'World News' Trumps Up Severity of Former Countrywide CEO Civil Charges

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By Jeff Poor (Bio | Archive)
June 5, 2009 - 09:51 ET
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Throughout 2008, Countrywide Financial, now owned by Bank of America (NYSE:BAC), was attacked as being culpable for the financial crisis. Adam Lashinsky of Fortune magazine, in an appearance on Fox News Channel's "Cavuto on Business" June 21, 2008, predicted the attacks "won't stop until they do a perp walk with Angelo Mozilo - the CEO of Countrywide."

A year later, a report on ABC's June 4 "World News with Charles Gibson" is seemingly championing that cause. Before a single criminal charge has even been filed, senior justice correspondent Pierre Thomas was already showing footage of jail cells. Thomas blamed Mozilo for being the "catalyst" of the housing crisis.

"Investigators say Mozilo was selling $140 million in stock as Countrywide imploded," Thomas said. "To many, Mozilo, known for his deep tan and aggressive style, was the king of subprime mortgages - those risky loans that were the catalyst for the housing meltdown. Mozilo, the son of a butcher from The Bronx, has always maintained publicly that he's never misled anybody."

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Mozilo had told Congress in 2008 it didn't make sense for his company to make a loan that's going to fail because ultimately the company would lose. In his report, Thomas pointed out that Mozilo had used the terminology "flying blind" to describe his company's financial picture, and suggested jail time was possible.

"Today, Mozilo called the allegations baseless and vowed to fight the civil charges, which could to lead to millions in fines," Thomas said. "But ABC News has learned he also faces an FBI investigation. If criminal charges are brought and successfully prosecuted Mozilo could be forced from his gated community into a jail cell."

However, CNBC's Charles Gasparino on the June 4 "The Kudlow Report" took a deeper look at the allegations against Mozilo.

"This is not going to go to trial," Gasparino said. "These cases nine times out of 10 will settle. If it does go into some sort of trial, it goes before an administrative court judge but that's highly unlikely. This is a civil case that will likely be settled before - before, you know, we ever see, you know, perp walks and as you know there's no perp walk in a civil case. But this is going to be settled at some point, it depends on the terms, and as you know in a civil case, no one goes to jail. You pay a fine, maybe Angelo Mozilo gets kicked out of the securities industry for the rest of his life but does he really care right now?"

Gasparino explained that Mozilo may in fact be culpable, based on what he knew and if he was intentionally misleading the market. And if that's in fact the case, he should face criminal charges. However, "flying blind" was how a lot of financial companies were run at the time - basing risk on historical data and not the borrower's financial credentials. Mozilo was frank about using that type of risk analysis at the height of the housing boom.

"Listen, Angelo Mozilo used to give speeches about how the way of looking at loans and how to grant loans the old way where you have to document income, where you have to - you know, look at credit scores, where that is outmoded," Gasparino said. "He didn't exactly do that on the sly. He basically said there's other ways of looking at it based on risk history. And I'll tell you that was the prevailing sort of sentiment during those crazy times of 2005 and 2006."

The media, Gasparino noted, didn't find fault with his methodology at the time, as Thomas' ABC News report has three to four years later.

"And I'll tell you, it wasn't exactly - you know, we in the media didn't exactly tell him you're crazy, why are you doing this? People, it happened and it was accepted," Gasparino said.


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Countrywide

June 5, 2009 - 11:21 ET by merlin61

Where are charges for Chris Dodd?  Barney Frank?

HUD - Fannie/Freddie and Angelo Mozilo

June 5, 2009 - 11:48 ET by Gary Hall

And the media knows a lot more... the government made me do it, and the government supported it, and now the government is not talking...

"And I'll tell you, it wasn't exactly - you know, we in the media didn't exactly tell him you're crazy, why are you doing this? People, it happened and it was accepted.."

... and the MSM isn't telling, either. A quick timeline:

July 9, 1999 --  Countrywide, Fannie Ink Pact
Countrywide ..has announced a strategic agreement with Fannie Mae. ..the deal "allocates a substantial portion of Countrywide's agency-eligible production to Fannie Mae." ..greater use of Countrywide's CLUES proprietary underwriting technology, greater usage of short-form appraisals, expansion of streamlined loan products, flow sales for expanded-criteria loans, and guideline waivers.Furthermore, products available through Countrywide's LandSafe subsidiaries (credit reports, appraisals, title insurance, flood determination, and home inspection) will be made available to other lenders and mortgage brokers via Fannie Mae's MornetPlus Network. A spokesperson for Fannie Mae said the agency had no comment on the agreement.

Fannie Mae and Countrywide are in business together. Now, let's add a bit of stimulus to the deal. Oh, this will drive demand for housing up.. vastly increasing demand over supply will do what? Drive real estate prices up.

Oct. 31, 2000 - HUD ANNOUNCES NEW REGULATIONS TO PROVIDE $2.4 TRILLION IN MORTGAGES - FOR AFFORDABLE HOUSING FOR 28.1 MILLION FAMILIES

And just what is Chris Cuomo, news anchor for ABC's Good Morning America, and younger brother of the current NY AG, Andrew Cuomo, hiding from us?

Aug. 8, 2008 - From the "Village Voice - "Andrew Cuomo and Fannie and Freddie - How the youngest Housing and Urban Development secretary in history gave birth to the mortgage crisis"

Who in Washington, benefits from Mozila?

WSJ - Oct  10, 2008 That a "Friends of Angelo" program existed is not in dispute. It was crucial to the boom that Countrywide enjoyed before its fortunes turned. While most of the company was aggressively lending to risky borrowers and off-loading those mortgages in bulk to Fannie Mae and Freddie Mac, Mr. Feinberg's department was charged with making sure those who could influence Fannie and Freddie's appetite for risk were sufficiently buttered up. As a Banking Committee bigshot, Mr. Dodd was perfectly placed to be buttered.

In response to the charge that he knew he was getting favors, Mr. Dodd at first issued a strong denial: "This suggestion is outrageous and contrary to my entire career in public service. When my wife and I refinanced our loans in 2003, we did not seek or expect any favorable treatment. Just like millions of other Americans, we shopped around and received competitive rates." Less than a week later he acknowledged he was part of Countrywide's VIP program but claimed he thought it was "more of a courtesy."

Mr. Feinberg, who oversaw "Friends of Angelo" from 2000 to 2004, begs to differ. He told us that as the loan officer in charge he was supposed to make sure that the "VIP" clients knew at every step of the process that they were getting a special deal because they were "Friends of Angelo."

Who else in Washington were "Friends of Angelo"? (I note: much of this list is from the June, 08 2008 Conde Nast Portfolio.com investigative series (one is linked) - others from the WSJ, etc.

Senator Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee

Senator Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee,

Alphonso Jackson, former Secretary of HUD

Donna Shalala, former Secretary of HHS

Richard Holbrooke, former U.N. Ambassador and Assistant Sec of  State and an adviser to Hillary Clinton’s presidential campaign.

James Johnson, former C.E.O. Fannie Mae, who had been advising presidential candidate Barack Obama, resigned from the Obama campaign..after the WSJ reported that he received Countrywide loans at below-market rates.

Henry Cisneros, former Countrywide director, who served as secretary of HUD in the Clinton administration

Paul Begala,former Clinton WH staffer, now a commentator on CNN

Postmaster General John Potter.

Franklin Raines,former C.E.O. Reines lied about earnings to get annual bonuses.

William Esrey, former C.E.O.’s of Sprint

Jamie Gorelick,former Vice Chairman of the Board of Fannie Mae; 9/11 Commissioner; fmr US Deputy Atty General

Graphic: A whole lot of loans

How it works - it's a circle - a family of friends:

Jul 17, 2008  - Angelo's Fannie Pack  At least five current or former executives at beleaguered Fannie Mae and Freddie Mac are linked to a controversial Countrywide Financial "V.I.P." program that provided mortgages on favorable terms to policymakers and business partners. 

Do the Democrats in power play a major role?

Former Pres. Bill Clinton "... I think the responsibility the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was President (well, I'd wonder about that one) to put some standards and tighten up a little on Fannie Mae and Freddie Mac.."

Sept. 22, 2008,  Bloomberg - How the Democrats Created the Financial Crisis

Does President Obama understand how we got here?

Sept. 17, 2007 - Interview w/ Brian Williams NBC Nightly News:

Williams: Who are what do you feel is to blame for this current mortgage and credit crisis? uh.. who do we see about that? 

Obama:  Well, I uh, think there are a lot of folks who have to take some responsibility. The original idea was a good one, which was, let's if we can distribute risk more broadly and make it easier to provide loans to people who otherwise might not be able to get it [them].

Yup - like 28 million people. Stimulus gives - stimulus takes away. There is no free lunch. 

Any questions why the coverage in the MSM of Mozilo's indictments won't mention any of this?

(;~/ gary

So barney Frank

June 5, 2009 - 12:10 ET by seven

Fudging on President Bush being to blame?

Great summary above.  In oversimplifying, Countrywide was a mortgage re seller.  Fannie was invilvwed in billions of these mortgages.   

 

seven.. on Barney Frank..

June 5, 2009 - 13:41 ET by Gary Hall

seven.. on Barney Frank.. These two video clips provide quite a bit of insight:

Barney Frank in 2005: What Housing Bubble?

Barney Frank Rewrites History - Says the Poor Should Not Own Homes

Enough said? (;~> gary

Will you people quit acting surprised, please?

June 5, 2009 - 13:38 ET by TASS71

The CRA, ACORN, National Peoples Action, Jimmnuh Cahtuh,and of course dear leader himself, have been laying the groundwork for the current financial crisis since before I was born. Step back and look at it all. It is too well implemented for it to have been anything but a plan. And they don't have any problem admitting to it. Their Cloward-Pliven strategy is specifically designed to foment what we are experiencing today.

However beautiful the strategy, you should occasionally look at the results. - Sir Winston Churchill

TASS

June 5, 2009 - 13:51 ET by NorthCoaster

I believe that you have identified the strategy correctly. I just found out about this approach from a poster at NB and this strategy along with using Saul Alinsky's policy approaches fits astoundingly well with what we see and hear is happening.