Darrell Issa

Darrell Issa

6 July 2012. Bank of America produced more than 120,000 pages of documents in response to the subpoenas issued by Committee on Oversight and Government Reform Chairmen Darrell Issa and Edolphus Towns. The documents produced by the Bank shed additional light on the scope and purpose of Countrywide’s VIP program, particularly as it related to the company’s strategic partnership with Fannie Mae.

In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006 Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender.

Between January 1996 and June 2008, Countrywide’s VIP loan unit made
hundreds of loans to current and former Members of Congress, congressional staff, high ranking government officials, and executives and employees of Fannie Mae, including Chairmen James “Jim” Johnson, Franklin Raines, and Daniel Mudd. VIPs who worked at Fannie Mae enjoyed expedited loan processing and pricing discounts. Countrywide also waived company guidelines for Fannie Mae’s senior executives to a greater extent than it did for “regular” VIPs.

The Federal National Mortgage Association (FNMA; OTCQB: FNMA), commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the New Deal. It is a government-sponsored enterprise (GSE), though it has been a publicly traded company since 1968. The corporation’s purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on thrifts.

Fannie Mae and Countrywide lobbied against government-sponsored enterprise (GSE) reform legislation that would have diminished Fannie Mae’s ability to acquire and hold subprime mortgages originated by Countrywide. Countrywide also lobbied against predatory lending bills. Documents obtained by the Committee show that several Members of Congress and congressional staff positioned to affect the legislation received VIP loans. 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. Those are the committees of primary jurisdiction for consideration of legislation related to the mortgage industry and the GSEs.