Countrywide, the problem mortgage company that was acquired by Bank of America, was once the largest mortgage lender in the country and the biggest supplier of mortgages to Fannie Mae€™s secondary market program. (Fannie Mae has since collapsed.) Countrywide released information that indicated it made additional loans to Fannie Mae officials at favorable rates. Referred to as the Friends of Angelo group, these officials received favorable rates and expedited service. The following chart shows the officials, their titles at Fannie Mae, and their loan amounts, rates, and terms.

In the last years before the Countrywide problems and Fannie€™s collapse, the two firms reached an agreement whereby Countrywide would funnel most of its loans to Fannie in exchange for a special rate. At the time they reached the special arrangement, the €œFriends of Angelo€ program was created. The FOA, as it was known, gave officials an expedited path for processing as well as a one-point reduction in rate. Former Fannie Mae vice chair Jamie Gorelick said, €œI don€™t believe there was any special treatment given.€ However, an employee at the time said, €œI know 100 percent she went through the VIP department.€ In response, Ms. Gorelick said, €œYou€™d think if somebody was trying to do me a favor, they would tell me they were doing me a favor, and I am unaware of any such treatment. When I did this transaction, I was decidedly a has-been. I had no favor to give.€4

Apply what you know about conflicts of interest to Ms. Gorelick€™s responses to the inquiries about her loan. Did former CEO Daniel Mudd have a conflict? What is the relationship of corporate officers to customers? What is the role of regulators? Senators?

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AMOUNT NAME TITLE Former Chair Former Vice Chair Chair, Senate Finance Comm. (Oversight for Fannie Mae) Former CEO Former Chair RATE TERM 10 yrs. Franklin Raines 5.125 $982,253 $960,149 $506,000 Jamie Gorelick 10 yrs. 5 yrs. 5.000 Christopher Dodd 4.250 James Johnson 3.875 5 yrs. $971,650 $986,340 $2.965,000 Franklin Raines 4.125 10 yrs. 7 yrs. 4.250 Daniel Mudd Former CEO