Paul Muolo, Mathew Padilla Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis (2008)

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.However, on the federal level, the Con-gress, Senate, and White House were of no real threat to Ameriquestand Argent.There were occasional discussions of federal legislation thatmight crack down on the lending practices of subprime fi rms, but as faras a bill actually passing (even on the committee level) was concerned,nothing came close.And if something did actually pass, Arnall had afriend in the White House.It was on the state level that Ameriquest, Argent, and Countrywidefaced their biggest threat to doing business.One way to influencethe debate was to donate money to state candidates.In 2001 Georgiapassed the Fair Lending Act, which required residential lenders to provethat on a refinancing that was less than five years old the new mortgagewould provide what was called a tangible net benefit to the borrower.Ameriquest and other subprime lenders began lobbying state politiciansto remove that provision.They feared it would harm their business.(Inthe early days of subprime lending, when consumer finance companiesdominated the industry, most of the loans originated were either sec-ond liens or refinancings.In the modern era of subprime, lenders stillrelied heavily on refinancings, though the purchase of new houses wasa growing part of their business.Ameriquest, by pioneering the use ofstated-income and limited-documentation loans, created a whole new92 chai n of b l ameclass of borrowers who could buy homes without having to prove theyactually earned what they stated on their loan applications.)Georgia State Senator Vincent Fort would later tell the Wall StreetJournal that Ameriquest was very, very engaged, adding that AdamBass, Arnall s nephew, who was now on board at the company full-time, lobbied him directly.Senator Fort said he accused Bass of vic-timizing minorities, which, according to the newspaper, angered theattorney.Ameriquest s spokesman would only say of the meeting that itwas a very candid conversation about complex policy issues. After theGeorgia law passed, Ameriquest began donating money to state legis-lators.One donation, for $2,500, went to Lieutenant Governor MarkTaylor after he emerged as a pivotal fi gure in the debate over whetherparts of the bill should be overturned.Many subprime lenders were threatening to pull out of Georgia,Ameriquest among them.Rating agencies Standard & Poor s andMoody s Investors Service said they would have trouble putting a ratingon subprime mortgage-backed securities (MBSs), because any loan thatviolated the new law might spur litigation, thus tainting these bonds.(The last thing in the world an investor wanted was to buy a bond thatmight be the subject of litigation.) Within a few months, a new law waspassed that neutered the tangible net benefi t clause.Ameriquest and itscompetitors won.Money, in this instance, talked.Over the next fewyears the same scenario would play out in other states Illinois, NewJersey, New York, and Pennsylvania, to name a few with antipredatorylending laws being either passed or discussed, and lobbyists from sub-prime companies or trade groups trying to kill or beat back regulationsthat hurt Ameriquest and their competitors, including Countrywide.One lobbyist fi ghting the good fi ght for subprime lenders wasWright Andrews, an attorney who ran a Washington-based lobby-ing shop called Butera & Andrews.(Andrews, a portly man withruddy cheeks, was directly involved in beating back the Georgia bill.)According to the Wall Street Journal, the attorney also managed threedifferent subprime-related trade groups: the National Home EquityMortgage Association (Ameriquest was a member), the Coalition forFair and Affordable Lending, and the Responsible Mortgage LendingCoalition.A cynic might argue that the names of the last two groupswere a bit ironic given all the allegations of abusive lending practices The Beach Boys of B&C 93that subprime firms like Ameriquest were being slapped withoutrageous points and fees and questionable appraisal practices amongthem.Besides his partner James Butera, Andrews had another ally inrepresenting the industry, his wife Lisa.In 2003 Ameriquest hired LisaAndrews as its senior vice president for government affairs, a fancy wayof saying she was the subprime lender s top lobbyist.At this point Arnall had plenty to protect.Ameriquest was the larg-est retail subprime lender in the land, funding about $30 billion a yearin new loans through its 230 retail branches and thousands of loan offi-cers.Argent, the wholesale division that relied exclusively on loan bro-kers, was originating just as much.Arnall s entire ACC empire (most ofwhich was Ameriquest/Argent) was earning $1 billion a year pretax.Wayne Lee, who had risen in the ranks at Long Beach Mortgage,had molded Argent into an origination giant by hiring aggressiveaccount executives who gathered loans from a nationwide network ofloan brokers, many of whom were already familiar with the companybecause they did business with Arnall s LBM.Ameriquest was spendingmillions of dollars in ads each year on television, radio, and the Internet.One series of TV commercials was called, Don t judge too quickly.Wewon t. In one ad a teenage girl and her friends are on the way to aconcert, the middle-aged father driving.The daughter asks the fatherto pull over at a convenience store so she and her friends can get somegum.As the girls run into the store, the father yells out that she ll needsome money.The daughter, wearing a feathery pink waistcoat and ashort skirt and looking like a young hooker leans into the car as thefather, who s waiting at the curb, hands her a $20 bill.Just as he s doingthis a police car pulls up behind him.The dad, with an embarrassedlook on his face, and thinking what the cops are probably thinking,mutters to the camera, I m her daddy.The ads all of which portrayed situations that looked bad (but hadinnocent explanations) aired in selected markets but without 800 num-bers or web site addresses.The idea was to brand the Ameriquest nameon anything that would give the company maximum exposure and makeits telephones ring.(As Cole had noted, it was all about selling.) Overthe years Ameriquest bought the naming rights to the Texas Rangersbaseball stadium, and advertised on the walls of major and minor leaguestadiums.It sponsored a tour by the Rolling Stones, and even topped94 chai n of b l amethat by hiring (Sir) Paul McCartney to play the halftime show at theSuper Bowl the Ameriquest name emblazoned over the TV screen asthe former Beatle finished Live and Let Die [ Pobierz całość w formacie PDF ]

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