The Countrywide VIP scandal has rocked Capitol Hill. Initial reports showed that Senators Kent Conrad (D-ND) and Chris Dodd (D-CT) were the most high profile politicians to accept special cut-rate mortgages from the troubled subprime lender. Now, it has become clear that dozens of lawmakersand high-ranking officials were recipients of these bribes.
The scandal has been centered on the efforts by now-disgraced Countrywide CEO Angelo Mozilo, who courted the influence of lawmakers using these preferential loan deals. In most cases, Countrywide waived fees and provided reduced interest rates and “no doc” mortgages to powerful senators and congressman. Mozilo, however, has retired and Countrywide is now a subsidiary of Bank of America. Most press scrutiny has focused on the recent revelations that lawmakers like Congressman Buck McKeon (R-CA) also received special deals from Countrywide.
But a recent report from the House Oversight Committee hints that the bribery racket was much larger than just Countrywide.
The report notes that the Mortgage Bankers Association, a sprawling lobbying association for the biggest names in home lending, played a role in at least some of the bribes. For instance, the cut-rate mortgage offered to McKeon was recommended by the chief lobbyist of the Mortgage Bankers Association at the time, a man named Mike Farrell:
In an internal e-mail from September 29, 1998, Kay Gerfen noted that McKeon was referred to Countrywide by “Mike Farrell/MBA.” Farrell was the chief lobbyist and legislative strategist for the Mortgage Bankers Association of America (MBA). At the time, Farrell was working on “leading the industry’s successful campaign . . . to raise the maximum loan amount for FHA single-family insured mortgages.” Mozilo served as the President of the MBA from 1991 to 1992 and remained closely connected to the association, which represented the interests of the real estate finance industry.
The Mortgage Bankers Association lobby is still a heavy-hitter. The MBA’s political action committee has doled out over $189,000 this year to Republican congressional candidates, and over $138,000 to Democrats. Last year, they spent over $2.8 million on registered federal lobbying.
The Oversight Committee report also notes that the Mortgage Bankers and Countrywide partnered to host lavish dinners in D.C., including one at the restaurant owned by Jack Abramoff.
Were Mortgage Bankers Association part and parcel of the influence racket perpetrated by Countrywide? How did Mike Ferrell know about the VIP program? Were other MBA lobbyists involved? And for how long?
It’s one thing for a single mortgage bank to try to offer gifts to politicians to influence Congress. It’s another scandal altogether for an entire lobbying association that represents the entire industry to be part of the effort.
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