Using figures from the FDIC as reported via Calculated Risk:
Note that these figures are preliminary estimated by the FDIC and losses to the DIF can increase as the run-off of the bad assets continues:
Pacific Coast National Bank; San Clemente, California: Total assets of $134.4 million / The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $27.4 million. = 20% bad assets
Century Bank FSB; Sarasota, Florida: Total assets of $728 million / The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $344 million. = 47% bad assets
Orion Bank; Naples, Florida: Total assets of $2.7 billion (2,700 mm) / The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $615 million. = 22% bad assets.
"Assets" in bank accounting are loans while "deposits" are counted as liabilities. 20+% bad assets is shocking. The regulators "normally" shut you down after you breach capital adequacy. Lack of manpower and a desire to kick the can on this crisis has left these fellows to rot & bloat up to quite an impressive size. |
PC to Blame at Fort Hood?
Charges fly that 'political correctness' prevented officials from probing Fort Hood suspect's e-mails
Because as any Republican can tell you, nothing serves America like dividing the Republic in the face of its enemies. |
U.S. Consumer Credit Fell More Than Forecast in September
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By Vincent Del Giudice
Nov. 6 (Bloomberg) -- U.S. consumer credit fell in September for an eighth straight month, the longest series of declines on record, as thousands of Americans lost their jobs and banks tightened access to loans.
Borrowing fell more than economists predicted, declining by $14.8 billion, or 7.2 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $9.86 billion in August, less than previously estimated. The consecutive declines were the most since records began in 1943.
A labor market that kept losing jobs in October threatens to limit consumer spending, which accounts for about 70 percent of the world’s largest economy. More than 100 banks have failed this year, and lenders are requiring tougher conditions for the credit they extend to consumers and businesses.
“Consumers are ratcheting back their purchases of goods and services made with credit cards as mounting job losses have made them very cautious about what the future holds,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, before the report.
Economists had forecast consumer credit would drop by $10 billion in September, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from declines of $4 billion to $21 billion. The Fed initially reported that consumer credit declined in August by $12 billion.
Revolving debt, such as credit cards, declined by $9.93 billion in September, according to the Fed’s statistics. Non- revolving debt, including loans for autos and mobile home, dropped by $4.87 billion. The Fed’s report doesn’t cover borrowing secured by real estate. |
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LONDON (MarketWatch) -- Fitch Ratings on Wednesday cut Ireland's credit rating by two notches, reflecting the severity of the decline in the nation's gross domestic product and the "exceptional" rise in government liabilities. The rating agency said it had cut Ireland's long-term foreign and local currency issuer default ratings to AA- from AA+. "However, the agency notes the vigour of the government's fiscal consolidation response to date, the expectation of further aggressive budget tightening and the likely success of the National Asset Management Agency in rehabilitating the banking sector," Fitch said. "All these factors have helped stabilise the outlook for Ireland's creditworthiness," it added. |
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/31/AR2009103102141.html
Newly released FBI data offer evidence of the broad scope and complexity of the nation's terrorist watch list, documenting a daily flood of names nominated for inclusion to the controversial list.
During a 12-month period ended in March this year, for example, the U.S. intelligence community suggested on a daily basis that 1,600 people qualified for the list because they presented a "reasonable suspicion," according to data provided to the Senate Judiciary Committee by the FBI in September and made public last week.
FBI officials cautioned that each nomination "does not necessarily represent a new individual, but may instead involve an alias or name variant for a previously watchlisted person."
The ever-churning list is said to contain more than 400,000 unique names and over 1 million entries. The committee was told that over that same period, officials asked each day that 600 names be removed and 4,800 records be modified. Fewer than 5 percent of the people on the list are U.S. citizens or legal permanent residents. Nine percent of those on the terrorism list, the FBI said, are also on the government's "no fly" list.
This information, and more about the FBI's wide-ranging effort against terrorists, came in answers from FBI Director Robert S. Mueller III to Senate Judiciary Committee members' questions. The answers were first made public last week in Steven Aftergood's Secrecy News.
Sen. Russell D. Feingold (D-Wis.), who has shown concern over some of the FBI's relatively new investigative techniques assessing possible terrorist, criminal or foreign intelligence activities, drew new information from the agency. Before the attacks of Sept. 11, 2001, the FBI needed initial information that a person or group was engaged in wrongdoing before it could open a preliminary investigation.
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Under current practice, no such information is needed. That led Feingold to ask how many "assessments" had been initiated and how many had led to investigations since new guidelines were put into effect in December 2008. The FBI said the answer was "sensitive" and would be provided only in classified form.
Feingold was given brief descriptions of the types of assessments that can be undertaken: The inquiries can be opened by individual agents "proactively," meaning on his or her own or in response to a lead about a threat. Other assessments are undertaken to identify or gather information about potential targets or terrorists, to gather information to aid intelligence gathering and related to matters of foreign intelligence interest.
Feingold pointed to a November 2008 Justice Department inspector general audit showing that in 2006, approximately 219,000 tips from the public led to the FBI's determination that there were 2,800 counterterrorism threats and suspicious incidents that year. "Regardless of the reporting source, FBI policy requires that each threat or suspicious incident should receive some level of review and assessment to determine the potential nexus to terrorism," the audit said.
In a different vein, the FBI was asked why it is losing new recruits as special agents and support personnel at a time when terrorist investigations are increasing. The FBI responded that failed polygraph tests rather than other factors, such as the length of time for getting security clearances, are the main reason recruits are ending their efforts to join the bureau. In the past year, polygraphs were the cause of roughly 40 percent of special-agent applicants dropping out, the records showed. |
http://www.nytimes.com/2009/10/23/business/23mortgage.html
Freddie Mac’s Secrecy Pacts Face Court Test
The Treasury has propped up Freddie Mac with more than $50 billion in taxpayer money since the company nearly collapsed more than a year ago, and officials warn that the company will probably need additional billions in the months ahead.
Federal prosecutors in Virginia and the Securities and Exchange Commission are already investigating whether the company misled investors about the risks it was taking with securities backed by subprime mortgages and no-document loans.
But in a battle that will surface on Friday in a federal courtroom in New York, the company and its primary government overseer, the Federal Housing Finance Agency, are trying to enforce secrecy agreements that scores of former employees signed as a condition for receiving severance payments when they left the company.
In their class-action lawsuit against Freddie Mac, three big union-based pension funds charge that Freddie Mac executives defrauded investors by concealing the company’s exposure to high-risk mortgages, its mounting losses and its inadequate capital position.
At the hearing on Friday, lawyers for shareholders will argue that Freddie Mac’s secrecy agreements amount to buying silence from willing witnesses who may have crucial information about what the company’s top executives knew at the time they were assuring investors that all was well. The lawyers will ask a judge to invalidate the restrictions, a move that Freddie Mac and federal regulators will say the court has no right to do.
“Federal dollars are being used to bribe people, to buy their silence,” said David George, a lawyer representing the pension funds in a class-action lawsuit.
Under the secrecy provisions, former employees would be permitted to answer questions from government prosecutors and investigators in any criminal case or in a regulatory proceeding.
But, barring a court order, the former employees are prohibited from cooperating with anyone involved in a civil lawsuit against Freddie Mac.
Several former employees, who insisted on anonymity, confirmed that they were eager to talk with the shareholder group and said they might have valuable information.
“I would say more, but I don’t want somebody knocking on my door and asking for $50,000 back,” said one former employee who worked on Freddie Mac’s internal financial controls. “It’s almost like bribery; I felt that I was supposed to sign the agreement, take the money and keep all their secrets.”
The severance deals were so strict, according to former employees, that they prohibited those who accepted them from saying almost anything about their old jobs or even about the secrecy pledges themselves.
“I was told that in volunteering to take a buyout, I couldn’t even talk about the agreement or it would be off the table,” said an 18-year veteran of Freddie Mac, who insisted on anonymity because of the restrictions. “I was told that you don’t talk about the terms of agreement, you don’t talk to the news media and you don’t talk to attorneys involved in lawsuits against the company.”
Lawyers for pension funds that have filed a class-action lawsuit against the company say the secrecy provisions have already muzzled at least two dozen former employees with potentially important information.
Spokesmen for both Freddie Mac and the Federal Housing Finance Agency said they could not comment on the case because it is in litigation.
In a legal brief filed in August, the Federal Housing Finance Agency refused to confirm that the secrecy pacts even existed, saying their existence was “hypothetical.” But if the restrictions did exist, the agency continued, neither shareholders nor the courts had any authority to interfere with them.
( Read more... ) |
Democrats lock Republicans out of committee room
By Susan Crabtree - 10/20/09 05:47 PM ET
Rep. Edolphus Towns (D-N.Y.) locked Republicans out of the House Oversight and Government Reform Committee room to keep them from meeting when Democrats aren’t present.
Towns’ action came after repeated public ridicule from the leading Republican on the committee, Rep. Darrell Issa (R-Calif.), over Towns’s failure to launch an investigation into Countrywide Mortgage’s reported sweetheart deals to VIPs.
For months Towns has refused Republican requests to subpoena records in the case. Last Thursday Committee Republicans, led by Issa, were poised to force an open vote on the subpoenas at a Committee mark-up meeting. The mark-up was abruptly canceled. Only Republicans showed up while Democrats chairs remained empty.
Republicans charged that Towns cancelled the meeting to avoid the subpoena vote. Democrats first claimed the mark-up was canceled due to a conflict with the Financial Services Committee. Later they said it was abandoned after a disagreement among Democratic members on whether to subpoena records on the mortgage industry’s political contributions to Republicans.
A GOP committee staffer captured video of Democrats leaving their separate meeting in private chambers after the mark-up was supposed to have begun. He spliced the video to other footage of the Democrats’ empty chairs at the hearing room, set it to the tune of “Hit the Road, Jack” and posted it on the Oversight and Government Reform Committee’s minority webpage, where it remained as of press time.
Towns’s staffers told Republicans they were not happy about the presence of the video camera in the hearing room when they were not present. Issa’s spokesman said the Democrats readily acknowledged to Republicans that they changed the locks in retaliation to the videotape of the Democrats’ absence from the business meeting even though committee rules allow meetings to be taped.
"It's not surprising that they would choose to retaliate given the embarrassment we caused by catching them in a lie on tape,” said Issa spokesman Kurt Bardella. “If only they
would use their creative energy to do some actual oversight rather than resorting to immature tactics, but I guess we're getting some insight into what lengths they'll go to avoid addressing the Countrywide VIP issue."
Towns’s office said in a statement the locks were changed on Republicans "because they don't know how to behave." As for the video the GOP made, Towns's office pointed out: "The minority is using taxpayer dollars to make these campaign style videos." |
A key House committee on Thursday quietly altered its health care legislation in a way that could allow the Senate to mow over Republican opposition to Democratic reforms by exploiting a budgetary loophole.
The Ways and Means Committee adjusted its health care overhaul package so that the Senate, down the road, could avoid a filibuster and pass health care reform with a smaller number of votes than normally required.
The long-discussed process, nicknamed the "nuclear option," is known as reconciliation. It's coming into potential play after the Senate Finance Committee on Tuesday became the last of five committees to approve health care reform legislation, sending the overhaul proposals a big step closer to the president's desk. Before it gets there, though, the bill has to pass from the committees to the floors of the House and Senate.
Under the normal process, senators can filibuster almost anything and the debate would only be cut off if at least 60 lawmakers vote to do so. For that reason, 60 is considered the magic number in the quest to pass health care reform out of the Senate.
But under reconciliation, typically used in the budget process, no filibusters are permitted and a bill can pass with just a simple majority.
Structuring the health care bill in this way allows it to be scooped up in the reconciliation process, which could torpedo the Republicans' trump card.
"The secret of the week is that Democrats pulled the trigger on the nuclear option," warned Rep. Paul Ryan, R-Wis., top Republican on the House budget committee and a senior member of the Ways and Means Committee. "They built their vehicle today."
But Ways and Means Chairman Charlie Rangel, D-N.Y., said the committee's maneuver "is strictly procedural."
He noted, however, that the "action was necessary because there is a possibility that a handful of Senate Republicans could choose to engage in partisan tactics to stall this important health reform bill."
Rangel added that this move was to "simply preserve the option of advancing health reform legislation."
Gosh, why doesn't Charlie just say they deserve a "straight up or down vote"? This is functionally identical to the Bushite Scum's attempts to ram their extremist judges through to confirmation except the people running roughshod over procedural niceties have "D"s after their names. Where are the righteous Democratic defenders of Congressional decorum now? |
Oct. 12 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.
Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.
“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”
Sliding Share
The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification. |
| » 34 Banks Skip TARP Dividend Payments While America Sleeps |
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1: "Hey, bankers are robbing the Treasury!"
2: "Oh, it's just money, did you hear how Obama won the Nobel Peace Prize, which he totally [did / did not] deserve!"
http://www.nakedcapitalism.com/2009/10/34-banks-miss-tarp-dividends-and-almost-no-one-notices.html
Oct. 10th, 2009 @ 01:10 pm
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Congress is set to allow the Pentagon to keep new pictures of foreign detainees abused by their U.S. captors from the public, a move intended to end a legal fight over the photographs' release that has reached the Supreme Court.
Federal courts have so far rejected the government's arguments against the release of 21 color photographs showing prisoners in Afghanistan and Iraq being abused by Americans.
The Obama administration believes giving the imminent grant of authority over the release of such pictures to the defense secretary would short-circuit a lawsuit filed by the American Civil Liberties Union.
The White House is asking the justices to put off consideration of the case until after a vote on the measure in the House and Senate, as early as next week. The provision is part of a larger homeland security spending bill and would allow the defense secretary to withhold photographs relating to detainees by certifying their release would endanger soldiers or other government workers.
The ACLU said the court should not disturb a ruling by the federal appeals court in New York ordering the photographs' release. The pending congressional action "does not supply any reason for delay," Jameel Jaffer, director of ACLU's national security project, told the court.
The dispute is on a list of cases the Supreme Court could act on Tuesday.
Lower courts have ruled that a provision of FOIA allows documents to be withheld from the public for security reasons only in instances where there are specific threats against individuals.
President Barack Obama initially indicated he would not fight the release of the photographs. He reversed course in May and authorized an appeal to the high court.
Oct. 10th, 2009 @ 12:39 pm
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The NYPD is amassing a database of cell phone users, instructing cops to log serial numbers from suspects' phones in hopes of connecting them to past or future crimes.
In the era of disposable, anonymous cell phones, the file could be a treasure-trove for detectives investigating drug rings and other criminal enterprises, police sources say.
"It's used to help build cases," one source said of the new initiative.
"It doesn't replace the human element, like debriefing prisoners, but it's another tool to use that we didn't have in the past."
A recent internal memo says that when cops make an arrest, they should remove the suspect's cell phone battery to avoid leakage - then jot down the International Mobile Equipment Identity number.
The IMEI number is registered with the service provider whenever a call is made.
And that data could allow a detective to match, for example, a cell phone used by one suspect to a phone used by another.
There are limits to the data's usefulness - all Chinese-made cells sold in India have the same number and some overseas cells are embedded with fake numbers.
Still, civil libertarians are alarmed by the new policy since normally a warrant is needed to obtain information such as calls made or numbers in an address book.
New York Civil Liberties Union associate legal director Christopher Dunn said it appears the NYPD is "taking phones apart to get information" without warrants.
"It's hard to believe they feel there's a real need to take out the battery to prevent leakage," he said. "Instead, it looks like they're doing this to circumvent the warrant process."
The cell phone information joins another database of more than 20 million 911 callers that the NYPD has been building. It has paid off.
In one case involving a 911 call, detectives solved a burglary pattern after the suspect left a slip of paper with his cell number on it at a crime scene, Deputy Commissioner Paul Browne said.
The phone was disposable so no owner information was available, but police were able to track it to the suspect because he had used it to make a 911 call after he was assaulted.
The NYPD started collecting 911 data for incidents involving a police response in 2003. Four years ago, it began putting the information into its new computer nerve center, the Real Time Crime Center.
Oct. 8th, 2009 @ 01:22 pm
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| » This Is The End: Global Calls For End To Dollar Hegemony Contain Adequate Descriptive Language |
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The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit.
"Important progress in managing imbalances can be made by reducing the reserve currency country?s 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said.
Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity."
He said: "Greater use of a truly global reserve currency, such as the IMF?s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes," he said.
The SDRs are the asset used in IMF transactions and are based on a basket of four currencies -- the dollar, euro, yen and pound -- which is calculated daily.
China had called in March for a new dominant world reserve currency instead of the dollar, in a system within the framework of the Washington-based IMF.
They've developed the vocabulary and conceptual library to devise a functional replacement. Won't be long now.
Oct. 6th, 2009 @ 09:44 am
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| » Impoverished Mexican Population Swells |
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Wal-Mart Bodegas Lift Profit in Mexican Recession: Week Ahead
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By Emily Schmall
Oct. 5 (Bloomberg) -- Wal-Mart de Mexico SAB, Latin America’s largest retailer, is profiting from the worst recession since the 1930s by offering smaller, cheaper products to Mexicans at its Bodega Express shops.
Walmex, as the Mexico City-based retailer is known, will report this week a 12 percent increase in third-quarter net income to 3.66 billion pesos ($266 million), according to the average analyst estimate. A rise would mark the fourth straight quarterly advance in earnings.
The Bodega Expresses -- 400-meter (1,312 feet) shops wedged into poorer neighborhoods -- are allowing Walmex to tap into demand for single-use boxes of cereal, milk and tortillas from Mexicans who buy meal-to-meal, according to HSBC Holdings Plc and Actinver SA. The World Bank forecasts the number of people living in poverty will swell by more than 4 million this year in Mexico, where the minimum wage is 55.85 pesos ($4.09) a day.
Walmex is “capitalizing on the people who want to trade down, people living day to day,” said Francisco Suarez, an equity strategist at Actinver, Mexico’s largest independent money manager. Minimum-wage earners “depend a lot on this just to live,” he said.
Oct. 5th, 2009 @ 10:26 am
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| » Bloomberg: "We can’t just say everybody can go everyplace and do anything they want.” |
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Behind the mayor, a 40-foot video wall displayed maps, incoming data from a police precinct and more than a dozen video streams, many of them showing tourists taking photographs on a sunny day.
The plan devised to protect downtown Manhattan, known as the Lower Manhattan Security Initiative, was introduced by Mr. Kelly in 2005. That raised concern among civil liberties groups, which have called for more public discussion as the police peer, with greater intensity, at more corners of the city.
Asked Sunday about criticism of the increased surveillance, Mr. Bloomberg said: “We live in a world where we have to have a balance. We can’t just say everybody can go everyplace and do anything they want.”
He added, “Do you really want to work in a building that doesn’t have security?”
Oct. 5th, 2009 @ 10:24 am
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| » FT: Chicago Games Loss To Nettle Obama |
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Problems await Obama after Chicago loss
By Edward Luce in Washington
Published: October 2 2009 20:28 | Last updated: October 2 2009 20:28
He came, he pitched and he flew back empty-handed.
Even before Chicago was eliminated, critics had lampooned Barack Obama’s trip to Copenhagen as a misplaced exercise in “verbal gymnastics”. But Friday’s embarrassing first-round elimination is likely to cause Mr Obama more problems back home.
“I don’t view this as a repudiation of the president or the first lady,” said David Axelrod, Mr Obama’s senior advisor and a fellow Chicagoan. “It didn’t work out but it was worth the effort.”
On Friday Mr Obama’s critics on the right were joined by many in the media, which had already raised questions about his priorities.
More immediately, the rejection is likely to intensify questions about Mr Obama’s allegedly vaunting self-belief. Although Mr Obama spent only a few hours in the Danish capital, and although other leaders were there to bat on behalf of their cities, Barack and Michelle Obama couched their pitches in biographical terms. By personalising Chicago’s appeal, Mr Obama put his own reputation on the line.
“Nearly one year ago, on a clear November night, people from every corner of the world gathered in the city of Chicago . . . to watch the results of the US presidential election,” Mr Obama told the Olympic committee. “Their interest wasn’t about me as an individual . . . Rather, it was rooted in the belief that America’s experiment in democracy still speaks to a set of universal aspirations and ideals . . . And so I urge you to choose Chicago!”
And by biographic, we mean hagiographic. And by the way, if you come here, we want ten fingerprints, a mugshot and we treat you all like terrorists. Gee why doesn't anyone want to come visit the domain of Saint Obama?
The fallout from Mr Obama’s quixotic trip will overshadow more important White House initiatives, including his attempts to push through universal healthcare, his review of America’s role in Afghanistan, and attempts to revive the US economy. It did not help that Friday’s rejection coincided with the announcement of a 263,000 increase in US joblessness.
Chicago’s loss will also come at the expense of focus on Mr Obama’s success on Thursday in Geneva, where the US persuaded Iran to agree to open up its second uranium enrichment site to inspection. This moment was arguably a vindication of Mr Obama’s strategy of engagement. On Friday he described Chicago’s Olympic bid as part of his overall effort at re-engaging with the world.
“I ran for president because I believed deeply that at this defining moment the USA has a responsibility to forge new partnerships with the nations and the peoples of the world,” he told the Olympic committee.
Supporters fear Mr Obama has given easy ammunition to conservative critics of international engagement – a posture based implicitly on the president’s persuasive charms. Bill Galson, a veteran analyst, said: “The timing is unfortunate because it steps all over a good story coming out of Geneva [on Iran]. The media in Washington are like six-year-old soccer players: they all run after the same ball.”
The episode is also likely to renew focus on Mr Obama’s Chicago network. The president is thought to have been urged to go to Copenhagen by Valerie Jarrett, a senior White House adviser, and former aide to Richard Daley, the mayor of Chicago. Michelle Obama also worked for Mr Daley.
On Thursday, Rahm Emanuel, Mr Obama’s chief of staff, also from Chicago, teased Mr Obama’s critics. “You know we’ll make sure they get some good seats once Chicago does host the games,” he told ABC News.
So why did the president spent 1.5m in taxpayer money to go beg for parasites to come to my country so we could throw the latest installment of a money-losing fiasco that's a giant commercial pretending to be a sporting event? Oh right, some people back in his home town stood to make money on the real estate and development contracts related to the games. Der.
Thanks Mr. President, it explains a lot about why you appointed Timothy Geithner Secretary of the Treasury.
Oct. 4th, 2009 @ 05:10 am
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| » Chairman of Oversight Comittee Refuses To Subpoena Records Of Program That Got Him VIP Mortgage |
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The discovery that Countrywide Financial Corp. recorded phone conversations with borrowers in a controversial mortgage program that included public officials -- and that those recordings have been destroyed -- has prompted new congressional calls for more information about the program.
Rep. Darrell Issa of California, the ranking Republican on the House Oversight and Government Reform Committee, is trying to subpoena the remaining records of Countrywide's VIP loan program. So far, the committee's chairman, New York Democratic Rep. Edolphus Towns, has turned down that request.
The committee's Republican staff investigators have spent months looking into the VIP program, and learned of the call-recording system from a former Countrywide employee in June, according to a spokesman for Mr. Issa.
The Issa spokesman said that earlier this month Bank of America Corp., which purchased Countrywide in July 2008, confirmed the existence of the recording system, but said all the VIP program-related calls had been disposed of.
A Bank of America spokesman said in a written statement that the VIP recordings "were retained only for a limited time or until available recording space was utilized. Due to these limitations, we have no recordings from before July 2008 when Bank of America assumed management of Countrywide and terminated the VIP program."
Many companies routinely record phone conversations with customers, both for internal-training purposes and to help resolve disputes over what was said during a call.
On Thursday, Mr. Issa sent a letter to Bank of America Chief Executive Kenneth Lewis with a dozen questions seeking more information on what happened to the recordings. Arguing that those call records could have shed light on what public officials were being told by Countrywide personnel about the favorable treatment they were receiving, Mr. Issa wrote that Bank of America's "refusal to fully explain" what happened to the recordings "raises important questions."
Mr. Issa's letter noted that the VIP program began receiving widespread media attention in early June 2008, nearly a month before Bank of America's Countrywide takeover. Articles focused on prominent individuals who received loans through the program, which often gave lower fees and interest rates and faster service than could be obtained by the general public. Among the prominent VIP program borrowers were two Democratic senators, Chris Dodd of Connecticut and Kent Conrad of North Dakota. Both men have denied wrongdoing, and said they never asked for favorable loan terms from Countrywide.
Last year, Condé Nast Portfolio magazine reported that Alphonso Jackson, who had been a Housing and Urban Development secretary under President George W. Bush, also received two loans through the VIP program. At the time, Mr. Jackson told the magazine that he had been a longtime Countrywide customer and wasn't aware of receiving any favorable treatment on the loans.
Mr. Jackson couldn't be reached for comment Sunday.
Given all the public attention to the VIP operation in the month before Bank of America's Countrywide takeover, any destruction of records after the acquisition "would be reprehensible," Mr. Issa wrote in his letter to Mr. Lewis.
Asked about the letter to Mr. Lewis, the Bank of America spokesman said the bank "has in the past, and continues, to assist congressional committees with respect to matters related to Countrywide." The spokesman added that the bank was "unable" to say whether any VIP recordings still existed when it took over Countrywide because of the routine nature of removing such recordings.
The VIP loan unit was also known as the "Friends of Angelo" program because a number of the borrowers were recommended by the company's then-chief executive, Angelo Mozilo. An attorney for Mr. Mozilo couldn't be reached for comment Sunday.
In August, The Wall Street Journal reported that Mr. Towns, the oversight committee chairman, had received two mortgages from Countrywide -- one on his home in Brooklyn and the other on a house in Florida. The loan documents indicated that both had been processed through the VIP unit. At the time, a Towns spokeswoman said his decision not to subpoena the VIP records had "nothing to do with his mortgages." If the mortgages, which were originated in 2003, came through the VIP unit, Mr. Towns was unaware of that fact and never asked for special treatment, the spokeswoman said.
Given the information about Mr. Towns's Countrywide loans, he "is conflicted now" when it comes to investigating the VIP program, Mr. Issa said in an interview Friday. He said that the chairman should allow the oversight committee -- which consists of 24 Democrats and 15 Republicans -- to vote on issuing a subpoena. Mr. Issa said three committee Democrats have approached him privately and said they would vote for such a resolution. He believes other Democrats would do the same. "If it comes to a vote, I don't think I would lose," he said.
The spokeswoman for Mr. Towns didn't return messages seeking comment.
Sep. 30th, 2009 @ 06:02 am
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