Updated:

Jan 14, 2019

Original:

Jun 19, 2008

Chris Dodd: The Senator From Bank of America

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Chris Dodd, the US senator who introduced the mortgage bailout bill this week, has received approximately $70,000 in campaign contributions from Bank of America in the last year-and-a-half, Tim Carney reports in the Washington Examiner.* The mortgage bill would allow banks such as Bank of America and mortgage lenders like Countrywide, which BofA is in the process of acquiring, to push their worst performing loans onto government agencies. It is such a give away to mortgage laden banks that it is being mocked by Republican staffers as "the Bank of America bill on steroids."
Dodd, of course, chairs the senate's banking committee. It may seem obvious that the banking committee chairman would receive lots of money from one of the nation's largest banks. But it wasn't always so. Richard Shelby, who headed the banking committee while Republicans controlled the senate, received only $7,000 from Bank of America employees during his four-year chairmanship. When the going was good, no one needed to own a senator.
But these are difficult times for banks, especially banks buying the nations largest home lender. And so Bank of America has opened up its coffers to buy a little influence on Capitol Hill.

Bank of America PAC money behind Dodd's Countrywide loan

*Full disclosure: Blah, blah, blah. You already guessed it.

Just something to keep in mind. A former Countrywide Financial Corp. manager whose fraud suit contributed to the mortgage industry’s $25 billion settlement with federal and state regulators received about $14.5 million for his efforts, his lawyers said. Kyle Lagow, an appraisal manager for Countrywide from 2004 to 2008, claimed that Countrywide inflated the value of homes to support bigger loans, according to a statement today from Seattle-based law firm Hagens Berman. Charlotte, North Carolina- based Bank of America bought Countrywide in 2008 to save it from collapse as defaults on home loans soared. Lagow’s information helped prompt a $1 billion settlement of Federal Housing Administration claims announced by Bank of America in February, according to the law firm. The sum was included in the nationwide settlement reached that month. [Bloomberg]

And then decided that sticking with the "worst deal in the history of American finance," which has cost it $40 billion in cleanup so far, made them at least look like responsible adults, facing the consequences of their actions, rather than deadbeats trying to take the easy way out. Long before Sanford Weill suggested last week that big banks should split up, Bank of America executives and directors considered the idea and then decided against it, said people close to the nation's second-biggest bank by assets...Chief Executive Brian Moynihan and his team looked at a possible bankruptcy of Countrywide Financial Corp., the troubled mortgage operation it purchased in 2008. Management also studied whether it made sense to break off Merrill Lynch, the securities firm it purchased in 2009. Mr. Moynihan ultimately recommended to his board that neither action made sense. The company decided Merrill had become too big of a profit center and splitting it off could expose the brokerage firm to the sort of funding problems that killed off other Wall Street firms in 2008. Meanwhile, it felt bankruptcy of Countrywide might invite more legal and reputational troubles for Bank of America while exposing other subsidiaries to problems. Bank Breakups, Not So Fast [WSJ]

Remember when Bank of America bought Countrywide in 2008 and CFC Chief Executive Officer/Oracle Angelo Mozilo said they wouldn't be sorry and it wouldn't be long before BofA would "reap what Countrywide hath sowed"? He wasn't kidding and now, finally, BAC and Ken Lewis, the guy who had the foresight to do the deal, are having their vision and skills recognized. Bank of America thought it had a bargain four years ago when it paid $2.5 billion for tottering mortgage lender Countrywide Financial Corp. But the ill-fated decision has already cost the Charlotte, N.C., lender more than $40 billion in real-estate losses, legal expenses and settlements with state and federal agencies, according to people close to the bank. "It is the worst deal in the history of American finance," said Tony Plath, a banking and finance professor at the University of North Carolina at Charlotte. "Hands down." Bank Of America's $40 Billion Mistake [WSJ]

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