Behind the Headlines Video
We've obtained a report that provides more details on events leading up to the mortgage crisis.
As you recall, Congress pressured banks to make loans to borrowers with bad credit. So banks created mortgage products that carried high risk. They then packaged these into various financial instruments that were sold to other banks and investors. The collapse of the housing market had a domino effect on the banks.
Starting in the 1990s, Countrywide Financial Corporation began giving dozens of sweetheart mortgages to members of Congress, former Cabinet officers, key policymakers, and Fannie Mae officials. The intention was to keep current government policies in place. Countrywide CEO Angelo Mozilo often personally ordered the loans in a program known as "Friends of Angelo" or FOA.
Among those receiving FOA loans were former Clinton Cabinet Secretaries Henry Cisneros, Alphonso Jackson and Donna Shalala. Senate Committee Chairmen Chris Dodd [(D-CT)] and Kent Conrad [(D-ND)] and the CEO [James Johnson] of Fannie Mae also got sweetheart deals.
The Senate Ethics Committee has cleared Senators of wrongdoing. And no one at Countrywide has been criminally charged.
A 2009 House investigation conducted under then-Chairman Edolphus Towns [(D-NY-10)] omitted the names of government officials -- and details of his own FOA loan.
A copy of the new report -- including names -- is on our website.
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