Beleaguered Countrywide Financial Corporation, which was
Bank of America Corporation
), has been accused of influencing key members of the Congress to
earn favors by providing them with discounted loans. Following an
intensive investigation, House of Representatives' Oversight and
Government Reform Committee concluded this in a report.
The report noted that Countrywide employed 'VIP program' to
build good rapport with lawmakers and other prominent figures
including government officials, who held important positions and
could influence proceedings in favor of the company for a
considerable period, the company carried on its foul lending
scheme. Consequently, it was able to influence several legislations
in its favor.
For a VIP loan, of the interest rate was decreased and junk fees
ranging as much as $350 to $400 were relinquished. Moreover,
Countrywide launched several lobbyists in the House of
Representatives to refrain the committee from passing a legislation
pertaining to new sub-prime lending rules, which would have been
detrimental for the company. Even the legislation passed to
initiate reform measures at Fannie Mae and Freddie Mac were
influenced by Countrywide's lobbyists.
Countrywide went to the extent of building up a separate
division, fully supported by its lobbyists. The public interest was
completely ignored and legislations were designed according to the
whims of Countrywide.
The U. S Department of Justice has not prosecuted any personnel
of the defunct Countrywide so far, but the House of
Representatives' report has accused that the company's CEO and his
lobbyist team have been constantly trying to meet their ends
through wrongful means.
In 2010, Securities Exchange Commission had charged Countrywide
CEO along with two other employees a penalty of $22.5 million for
providing misleading statements to investors during the sub-prime
crisis. Further, another penalty of $45 million was charged in lieu
of settlement of total claims by investors.
BofA acquired Countrywide in 2008. The finance experts have
considered the deal as disastrous. The acquisition has already cost
$40 million to BofA, stemming from real-estate-related
balance-sheet write-offs, funds set aside for mortgage-backed
securities claims, and litigation costs relating to the Countrywide
acquisition. The experts anticipate these costs to rise in the
The sub prime mortgage crisis had severe ramification on the
economy. The economy has not yet been fully recovered from the
effects of the crisis. In such scenario, self-indulgent acts by
companies like Countrywide display lack of corporate
responsibility. The investors' needs are completely overlooked and
by rigging Federal Statutes, the public interest is totally
As for BofA, the already escalating costs arising from the
Countrywide purchase are enough to put off the investors. Moreover,
the taxpayers' money goes out in funding bailouts for these
Currently, BofA retains its Zacks #3 Rank, which translates into
a short-term Hold rating. One of its peers,
JPMorgan Chase & Co.
) retains a Zacks #4 Rank, which translates into a short-term Sell
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