'Nightly News' Scapegoats Countrywide for Housing Downturn
The same day Florida Attorney General Bill McCollum followed the lead of attorneys general in California and Illinois by suing Countrywide (NYSE: CFC), and just one day before Bank of America (NYSE:BAC) planned to complete its acquisition of Countrywide, the June 30 âNBC Nightly Newsâ aired an âNBC Investigationâ alleging deceitful practices by the lender.
NBC chief investigative correspondent Lisa Myersâ report relied on the claims of a former Countrywide regional vice president who now accuses the lender of âshady, possibly illegal practices.â
â[Mark] Zachary, who had 12 years in the mortgage business when he joined Countrywide in 2006, says he also found a pattern of inflated appraisals and employees coaching borrowers to lie,â Myers said. âIn internal e-mails and documents he repeatedly warned superiors â writing last year, ââŚ some builders and lenders are setting people up for further failure in life by â putting them in loans and houses they do not belong in.ââ
But Zacharyâs allegations are nothing new. They were first reported in January when he filed a lawsuit in U.S. District Court in the Southern District of Texas claiming he was fired for objecting to Countrywideâs illegal tricks that included using an appraiser that it knew inflated the value of homes.
Myers noted that Zachary, who was fired by Countrywide, is now suing the company and included a brief statement from Countrywide suggesting the former employee is motivated by âself-interestâ in making the accusations and stating it had âinvestigated each of his claims and found no merit to his accusations.â
Despite Zacharyâs conflict with the company, NBC presented his story and accusations against Countrywide for more than a minute and a half (more than half of the entire two minute 42 second story) and supported them with the statement of an anonymous loan officer and an identified borrower. Zachary said Countrywide endorsed âliar loansâ â riskier loans that donât require documentation, making it easier for borrowers to lie on their loan applications.
â[T]he income stated on those loans generally is not a true representation of what that person normally makes,â said Zachary.
Myers didnât equally criticize borrowers for lying on loan applications, depicting Countrywide as the only party to blame for the lending practices that eventually brought the housing industry to its knees.
Some experts have said the scapegoating of Countrywide will not end until its CEO does a âperp walk.â After two former Bear Stearns employees were arrested and charged with securities fraud, Adam Lashinsky of Fortune magazine said the crusade against Countrywide wouldnât stop until CEO Angelo Mozilo goes down in an appearance on Fox News Channelâs âCavuto on Businessâ June 21.
â[I]tâs obvious the Feds need a scapegoat in this mortgage crisis when they go and arrest a couple of Bear Stearns executives who make the sin of being wrong,â Lashinsky said. âMy prediction is â they wonât stop until they do a perp walk with Angelo Mozilo â the CEO of Countrywide.â
âYou know, I agree with you,â replied host Neil Cavuto.