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Revealed: How Countrywide Crashed the Housing Market and Got Away With It

Although it seems that Occupy Wall Street and Tea Party are as different as night and day, there may be one important thing that they have in common: anger about the dysfunction and cronyism crippling the U.S. government and economy.

This two-part video by 60 Minutes carefully details how both Countrywide Financial and Citigroup partook in reckless and oftentimes illegal behavior that helped bring about the housing market collapse–with zero repercussions.

Eileen Foster, a former executive vice president in charge of fraud investigations at mortgage lender Countrywide Financial, told CBS 60 Minutes reporter Steve Kroft that mortgage fraud was a common occurrence at the firm.

She claims that she faced illegal retaliation for filing reports investigating the fraud, alleging Countrywide fired her when she refused to lie to federal regulators on Countrywide’s behalf, reports the Huffington Post.

“From what I saw, the types of things I saw, it was, it appeared systemic,” Foster said on 60 Minutes Sunday. “It wasn’t just one individual or two or three individuals, it was branches of individuals, it was regions of individuals.”

A separate recently-released government report also claims that government lending agencies Fannie Mae and Freddie Mac “illegally foreclosed on homeowners by failing to hold banks properly accountable for subprime loans,” reports the HuffPo.

As for Foster, she’s since been vindicated since being fired for what Countrywide called “inappropriate and unprofessional conduct,” the Wall Street Journal reports. This fall, she was awarded nearly a million dollars in back pay and benefits from BofA for wrongful termination.

But it’s this sort of behavior, and what Foster was put through, that perfectly illustrates why the U.S. is in need of comprehensive repair.

Whether you’re a Democrat, Republican, or you don’t care about politics, the U.S. economy will never truly thrive so long as criminals can blatantly rob the country in plain view without any sort of repercussions.

Watch part 1 of the 60 minutes report:

See part 2 of the 60 minutes report where they discuss Citigroup’s part in the financial meltdown:

“I have to imagine Angelo Mozilo and all the other thieves must be laughing at the incompetence of the American people who are too busy blaming Democrats or Republicans for all their problems,”  writes Damien Hoffman of Wall St. Cheat Sheet.

Indeed, Hoffman continues, instead of simply blaming one party or another, perhaps it would be in the best interest of average Americans to “finally [band] together to eradicate the financial terrorists in our country like Mozilo, Dick Fuld, and all the politicians who didn’t represent us against harmful interests.”

[Editor' note: portions of the above are from a post that originally appeared on Wall St. Cheat Sheet.]

Comments (28)

  • Cosmic Ray
    Posted on December 7, 2011 at 11:27pm

    I just spent a few days (about 3 weeks ago) searching through newspaper archives from 1994 to 1998 and it’s clear that banks lowered their lending standards in response to pressure from the Clinton admin. And in fact, the housing bubble started in 1997 according to a 2006 NYTimes article on housing prices.

    I do not believe the 60 minutes story is telling the full story.

    Report Post »  
    • toto
      Posted on December 8, 2011 at 9:08pm

      Of course they are not telling the whole truth. You have to start with what caused the Banks to offer these loans in the first place. It should come as a surprise to no one, that once they had they hot potatoes that were extremely risky, they would get creative in getting rid of them. Everyone thinks that the homeowners, that were complicit in taking out loans, are innocent parties. Unless they were mentally compromised, anyone without a job, knows they can’t pay the rent. The requirements for loans were non existent. The people that lost the most were the “rich”, who bought the mortgage backed securities with the assurance that they were AAA (factually false as we now know) which became worthless. When do you ever hear that? Most of the homeowners lost something they never really had, because they weren’t paying for it. Another innocent injured group are those that bought at the top of the market.

      Report Post »  
  • dadadadio
    Posted on December 7, 2011 at 9:31pm

    I seem to recall Countrywide being a major sponsor of Glenn’s first TV show back on HNN, in his days before Fox…..before the big downturn, of course……just sayin’….

    Report Post » dadadadio  
    • V-MAN MACE
      Posted on December 8, 2011 at 10:19am

      Yea, and Beck supported the banker bailouts too.

      Report Post » V-MAN MACE  
    • Melvin Spittle
      Posted on December 9, 2011 at 7:26pm

      Is it a surprise that today’s advertisers may be tomorrows corrupt criminals? It is ridiculous to blame a station for selling advertising to companies that later are found guilty of financial crimes. If they had an accountability to vet every advertiser, they would never make a profit. That is like making all those that voted for Obama equally responsible for illegal operations such as Fast & Furious. How does this logically connect Beck with illegal activity?

      Report Post » Melvin Spittle  
  • Verum Ad Potentia
    Posted on December 7, 2011 at 1:20pm

    Hey OWS, are you paying attention?!?

    Report Post » Verum Ad Potentia  
  • wyocampbell
    Posted on December 7, 2011 at 11:21am

    The crooks in Washington DC have provided a “Get out of Jail Card Free” to the Corporate Criminals by the cleverly worded Sarbane Oxly Act. It gives CES plausable deniability and federal prosecutors justification for their inaction. With a single signature the entire criminal operation is protected from prosecution. What a deal.

    Report Post »  
    • jzs
      Posted on December 7, 2011 at 1:12pm

      Blaze, you are off-message. Barnie Frank caused the collapse. Banks and corporations were blameless.

      Report Post » jzs  
  • jernie
    Posted on December 7, 2011 at 10:58am

    While the whole story is about greed, it should be noted that the government mandated bank participation in the subprime lending through the Community Reinvestment Act (CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.). The involvement of the Fannie in new loan origination was set in 1996 at a target of 42% of their loans being to families with incomes below the median in their community. This target was increased to 50% in 2000 and 52% in 2005. This gave federal approval and financing to the subprime market, keeping in mind that Countrywide did not hold the mortgages they originated and relied on the ability to market them. The government attitude is summed by the statement of Barney Frank to the House Financial Services Committee hearing in 2003 2003:
    I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .

    Report Post »  
  • oneforall
    Posted on December 7, 2011 at 10:46am

    Paul Pelosi Jr. was one of these criminal mortgage brokers who pushed these sup-prime “crack” loans for Countrywide Financial—- “fog a mirror” and you are given a mortgage– because it just isn’t “fair” to have to qualify for a mortgage.

    Obama‘s SEC didn’t prosecute Angelo Mozilo — instead he was fined— and the fine was paid by BofA
    who had stupidly (or was forced to) bought Countrywide paid the fine— Mazilo didn’t even have to pay his own penalty– Mazilo reportedly made $440 million through his crimes

    CNBC had that grease-ball crook on their shows every week— Countrywide had massive TV advertising. They trolled for un-qualified and un-deserving clients— made fraudulent loans– bundled the loans and sold them to FM and FM ( who also didn’t care what kind of loans these were due to their “GOVERNMENT SPONSORSHIP) where they were turned into MBS’s and sold again.

    The “elevator mortgage closing” — where Countrywide would make the loan and sell the loan the same day. Criminals — every last one of them! — especially the government criminals!

    Fannie Mae is a New Deal holdover — Freddie Mac needs to be dissolved today — fold it into FM– at least save on the overhead— then dissolve Fannie over the next two years.

    Enough of their corrupt debt! Congress must protect the taxpayers Treasury — and Fannie Mae threatens us — it is a failure!

    Report Post »  
  • Outlaw_Josey_Wales
    Posted on December 7, 2011 at 10:37am

    The national debt of the United States of America is the mother of all adjustable rate mortgage. When interest rates on the debt goes back to there normal levels of 5.5 to 7.25% the U.S. economy will implode. Today the average interest on the national debt is 2.9%, 2001 5.74%, 2006 5.04%, 30 year average is 7.5%. In the last 3 years the U.S. has borrowed over $5 trillion at a very low interest rate, that will have to be refinance at a higher rate. If the average interest on the debt doubles 2.9% to 5.8% so will the interest payment. Total interest on the debt for 2011 was about $460billion, double that $920billion. As you can see the debt is a ticking time bomb, just a matter of time before it goes off and there is no stopping it. The S&P “AA+ outlook negative” rating for the U.S. is to high we will default.

    Report Post » Outlaw_Josey_Wales  
  • Canada_Goose
    Posted on December 7, 2011 at 9:46am

    Hope this finally ends the big lie that banks and investment houses are merely victims of the crash.

    You see, as many on the right have claimed, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.

    The arguments right wingers make fail to withstand even casual scrutiny. But that has not stopped people who should know better from repeating them.

    Congress did radically deregulate the financial sector, doing away with many of the protections that had worked for decades. Congress allowed Wall Street to self-regulate, and the Fed then turned a blind eye to bank abuses.

    Federal housing data reveal that private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

    Report Post » Canada_Goose  
    • Canada_Goose
      Posted on December 7, 2011 at 9:52am

      Specifically Federal Reserve Board data show that:

      •More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
      •Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
      •Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics. [McClatchy, 10/12/08]

      Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

      Report Post » Canada_Goose  
  • hhr2008
    Posted on December 7, 2011 at 9:36am

    Bob Kelemen1 minute ago

    CountryWide and Golden West Junk Mortgage Brokers
    NBC’s further move to the Left– http://www.wnd.com/index.php?f... –by the way Golden West sold its polished up Junk Morgages which lead to the downfall of Wachovia Bank. The Golden West owners should be in Jail now instead of using its Wachovia money to setup leftist orginizations and now infiltrating the public airway via NBC. The left never gives up, they have to be hammered in every corner, every day and every way or they will continue to grow like cancer.

    Report Post »  
  • hhr2008
    Posted on December 7, 2011 at 9:31am

    Bob Kelemen1 minute ago

    ContryWide and look at another Junk Mortage Broker–Golden West and what it is doing with it’s Wachovia money. NBC’s further move to the Left– http://www.wnd.com/index.php?f... –by the way Golden West sold its polished up Junk Morgages which lead to the downfall of Wachovia Bank. The Golden West owners should be in Jail now instead of using its Wachovia money to setup leftist orginizations and now infiltrating the public airway via NBC. The left never gives up, they have to be hammered in every corner, every day and every way or they will continue to grow like cancer.

    Report Post »  
  • SickAndTired
    Posted on December 7, 2011 at 9:11am

    This 60 minutes piece is just more radical left propoganda trying to move the blame away from the original cause of the problem, the radical secular socialist left in control of our Congress.

    Report Post »  
  • South Philly Boy
    Posted on December 7, 2011 at 8:46am

    Put THEM ALL in JAIL

    Report Post » South Philly Boy  
  • poorrichard09
    Posted on December 7, 2011 at 7:49am

    Don’t forget (former) Sen. Chris Dodd was a “friend of Angelo” (Mozilla) and got sweetheart real estate deals thru Countrywide.

    Report Post »  
  • semihardrock
    Posted on December 7, 2011 at 7:18am

    ANF IF THEY DIDNT GIVE all the people who were “unqaulified” for a loan with REAL underwriting guidelines, ACORN, Barney Frank, NAACP would be protesting in the streets claiming RACIST BANKS wont give loans to people in the ghetto!

    Democrats and Socialism COLLAPSED the Banking System in America!

    Report Post » semihardrock  
  • grannyrecipe
    Posted on December 7, 2011 at 7:03am

    60 minutes is trying to frame the whole problem on “evil corporations” only. What has happened is that the Government has imposed its regulatory self onto corporations for decades to a point where a corporations conduct has become indistinguishable from the conduct of Government. Corporations, by force, have essentially become bureaus of the Government. Its called Fascism. This was Mussolini’s vision outlined in his manifesto.

    Report Post » grannyrecipe  
  • SageInWaiting
    Posted on December 7, 2011 at 6:55am

    Unfortunately, the investigations would need to start at the Fed, Congress, and the Administrations going back for years and then into the Wall Street big boys. It won’t happen; they’re STILL looting the treasury. The foxes aren’t guarding the hen house, they’ve moved in.

    Report Post » SageInWaiting  
  • GulfPeg
    Posted on December 7, 2011 at 5:44am

    It has been 3 or 4 years since this happened and it doesn’t look like anybody is going to be held accountable. This is just UNBELIEVABLE! Apparently Sarbanes-Oxley law was only put in place to pull the wool over people’s eyes.

    Report Post »  
  • Micmac
    Posted on December 7, 2011 at 4:42am

    At the same time I was asking where in the hell is Chris Cox, letting all this go on. That’s who I blame…turning a blind eye, or being just plain incompetent.

    NoBama 2012
    Reboot Washington

    Report Post »  
  • Micmac
    Posted on December 7, 2011 at 4:38am

    Have a friend who ran about 5 loan centers for CW and long before the crash I kept asking him how they can make 110%/no down loans like they were to people who didn’t even speak english and had lower blue collar jobs. The individual loan agents who spoke these languages at that time were making $20,000 – 30,000 per month in commissions, as was my friend. All they could see was their income and had no concern about the viability of what they were doing. It was all pure greed.

    Now these same people, again who I personally know, are working for banks taking over the “solvent” banks that Dodd-Franks is putting out of business, without a care for the shuttered banks. Listening to them talk about it just makes me sick.

    NoBama 2012
    Reboot Washington

    Report Post »  
    • rockstone
      Posted on December 7, 2011 at 8:16am

      Boy….. Do you have some sleazy friends or what? Yeah, I know… All they could do was stand there and watch. Their pay wasn’t tied to what was going on (sarc).

      I guess you can’t be too much of a prize yourself……..

      Report Post » rockstone  
  • taxx
    Posted on December 7, 2011 at 2:42am

    It appears the 60 Minutes investigation was based on whistle blowers from Country Wide and Citi Group. Apparently they didn’t have any whistle blowers from Fannie – Mack.

    Report Post » taxx  
  • suz
    Posted on December 7, 2011 at 2:06am

    the 60 minutes piece did not mention once, fanny mae/freddie mike…not once.

    Report Post » suz  
    • Matt Marshall
      Posted on December 7, 2011 at 6:22am

      Exactly right Suz… My father-in-law is VP of Mortgage Lending at a community bank here in Michigan. And, while I know Fannie and Freddie rely to a degree on the due diligence conducted on the front line, the reality is that they do their own due diligence, ranging from reviewing the details of the paperwork to checking into the borrower. And, Fannie or Freddie can bounce back a loan request to the originating bank.

      There’s no doubt that there have been and remain serious problems at Freddie and Fannie. Furthermore, I notice this 60 minutes piece does not discuss the fact that the government set the stage for this rampant corruption with innefficient laws like SarBox, sub-prime mandates, and other market manipulating regulations that mis-aligned interests.

      I can only assume the politicians and bureaucrats setting the stage had good intentions, but unfortunately that just isn’t enough when it comes to manipulating free markets.

      Report Post »  

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