Ameriquest Mordage Co., the California based company that made more than $80 bn subprime mordage between 2005 and 2007, described itself as a ¨sponsor of the american dream¨
Ameriquest was repeatedly held up by regulators and courts for abusive lending practices, most recently in 2006 when it agreed to pay a $325m fine after it was shown it had misled borrowers, falsified documents and pressured appraisers to inflate home values.
The company, which has since closed, gave $263.000 to Gorge W. Bush in campaign contributions. Mr. Arnall, the chief executive and founder of Ameriquest, who died last year, went on to become Mr. Bush´s ambassador to the Netherlands. To keep things even handed, his company donated $1.57m to the Democratic party.
Between 2005 and 2007, which was the peak of subprime lending, the top 25 subprime originators made almost $1.000bn in loans to more than 5m borrowers, many of whom have had their houses repossessed.
Those loans, many them considered predatory, lit the fuse that led to the global financial meltdown. The Fed, which repeatedly refused to tighten regulation of these non-bank companies, since it is charged only with direct regulation of banks, told the Congress it would be too expensive to provide oversight.
There is an investigation, which began in september, shows most originators spent millions of dollars lobbying Washington from the mid to late 1990s, much of it to prevent new legislation that would tighten restrictions on subprime lending.
The financial secttor has spent $3.5bn in the past decade lobbying in Washington and made $2.2bn in campaign donations, says an independent watchdog.
At least 21 of the 25 top subprime originators, most of which are now bankrupt, were either owned or heavily financed by the biggest recipients of Troubled Asset Relief Funds, including Citybank, Bank of America, Wells Fargo and JPMorgan - also the largest political donors in Washington.
Among the other top originators were New Century Financial Corp., which was alleged by investigators in its 2007 bankrupcy processing to have made ¨ aggressive manner that elevated the risks to dangerous and ultimately fatal levels ¨ . It´sd largest financial backer was Goldman Sacks, which has received $10bn in Tarp bailout funds.
¨The largest American adn European banks made the bubble in subprime lending possible by financing it on the front end, so they could reap the huge rewards from securitizing and selling mortgage backed securities¨ says the investigation. ¨Washington was warned repeatedly over the last decade that these high cost loans represented a systemic risk to the economy. It is hard to believe the major banks were unaware of what was going on, or what the consequences might ultimately be¨.
