THE BLOG
11/29/2009 05:12 am ET Updated May 25, 2011

Wall Street Journal Reporter Conceals Facts About The Real Countrywide Mortgage Scandal

If actions speak louder
than words, then Edolphus Towns didn't feel like much of a VIP at Countrywide
Financial. In 2003 the Brooklyn congressman got two five-year adjustable rate mortgages,
for his New York and Florida residences, from the nation’s largest mortgage lender.
But Towns never waited for the interest reset date. He dropped Countrywide and took his New York loan somewhere else in 2005. Towns unwittingly undercut
the story of Robert Feinberg, the so-called Countrywide VIP whistleblower who
said that he and others did “whatever it takes” to keep the business of a “VIP.”

To impugn Towns, John Emshwiller of The Wall Street Journal falsified some
details in, “Key Lawmaker Received
Countrywide Loans.”
Emshwiller claimed that Countrywide’s VIP program
“provided loans to public figures and other favored borrowers often at lower
interest rates or with lower origination fees than were available to the
general public.” In fact, no one had ever alleged that VIPs customers got lower
interest rates, only reduced fees. And no one had ever shown any evidence that those
fees were  lower than what was available elsewhere on the open market.

The entire premise of Emshwiller’s
story was discredited a few hours after it was published, when a unanimous Senate
Ethics Committee
announced the results of its exhaustive review of the
Countrywide VIP program. In order “to ascertain how the VIP program
worked” the Committee “took every possible step during the course of its
year-long inquiry to obtain information from multiple sources, including
issuing subpoenas for detailed contemporaneous documents and testimony,” and
“carefully reviewed more than 18,000 pages of documents from Countrywide and
its former employees…”

The Committee found that
the VIP program was exactly what the senators under investigation, Christopher
Dodd and Kent Conrad, said it was - a program that offered expedited service,
and nothing else out of the ordinary:

During the mortgage boom
that occurred from late 2002 through 2004, the VIP loan unit handled thousands
of loans worth billions of dollars for a very broad spectrum of individuals,
large numbers of whom had never met, let alone befriended, [Countrywide CEO
Angelo] Mozilo.

Overall it appears that
the VIPs were often offered quicker, or more efficient loan processing and some
discounts. However, it also appears that all VIP loans, including all [Friends
of Angelo] loans, were required to meet the same underwriting standards and conditions
for resale on the secondary market and non-VIP loans.  Furthermore, there is evidence on the
record that the discounts offered to VIPs and FOAs were not the best deals
availble at Countrywide or in the marketplace at large. In sum, participation
in the VIP or FOA programs did not necessarily mean that borrowers received the
best financial deal available either from Countrywide or from other lenders
. [Emphasis added.]

Once the Committee,
comprised of equal numbers of Republicans and Democrats, had exonerated the
senators, right wing smear artists selectively drew upon Emshwiller’s reporting
to fabricate a new false narrative. Those most shameless of those smear artists was John Emshwiller.

They all took their cue from Rep. Darrell Issa of California, who had been working to do
an end-run around the Senate investigation in order to impugn Dodd and other Democrats.  As a minority member of the House
Oversight Committee, Issa had no subpoena power. Towns, the Democrat who
chaired the committee, knew it was inappropriate for the House to investigate
members of the Senate, so he had refused Issa’s request to issue subpoenas for a
separate Countrywide investigation.

These smear artists echoed Issa's talking points by concealing:

(1) that the Senate Committee had fully investigated the
VIP program,

(2) that the committee had found that the VIP program did not
necessarily offer better terms to its customers, 

(3) that Towns had unilaterally stopped
doing business with Countrywide four years ago, and

(4) that in March 2009 Issa had
issued his own Countrywide VIP Report,  which was riddled with partisan falsehoods

By
concealing those four facts, the right wing shills could falsely
portray Towns as ethically conflicted and obstructing of a legitimate
investigation of corruption.  They included Bret Baier of
Fox News
, and Sharyl Attkisson, who masquerades as an investigative reporter on
CBS.

But in yesterday’s Journal,
Emshwiller went further. He also concealed the facts that the Senate
Ethics Committee had investigated Dodd and Conrad, and that it found
"no credible evidence" to support the allegations made against them. 
Using the flimsiest pretext to shill on behalf of Issa, Emshwiller wrote:

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...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.

Emshwiller also concealed that
recordings of conversations with Dodd, Conrad or Towns would have been
more
than six years old and were supplanted by documentation for loans that
were extended according to standard market terms.  Issa's claim that he
first learned about the recordings in June  sounds extraordiary, given
that his staffers first took Feinberg's testimony in December 2008 and
anyone familiar with the industry knows that it's standard practice to
record client communications.

Just like the birthers, who refuse to acknowledge Obama's birth
certificate, Issa and Emshwiller refuse to acknowledge the mountain of
evidence that the Countrywide VIP "scandal" has been thoroughly
discredited. That mountain includes the tacit acknowledgment by the
Associated Press that one of its reporters, Larry Margasak, lied. On
July 27, 2009, Margasak wrote: 

Despite their denials, influential Democratic Sens.
Kent Conrad and Chris Dodd were told from the start they were getting
VIP mortgage discounts from one of the nation's largest lenders, the
official who handled their loans has told Congress in secret
testimony.

In fact, the official, Feinberg, retracted his story and was unable to
confirm anything specific that contradicted Conrad and Dodd. As the AP later disclosed: 

A transcript shows Feinberg initially replying yes when
asked if he had told Dodd that he was getting special treatment. But
when asked the same question again, he said, "I don't remember..., but,
you know, it was conveyed in some way, shape or form."