Guest Post: How Reporters Provide Cover For Darrell Issa's Lies On The Countrywide "Scandal"
Submitted by David Fiderer
How Reporters Provide Cover for Darrell Issa's Lies on the Countrywide "Scandal"
A year ago, Associated Press reporter Larry Margasak got caught
in a lie. He manufactured a false lede by concealing critical
Despite their denials, influential Democratic Sens. Kent
Conrad and Chris Dodd were told from the start they were getting VIP
mortgage discounts from one of the nation's largest lenders, the
official who handled their loans has told Congress in secret testimony.
The witness also recanted his statement. When asked a second time
if he told Dodd that he was getting special treatment, he said, "I don't
remember... but, you know, it was conveyed in some way, shape or form."
No honest journalist would report that Dodd was "told from the start,"
about a mortgage discount.
In fact, the Senate Ethics Committee found that this witness had
no credibility. It wrote, "The Committee has found no evidence
that ...anyone communicated to you or your family that you were
receiving specific discounts or other special treatment not available to
other borrowers." It also wrote, "The loans you received appear to have
been available industry-wide to borrowers with comparable loan
profiles. There is no evidence that the interest rates for your
Countrywide mortgages were below prevailing interest rates." The
Committee concluded, after a year-long investigation into the matter,
that the 28,000 customers in Countrywide's VIP program offered terms
that, "were not the best deals available at Countrywide or in the
marketplace at large." Customers," were required to meet the same
underwriting standards," as everyone else. Overall, it appeared that
Countrywide's VIP customers were "often offered quicker, or more
efficient loan processing."
In other words, Countrywide's customers had no reason to believe that
its VIP program much different from the VIP customer programs at Verizon, Expedia, Acura
and Pizza Hut. The Senate Ethics Committee cleared both Dodd and Conrad of all ethics
charges, and anyone who reviewed the terms extended to Dodd could figure out right away
that no material "discount," was ever extended. Later, documentary
evidence would emerge to show that the Countrywide "whistleblower" had
been telling lies from the start.
Margasak pulled a similar
stunt yesterday, when he reported that Countrywide extended
"discounted mortgages" to employees government sponsored enterprises,
while failing to mention that the Senate Ethics Committee found no
evidence that the deals were better than those offered to anyone else.
He also put forth this whopper:
The documents reveal that when Countrywide was depending on
government-sponsored firms to finance billions of dollars worth of
subprime loans that touched off the housing meltdown, it was giving
employees at the largest of those companies -Fannie Mae-sweetheart deals
on their own home loans.
That claim is more than a little deceptive on a variety of levels.
The GSEs didn't buy or insure subprime mortgages. They only purchased
subprime mortgage securities sold by investment banks. (That was how the
GSEs did an end-run around their own underwriting standards.) There's
no evidence that Countrywide needed the GSEs to make its subprime bonds
marketable. Countrywide's primary connection with the GSEs, which long
predated its involvement in the subprime segment, was selling prime
mortgages. Countrywide was the biggest mortgage lender, period.
Margasak relies on a six-degrees-of-separation conflation, wherein some
Fannie Mae employee, who may or may not have had anything to do with
the firm's portfolio criteria, gets a loan from the nation's largest
mortgage lender at market rates, and suddenly there's a conspiracy
theory to explain the subprime meltdown.
Like other bogus right wing scandals--corruption
at ACORN, Climategate, Black Panther voter suppression--the media
narrative about the "sweetheart deals" given to Countrywide VIP
customers appears to be impervious to fact checking. The story keeps
emerging in new mutant forms, in precisely the same manner that new
"evidence" against global warming keeps emerging on Fox News, where
professional liars--Andrew Breitbart, James Inhofe, Karl Rove--are given an unfettered platform. Darrell Issa and his staffers pull the same kinds
of stunts that Breitbart does. He carefully selects his facts to
fabricate scandals out of thin air. Six weeks ago he was pumping, "The Sestak Affair - Obama's Watergate?" His new
Countrywide VIP "scandal" is equally spurious, as reported by Margazak:
"In 1999, Countrywide reached an exclusive agreement to sell
Fannie Mae billions of dollars in mortgages at a discounted rate," Issa
said in the letter.
Records compiled by a trade publication, Inside Mortgage Finance,
show Fannie rapidly expanding its purchases of Countrywide mortgages and
a decline in sales of them to Freddie.
In 1998, Countrywide sold $25.6 billion in loans to Fannie and $17.7
billion to Freddie. By 1999, the figures were $30.8 billion to $11.2
billion in Fannie's favor. By 2004, the spread was much wider: $67.7
billion in Countrywide mortgages sold to Fannie Mae compared with $2.9
billion in mortgages sold to Freddie Mac.
Mortgage lenders sell mortgages to the GSEs for the same reason that
Proctor & Gamble sells Tide to Walmart. That's their business model.
Every sale of of a pool of mortgages is "exclusive" because you can't
sell the same mortgage to two different people. And if, as Issa claims,
Countrywide sold mortgages to Fannie at a "discounted rate," then Fannie
got a windfall. Of course, Issa's amorphous reference to a "discounted
rate," in the context of nothing, is meaningless. By the way,
Countrywide was not a player in the subprime market in 1999.