Countrywide saved him by giving him a below-market interest rate probably served the lender well in keeping their misdeeds below the radar screen. It went well with the $21,000 in campaign contributions Dodd received from Countrywide.
Conrad saved over $10,000 under the Friends of Angelo program with the deduction of a point on one loan. He got a second loan through Countrywide when Mozilo intervened to approve the loan against company policy, on the basis of his position as a Senator. Conrad can’t recall ever meeting Angelo, but the evidence of “friendship” looks pretty clear.
For those who wonder how Countrywide got away with its mismanagement and its bad lending practices to the point of collapse, all we can say is that they had Friends in high places — or in low places, depending on how you look at it. The most ethical Congress ever put the foxes in charge of the henhouse, and it’s the homeowners who will suffer the consequences. Will Obama throw Chris Dodd, Kent Conrad, and Donna Shalala under the bus, too, as well as Pelosi and Reid?