Are you sitting down for this one?
A key provision of the housing bill now awaiting action in the Senate — and widely touted as offering a lifeline to distressed homeowners — was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials.
I wonder, wonder, wonder….hmmmmmm….what state has a lot of banks in it and has representatives in it that have totally caved under their pressure in the past??? Damn, drawing a total blank….
Bank of America, which is acquiring Countrywide Financial, the country’s largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said.
Bank of America executives presented a 28-page “discussion document” on March 11 to the same congressional staffs, which was marked “confidential and proprietary.” It was filled with detailed explanations of how a system similar to Credit Suisse’s plan might work, complete with flow charts and graphs.
This is the part to sit down for….
Bank of America said its participation came at the request of congressional aides. “They were reaching out to all sorts of people who have been thoughtful about this crisis,” said Peter McKillop, a spokesman for Bank of America. “They were talking to us and talking to every bank that had a sophisticated mortgage business. We wanted to come up with a bipartisan solution that stabilizes the housing market.”
sigh…if true, why would it surprise you…Hmmmm. did you know:
Tom Carpers office and Mike Castle’s office is in the same building that Chase Bank occupies
Joe Biden’s is in the same building as Wilmington Trust
and Castle’s is
KHN is the candidate to beat Castle, send her some turkee.
Countrywide is as shady as they come. Here’s an article from AP:
“CHICAGO (AP) — The nation’s biggest mortgage lender engaged in “unfair and deceptive” practices to get homeowners to apply for risky mortgages far beyond their means, according to a civil lawsuit Illinois’ attorney general planned to file Wednesday.
The lawsuit against Countrywide Financial Corp. (CFC, Fortune 500) – planned for the same day shareholders were scheduled to vote on the company’s takeover by Bank of America Corp. (BAC, Fortune 500) – stems from information from documents subpoenaed by the state beginning last fall, as the number of foreclosures nationwide began to skyrocket.
“Countrywide’s conduct has contributed to the high number of foreclosures in Illinois and caused significant harm to the public, the market, and scores of Illinois borrowers and homeowners,” according to a draft of the lawsuit provided by Attorney General Lisa Madigan’s office Tuesday evening.
A spokeswoman for the Calabasas, Calif.-based company declined to comment on the litigation.
Madigan spokeswoman Robyn Ziegler said the lawsuit would be filed Wednesday in Cook County Circuit Court. In the complaint, Madigan says that Countrywide offered unfair loans with risky features, used misleading sales techniques and encouraged employees and brokers through incentives to sell more high-risk loans.
Closing the book on Countrywide
“Unfair and deceptive advertising, marketing and sales practices were utilized to push mortgages, while hiding the real costs and risks to borrowers, including enticing borrowers with low teaser rates, low monthly payments and ‘no closing cost’ loans that failed to make clear and conspicuous,” according to the lawsuit, which also names Countrywide Chairman and Chief Executive Angelo Mozilo as a defendant.
Among other things, Madigan wants Countrywide to pay restitution to all affected consumers who lost their homes or loans. She also asks for 90 days to review any loans that are in or near foreclosure to see if borrowers can pursue affordable options.
Countrywide, like many in the mortgage industry, has suffered under the weight of the subprime fallout as thousands of customers default on home loans.
Defaults and subsequent foreclosures have been most pronounced on adjustable-rate mortgages made to borrowers with past credit problems. The subprime loans typically require a lower monthly payment in the first two or three years before resetting to higher interest rates and much larger payments.
As the nation’s largest mortgage lender and servicer, Countrywide has been under scrutiny by federal and state authorities. It also faces numerous other lawsuits related to its lending practices.
Countrywide agreed in January to sell itself to Bank of America Corp. (BAC, Fortune 500) for around $4 billion in stock. The deal is now valued at around $2.8 billion, reflecting a decline in Bank of America’s stock price over the last six months.
The acquisition received clearance from the Federal Reserve earlier this month, and Countrywide shareholders are scheduled to vote on it Wednesday morning during a meeting at the lender’s headquarters.
Assuming shareholders give their approval, Charlotte, N.C.-based Bank of America has said it could close the deal as early as July 1. ”
I posted this b/c I think it’s essential that what passes for our lapdog press asks our Congressional delegation whether they are carrying water for BOA and, by association, Countrywide. If so, it will once again be on behalf of the rich and criminal, and at the expense of the millions of people who were duped.
DHB – Did you actually read the article? It sounds like win-win legislation to me. Homeowners would be able to refinance into competitive rates and keep their homes while lenders would be able to minimize their losses. I don’t see it as a bail-out. In fact, the article says it would only cost the government $1.7 billion over five years. That’s pennies in Washington currency.
What am I missing? It kind of sounds like the government bailing out the consumers – isn’t that what you guys have been advocating? Would you prefer that all of those homeowners simply lose their homes?
Steve –
I may be misunderstanding your last paragraph, but I don’t think it’s fair to paint BofA with the same brush as Countrywide. BofA’s business practices have not been called into question. They are simply acquiring a beleaguered company and that purchase is integral in keeping the industry afloat (the loss of a lender as big as Countrywide would have a devastating impact across the board).
It is shifting the bulk of the consequences for the banks bad business practices to the tax-payer.
Under Republi-nomincs no business can ever fail because taxpayers have limitless resources.
The Credit Suisse plan allows the banks to keep profits from any good loans, while offloading risks to the taxpayer. Yes it is a bailout.
Even so, it might be a good plan based on the “too big to fail” principle. But in return, Congress should not pass it without enacting additional regulations to prevent a repeat.
hmmm… didn’t read Jason’s post first.
Behold the fruits of deregulation – an endless series of Federal bailouts.
Dominique-My question/point may be a little different than DHB’s, although there are similar elements in place.
I want to know whether the Federal legislation, coupled with the Countrywide/BOA merger, will shield Countrywide from responsibility for its reckless actions. I want to know to what extent, if any, our Congressional delegation, is pushing legislation that will benefit post-Countrywide BOA at the expense of those who have been damaged by Countrywide’s reckless and, I think, criminal actions. For example, if the legislation enables Countrywide to be shielded from lawsuits like the one from Illinois, then I, for one, would object to that.
I do not know the answers to these questions, which is why I’m calling on Delaware journalists for once to actually aggressively pursue the story and to report on what they find.
Socialize the risks, privatize the benefits — this is what passes for free market capitalism these days.
What was interesting about that article was in showing how the banks were pretty much drove this train of legislation. I’d love to hear what the housing advocates that Frank says were consulted had to say.
And of course this new bailout has no new regulations to constrain these banks from taking up silly risks that they need taxpayer funds to recover from.
…DVDHB forgot to mention that Tom Carper is in the other of the two buildings and Joe Biden is in Wilmington Trust’s corporate building…you know…disclosure.
Point is, the ire, if they support it (unkown to me), should be at the CONGRESSIONAL DELEGATION, not just the lone rep.
His correction is now noted. He’s such a good blogger.
Castle also has a storefront in the College Square shopping center in Newark…
Castle does, or the area GOP? I know at least it used to be the latter. I’m pretty sure it is still the GOP, not specifically Castle.
I’ll have to look at it again. I thought I saw “Castle” on the awning sign, but maybe I just saw the window full of Castle yard signs and got faked out. You might be right.
The Rethugs have a storefront in Branmar Plaza in Brandywine 100 as well. Just a buncha yard signs in the window, never seen anyone actually in the space.
Wonder what kind of sweetheart deal Louie Capano gave them…