America seethed over Angelo Mozilo's Countrywide profiteering, while yawning for White House National Security Adviser Tom Donilon's Fannie Mae history. Citizens ignored Tom Donilon's role at "arrogant and unethical" Fannie, where he worked as an executive from 1999 to 2005.
Eyes opened for Mozilo's $67.5 million settlement with the SEC over his Countrywide sins. While that sounds like a spanking, Mozilo is personally liable for only $22.5 million of that amount. Insurance will pay two-thirds of the fine. Mozilo will avoid trial as a result of the settlement, much like Donilon's peers at Fannie Mae.
Former Fannie Mae chief Franklin Raines and two other top executives have agreed to a $31.4 million settlement with the government announced today over their roles in a 2004 accounting scandalRaines defended the settlement, while slamming subordinates (like Donilon):
"While I long ago accepted managerial accountability for any errors committed by subordinates while I was CEO, it is a very different matter to suggest that I was legally culpable in any way," Raines said in a statement. "I was not. This settlement is not an acknowledgment of wrongdoing on my part, because I did not break any laws or rules while leading Fannie Mae. At most, this is an agreement to disagree."
Fannie Mae and Countrywide are linked in other disturbing ways:
Dozens of Fannie Mae employees accepted VIP loans and VIP treatment from Countrywide.
Those loans came in two waves. The first came around 1999, when Countrywide agreed to sell Fannie Mae billions of dollars in mortgages, for what amounted to a volume discount.
According to the documents, the second spike in Countrywide loans to Fannie Mae workers happened in 2001-2003 on the leading edge of the mortgage boom - from late 2002 and 2004 - when Countrywide expanded its VIP loan unit.Fannie Mae's Executive Vice President for Law and Policy was Tom Donilon. SEC filings from 2003 describe his role:
Specifically, around the time that the partners were negotiating their exclusive partnership in 1999, documents indicate Countrywide CEO Angelo Mozilo gave Fannie Mae CEO Jim Johnson preferential treatment on more than $10 million in personal loans.
The documents show Countrywide also gave VIP loans to other senior leadership of Fannie Mae including:
--Then-CEO Franklin Raines, who succeeded Mr. Johnson on Jan 1, 1999.
--Then-Fannie Mae Vice Chairman Jamie Gorelick
--Then-Fannie Mae COO Daniel Mudd
Thomas E. Donilon has been Executive Vice President—Law and Policy and Secretary since May 2000. He served as Senior Vice President, General Counsel and Secretary from September 1999 to May 2000.
Law and policy includes corporate compliance. While he didn't take a loan, his employees did. Three Fannie legal counsels made the Countrywide VIP list, as did others.
Recipients of VIP loans from Countrywide included Senator Christopher Dodd (D-CT) and Senator Kent Conrad. (D-ND) After a yearlong investigation, a Senate ethics committee cleared Sens. Dodd and Conrad saying it found "no substantial credible evidence" that they broke Senate gift rules.In an odd coincidence, Dodd and Donilon ended up next to one another on a White House State Dinner guest list:
The Honorable Chris Dodd, United States Senate (D-Conn.)
Mrs. Jackie Clegg Dodd
The Honorable Thomas Donilon, Assistant to the President, Deputy National Security Adviser, NSC
Ms. Cathy Russell, Chief of Staff to Dr. Jill Biden
Cathy Russell is Tom Donilon's wife. Was a Countrywide VIP mortgage ever issued in her name? Never the less, Countywide VIP Dodd and Fannie Mae EVP Donilon have a distinct odor. Where is accountability in today's world? Missing in action...