I don’t even know what to say. I guess this is just one more item for the National Integrity Index. Normally, I stay away from shame-based attacks and commentary. Now I realize why, too few people in positions of fiscal responsibility seem to have any. Can you say “fiduciary?”
To quote Lily Tomlin: “No matter how cynical I get, I just can’t seem to keep up.”
The Stealth Public Bailout of Reckless “Countrywide”: Privatizing Profits and Socializing Losses
Nouriel Roubini | Nov 27, 2007
The letter by Senator Schumer questioning the $51.1 billion that Countrywide borrowed from the Federal Home Loan Bank system (specifically the Federal Home Loan Bank of Atlanta) has finally revealed the little dirty secret – that was known only to a few insiders and was noticed on this blog a month ago – that Countrywide, the largest US mortgage lender, has received a massive stealth public bailout that has put at severe risk taxpayers’ money. Here is Countrywide – the premier poster child financial institution of the reckless and predatory lending practices of the last few years – getting in severe financial trouble because of its rotten lending practice in subprime, near-prime and prime mortgages – and whose CEO Mozilo is under SEC investigation for potentially illegal activities – now receiving a massive $51.1 billion of public bailout money with little official supervision of such lending. Mozilo is under investigation for his accelerated sales of Countrywide stock under a 10b5-1 plan. Mozilo has made more than $100 million on stock sales this year, while Countrywide shares collapsed more than 50%.
As the Schumer letter correctly points out the collateral against this $51 billion loan is mostly toxic waste subprime garbage whose market value is now much lower than the face value of such mortgages; so $51 billion dollars of taxpayers’ money has been put at risk with garbage as collateral for it.