When people ask why banking CEOs haven’t been called to account for the devastating mortgage meltdown that helped plunge the United States into the worst recession in generations, a name that invariably comes up is Angelo Mozilo, the former CEO of Countrywide Financial. On Thursday, his name surfaced again, after a Congressional committee released a report detailing how Countrywide provided sweetheart mortgage loans to powerful members of Congress. The results of the three-year Congressional investigation have renewed attention on one of the more notable influence-peddling schemes in recent memory, and could revive questions about why the well-tanned Mozilo hasn’t spent any quality-time in the slammer.
Prior to the financial crisis, Countrywide Financial was one of the largest mortgage lenders in the country, specializing in risky subprime loans, which it offered to people with less-than-sterling credit. According to Mozilo’s TIME 2007 Person of the Year citation, the mortgage chieftain “pushed his sales force to write risky loans long after alarm bells began sounding, and took home staggeringly large paychecks.” From 2000 though 2008, Mozilo received total compensation of over $500 million.
Countrywide, which enjoyed revenue of $11.4 billion in 2006 as the real-estate bubble neared its peak, was purchased by Bank of America in January of 2008 for the fire-sale price of $4.1 billion as part of the financial crisis mop-up.
The Congressional report released Thursday found that between 1996 and 2008, Countrywide’s VIP loan unit operated a “Friends of Angelo” program that made hundreds of loans to current and former members of Congress, congressional staff, and other high-ranking government officials. The VIPs received discounted mortgage rates and faster loan processing.
Meanwhile, some of the lawmakers and staff who received the VIP loans were “positioned to affect” legislation that Countrywide opposed. “In fact, Countrywide lobbyists – and CEO Angelo Mozilo himself – referred several Members and staff from the Senate Committee on Banking and the House Committee on Financial Services to the VIP unit,” the Congressional report found. The “Friends of Angelo” unit processed loans for key Senators and Senate staff “who could be helpful when legislation that affected the company was drafted or up for a vote.” Among the lawmakers named in the report:
Countrywide gave VIP loans to former Senate Banking Committee Chairman Christopher Dodd; Senate Budget Committee Chairman Kent Conrad; and Mary Jane Collipriest, Communications Director for former Senator Robert Bennett, who served on the Banking Committee. Dodd referred Collipriest to the VIP unit.
Countrywide also forged relationships with Members and staff of the U.S. House of Representatives. The VIP unit processed loans for Congressmen Howard “Buck” McKeon; Pete Sessions; Edolphus Towns; and Elton Gallegly.
The Congressional report could not find a single instance of quid pro quo directly connecting a lawmaker’s vote to a sweetheart deal, according to Rep. Jason Chaffetz, a Utah Republican and member of the Committee on Oversight and Government Reform, which produced the report. “But it skirts awfully close,” Chaffetz told CNN’s AC360 on Thursday evening. “You couldn’t just pick up the phone or go down to your local Countrywide representative and get this,” he added. “You could only get it by dealing with the ‘Friends of Angelo.’”
The Capitol Hill VIP program spread through Congress in part because “congressional staffers complained about their Countrywide mortgages to the company’s lobbyist,” according to The Wall Street Journal. All the lawmakers named in the report have denied wrongdoing. Several provided lengthy statements to CNN. Committee chairman Darrell Issa, the California Republican, has no plans to file an official complaint with the House Ethics Committee, his spokesperson told The Washington Examiner.
For his part, Mozilo made TIME‘s Person of the Year list in 2007. The citation wasn’t flattering. In 2010, Mozilo settled securities fraud and insider trading charges with the SEC by agreeing to a $67.5 million fine and a lifetime ban on serving as an officer or director of any public company. (Countrywide footed $20 million of the bill.) The fine was a fraction of Mozilo’s overall compensation, as Gretchen Morgenson of The New York Times reported at the time of the settlement:
For years, Mr. Mozilo was among the highest-paid executives in America and his S.E.C. fine is a fraction of the vast wealth he amassed running Countrywide. In one eight-year period, from 2000 until he left the company in 2008, Mr. Mozilo received total compensation of $521.5 million, according to Equilar, a compensation research firm.
Further reading: Countrywide’s “Friend of Angelo” VIP loan program was first detailed in Dan Golden’s 2008 Condé Nast Portfolio cover story. (I worked at Portfolio at the time; it was a big scoop. Portfolio closed in 2009, and many of the links to its stories have been lost. But an archived version of Golden’s story can be found here.)
PHOTOS: The Tale of a Lost Mortgage