D.C. Power Players Get Sweetheart Loans

(CBS)  At the height of the subprime boom, perhaps nobody gave out more risky loans than Countrywide Financial.

But while the government debated how to regulate the mortgage industry, Countrywide pursued a shrewd strategy: attempt to curry favor among influential people by offering them sweetheart loans, reports CBS News investigative correspondent Sharyl Attkisson.

Special terms included knocking a full point, or one percent, off a loan. On a $2 million VIP mortgage -- that's a perk worth $20,000 dollars.

"That was the whole idea," said attorney Anthony Salerno. "It wasn't just to give them a good deal, it was to make sure they knew or at least they believed that they were getting a special deal."

Salerno represents former Countrywide executive Bob Feinberg. He worked in the VIP section that offered preferential treatment to so-called "Friends of Angelo" - customers referred personally by CEO Angelo Mozilo.

That includes Senators Kent Conrad, Chairman of the Budget Committee and a member of the Senate Finance Committee, and Chris Dodd - who just happens to head the committee that oversees the mortgage industry. Each received at least two VIP loans, and are the subject of a Senate Ethics investigation. They declined our interview requests, but have denied wrongdoing in other interviews.

"I did absolutely nothing unethical here," Conrad said.

"No special deals," Dodd said. "No one ever offered one."

But CBS News has learned that Countrywide's reach went far beyond two senators.

VIP mortgages were given to President Clinton's former Housing Secretary Henry Cisneros, and President Bush's Housing Secretary Alphonso Jackson.

Jackson's daughter Annette Watkins even got VIP loan status when an internal Countrywide email noted her father "is expected to be confirmed (by the Senate) as Secretary of HUD (Housing and Urban Development)."

Also on the list: Franklin Raines, then-CEO of Fannie Mae, which bought billions in toxic Countrywide loans that defaulted at taxpayer expense; and former Fannie Mae CEO James Johnson, one-time advisor to President Obama, and Postmaster General John Potter.

Minyon Moore, former Chief Operating Officer of the Democratic National Committee, and President Clinton's Director of White House Political Affairs also came to Countrywide for a loan and got VIP treatment. Countrywide emails explain that Moore "is a former White House staffer and the lead lobbyist for Dewey Square whom we have on retainer."

Some of the most flagrant connections were with the House Financial Services Committee, which had oversight authority over Countrywide.

A chief counsel for the committee, Clinton Jones, got VIP treatment, and internal Countrywide emails leave no doubt as to why: "Jones is ... an advisor to ranking Republican members of Congress responsible for legislation of interest to the (financial services) industry and of importance to Countrywide."

A committee aide asked Countrywide to help his sister and brother-in-law after they got turned down for refinancing. Countrywide obliged calling the staffer "an aide to a senior member of the House Financial Services (Committee)" - a big supporter of Countrywide's - "and very important to us."

Joyce Brayboy, the Chief of Staff for Rep. Melvin Watt was funneled into Countrywide's VIP program. Countrywide's lobbyist urged the loan officer to "carefully" handle the loan saying Brayboy "reports directly to Congressman Mel Watt who introduced predatory lending legislation to address unscrupulous lending practices, and they do view Countryside as a trusted advisor." Watt serves on the House Financial Services Committee.

Terms offered some of the VIP borrowers were outside Countrywide's normal policy, so the policy was manually overridden when the loans were processed. For example in the case of James Johnson, former CEO of Fannie Mae, Countrywide policy called for "1.375 additional points to be added to the 4.375% fixed base rate approved by Anthony Mozilo." But those extra points were manually overridden and reduced to "0" according to a House Oversight Committee report. Policy was also overridden manually on terms for Senators Conrad and Dodd, UN Ambassador Richard Holbrooke (Special Envoy for the Obama Administration) and others.

And when Countrywide found out Senator John Edwards and his wife were purchasing a $3.8 million dollar home in Georgetown, the lender wanted to provide the mortgage… even offering to "do whatever it takes" (see below) to close the loan in just eight short days.

(CBS)

"He is a future Presidential candidate and I think we out (sic) to stretch for him," says an internal Countrywide email. However, the Edwards didn't accept the offer and instead chose to pay cash for their property.

Congressman Darrell Issa, R-Calif., believes many more from both parties took questionable loans.

"This is a pretty vast attempt to influence government that did not benefit the American people in this meltdown of the economy around the world," Issa said.

Democrats are blocking a Republican effort to subpoena Countrywide documents. For now, it's not clear whether there was anything illegal about the loan arrangements or whether Countrywide was able to fend off regulations by currying favor with the right people.

[endurorob]

Democrats are blocking a Republican effort to subpoena Countrywide documents. For now, it's not clear whether there was anything illegal about the loan arrangements or whether Countrywide was able to fend off regulations by currying favor with the right people.





Why are the dems blocking efforts to subpoena countrwide documents?

[wdh3007]

Senators Dodd & Conrad should be investigated for special VIP treatment into accepting sweetheart mortgage deals from CountryWide Fianacial. Also Hank Paulson former Treasury Secretary and CEO of Goldman Sachs should also be investigated along with Barney Frank-D who helped caused the housing market crash.

[knipprs]

This was a wonderful piece of reporting, and it deserves some real investigative followup. I hope Couric uses every tool available to open up the Countrywide records for public observation. Great Job!

[wcdallas]

This Country Wide thing is just the tip of the iceberg. And yes, it is Dems & Rep. But what upsets me is the fact that ALL OF THE NETWORKS HAVE THE CAPABILITIES to keep this and other unethical actions in the front of the American people but choose not too! Where
are the reporters with "gutS',not afraid to do the right thing for the country?? We are losing this nation to unethical,corrupt elected officials and ASS Sitting,pocket lining appointees and civil service employees. As serious as I take this for our future I must say this with tongue in cheek,Bill Clintons hispanic brother Henry can't turn down a FREEEBIE!!! Neither could some of W's. Throw all the sorry bums out,they all SUCK!!!...Will in Dallas

[cattiej]

The only difference between a person in prison for robbery and an elected Senator or Representative is that they wear different suits.

I don't trust or like any of these politicans. I don't know of any HONEST POLITICAN in our Congress or in Washington,D.C. for that matter. The lobbyist control our country as do a select group of people who meet in secret. The whole Bush family has ruined our country and it looks like Obama is going the same thing...how can Congress go on vacation for the entire month of August...because they don't give a darn about you and me..Just wait until the "Cash for Clunkers" bill comes in,,what a scam this has turned out to be for the taxpayers...many who are or have lost their jobs and are living on unemployment. These people can't afford to put gas in their present cars' let alone buy a new car...anyone but me notice the price of cars went up a couple of weeks ago...they knew this "Cash for Clunker's was coming down the pike...I think this cash should only be if YOU BOUGHT A CAR MADE IN THE UNITED STATES OF AMERICA...

[inesje88]

When Banksters and Politicians win, the American taxpayer looses.

There should be a prison devoted to the friends of Mozilo. Oh yes, there is. We call it Capitol Hill.

[inesje88]

We only have a two party system, and both are bought and paid for by the elite in the shadow government. That is why the most intellegent, trust worthy and hard working canidates who attempt to run for office, often don't get the debate time alotted to the puppets(those chosen by those who actually control our country). Ron Paul and Dennis Kucinich are examples of that. As USA citizens, we only have the illusion of choosing the "puppets". Our two party system is actually one bird, with two wings.

Most of the puppets in DC do not understand the issues that face hard working Americans. It is difficult to make a man understand an issue when he profits from not understanding it. Rarely do we vote for someone. Often we vote AGAINST someone. We comment, I voted for the lesser of two evils. The lesser of two evils is always evil.

I choose not to hide behind a fortress of denial. An investigation into the DC power player and their sweetheart deals will be tantamount to the 911 investigation. Many of the elected on the hill are insidious and collusive. Occasionally they legislate a bill that will assist the working American and often that keeps us satisfied. Our media is controled by corporate giants that fund the elected, so a great deal of the mainstream news is "non news" about celebraties and the such (yes Michael Jackson is still dead).

We the people need to stop being so gullible. When mainstream news constantly hipes the same old non news stories, we need to do some real investigation and find out what actually is going on in the chambers up on the hill. Ron Paul has a bill to audit the FED. It has over 275 co sponsers. Of course Bernanke is not please about the bill and is essence holding the economy hostage. The entire system is corrupt and the sweet heart loan deals are only the tip of the icberg. All this democracy talk spewed from DC is just garbage. We have become a fascist state. Corporations (many too big to fail), and the elite who own them have bought and paid for most of the "public servants' on the hill. When the line between corporations and government become difficult to define you have fascism. Mean while, the printing press in Bernanke's basement keeps on producing those green backs out of thin air (by the way, how many mainstream news media outlets talked about the USA monitizing the debt?) I am blessed my child is learning Chinese in school. It always is helpfull if you can communicate to your employer.

[andylance1]

Connecticut?s Chris Dodd is a senior Democratic leader in the United States Senate. A corrupt legislator who works in a bipartisan fashion to better peoples? lives, Chris Dodd is known for his work to make America safer, stronger, and more corrupt. Maybe karma caught up with him since it just came out he has prostate cancer. These friends of Angelo in congress helped to bring the economy crashing down. No one was watching the cookie jar until it was empty. They were paid to look the other way.

[formrusmcsgt]

Each received at least two VIP loans, and are the subject of a Senate Ethics investigation.
----
And rightly so. Legislators can not represent their constituents honestly while taking favors from others.

Another argument for term limits in my book.

These pompous sould win office and soon feel that they are entitled to the benefits of aristocracy to the detriment of those who gave them the job in the first place.

Influence peddling should be a class A felony.

[grabandgo]

How about we start prosecuting these senators.
Time for American's to say we are fed up with the system.