The Economic Meltdown: Accountability Check

The shoe fits both Parties.

The ethics story of week was the dropping of the missing shoe in the “Friends of Angelo” scandal that helped drive Democratic Senator and party leader Chris Dodd into retirement. (More here.) It fell like this:

WASHINGTON (AP) — The former Countrywide Financial Corp., whose subprime loans helped start the nation’s foreclosure crisis, made hundreds of discount loans to buy influence with members of Congress, congressional staff, top government officials and executives of troubled mortgage giant Fannie Mae, according to a House report.

What the report indicates is that the bribery of regulators and members of Congress to allow the sub-prime mortgage con-game to continue was far worse and for more widespread than anyone realized. Countrywide offered special loan deals to dozens of influential government officials to stave off regulations that might have avoided or greatly lessened the mortgage collapse that triggered the current long-term economic crisis: 

“Documents and testimony obtained by the committee show the VIP loan program was a tool used by Countrywide to build goodwill with lawmakers and other individuals positioned to benefit the company,” the report said. “In the years that led up to the 2007 housing market decline, Countrywide VIPs were positioned to affect dozens of pieces of legislation that would have reformed Fannie” and its rival Freddie Mac, the committee said.


“The Justice Department has not prosecuted any Countrywide official, but the House committee’s report said documents and testimony show that Mozilo and company lobbyists “may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence….If Countrywide’s lobbyists, and Mozilo himself, were more strictly prohibited from arranging preferential treatment for members of Congress and congressional staff, it is possible that efforts to reform (Fannie and Freddie) would have been met with less resistance,” the report said….Fannie Mae assigned as many as 70 lobbyists to the Financial Services Committee while it considered legislation to overhaul the company from 2000 to 2005. Four reform bills were introduced in the House during the period, and none made it out of the committee.”

Among the individuals being so courted and who were secretly and illegally assisted by Countrywide were:

  • Former Senate Banking Committee Chairman Christopher Dodd, D-Conn.
  • Senate Budget Committee Chairman Kent Conrad, D-N.D.
  • Mary Jane Collipriest, who was communications director for former Sen. Robert Bennett, R-Utah, then a member of the Banking Committee. 
  • Rep. Howard “Buck” McKeon, R-Calif., chairman of the House Armed Services Committee.
  • Rep. Edolphus Towns, D-N.Y., former chairman of the Oversight Committee. The AP reports: “Towns issued the first subpoena to Bank of America for Countrywide documents, and current Chairman Darrell Issa, R-Calif., subpoenaed more documents. The committee said that in responding to the Towns subpoena, Bank of America left out documents related to Towns’ loan.”
  • Rep. Elton Gallegly, R-Calif.
  • Top staff members of the House Financial Services Committee.
  • A staff member of Rep. Ruben Hinojosa, D-Texas, a member of the Financial Services Committee.
  • Former Rep. Tom Campbell, R-Calif.
  • Former Housing and Urban Development Secretary Alphonso Jackson
  • Former Housing and Urban Development Secretary Henry Cisneros
  • Former Health and Human Services Secretary Donna Shalala.
  •  Former Fannie Mae heads James Johnson, Daniel Mudd and Franklin Raines.

The report says that Rep. Pete Sessions, R-Texas, was one lawmaker who told the Countrywide VIP unit—the bribery group, in essence— not to give him a discount, and he did not receive one. Good for him. Then again, he didn’t inform the public about what was going on.

More is coming out about this, to be sure, but some unpleasant truths need to be pointed out:

  • The report shows that, to a significant extent, the current economic crisis was the result of corruption at the highest levels of both the private and the public sector, and the regulation of both was inadequate. Do not accept the  finger-pointing of grandstanding members of Congress as they beat up on the banks and financial institutions. Members of Congress failed as badly and as unconscionably as the financial institutions did.  They need to be held accountable. We trusted Congress more than we trusted the likes of Countrywide. Stupid, naive, gullible, unemployed us.
  • This was bi-partisan corruption, and the Democrats were in charge of Congress through most of it. President Obama’s rhetoric about the GOP “driving the economy into a ditch” is no longer acceptable campaign hyperbole. In light of these facts, it approaches  being a cover-up; it is certainly a lie. Members of both parties and a lot of Democratic appointees and allies were behind the wheel too, and worse, accepted money to drive into that ditch. It’s time for bi-partisan accountability.
  • A little respect is due Darrell Issa, the Chair of the House Oversight Committee who pursued this investigation. Democrats are unanimously accusing him of partisanship in investigating another disturbing scandal, Fast and Furious. Issa may be partisan, but all the evidence so far indicates that he isn’t corrupt. That places him at the elite ranks of a body filled with a lot of crooks and hypocrites in both parties. His efforts should be appreciated by the public and media, not attacked.

And why hasn’t the Justice Department prosecuted Countrywide?


Facts: Business Week


Graphic: Regrounding

Ethics Alarms attempts to give proper attribution and credit to all sources of facts, analysis and other assistance that go into its blog posts. If you are aware of one I missed, or believe your own work was used in any way without proper attribution, please contact me, Jack Marshall, at



2 thoughts on “The Economic Meltdown: Accountability Check

  1. And why hasn’t the Justice Department prosecuted Countrywide?

    I think you answered your own question, Jack.

    This was bi-partisan corruption, and the Democrats were in charge of Congress through most of it.

    The Dems don’t need another scandal right now, what with Fast and Furious (to say nothing of the leaking of information related to counterterrorism to the media, which I suspect will become a bigger story as we move on) – irrespective of the point that Republicans got just as dirty in this one.

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