Friends of Angelo: Countrywide’s Systematic and Successful Effort to Buy Influence and Block Reform

To augment its voice in the GSE-reform debate, Countrywide dispensed favors to VIPs who it believed might be worthwhile to the company. This group of borrowers included legislators, congressional staffers, lobbyists and other opinion leaders. Countrywide also distributed benefits to business partners, local politicians, homebuilders, entertainers and law enforcement officials.
Countrywide’s voice was heard in the debate on Capitol Hill about reforming the GSEs. When reform was considered by the 108th Congress, Members publicly expressed faith in Fannie and Freddie. Congressman Barney Frank (D-MA), for example, described them as “not facing any kind of financial crisis.” He was wrong.
Countrywide’s VIP loan program was a tool with which the company built its relationships with Members of Congress and Congressional staff. It was also a tool it used to protect its relationship with Fannie Mae. Senior Countrywide officials as well as the company’s lobbyists openly and explicitly weighed the value of relationships with potentially influential borrowers against the cost to Countrywide in terms of forfeited fees and payments. Preferential treatment for these potentially influential borrowers, the most important of whom were referred to internally as “Friends of Angelo,” was part of an expansive effort by Countrywide to “ingratiate [Countrywide] with people in Washington who might be able to help the company down the road.”

Darrell Issa

House Committee on Oversight and Government Reform

March 19, 2008

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