New York — On June 12, senior editor Daniel Golden disclosed on Portfolio.com that Senators Christopher Dodd and Kent Conrad, among others, were involved with Countrywide Financial in a V.I.P.-loan scandal. In the August issue of Condé Nast Portfolio, Golden takes an exclusive and comprehensive look inside former Countrywide C.E.O. Angelo Mozilo’s secret effort to curry favor with lawmakers, politicians, and others who could influence the company’s fortunes. He also shows how the Countrywide V.I.P.-loan scandal went far beyond a few members of Congress. (“Angelo’s Many ‘Friends,’ ” p. 82). Among the Friends of Angelo, or F.O.A.’s, was Richard Aldrich, a California state appeals court judge, who served on a three-judge panel that unanimously ruled in favor of Countrywide in a class-action lawsuit against the mortgage company. Other recipients included Henry Cisneros, who served as HUD secretary under President Clinton; former White House staffer Paul Begala; and Postmaster General John Potter. Cut-rate loans were also offered to congressional staffers who were involved with housing issues. In addition, Countrywide used its V.I.P. loans to cultivate current and prospective business partners, including former C.E.O.’s Bruce Karatz of KB Home and William Esrey of Sprint, according to Golden, raising conflict-of-interest issues akin to those posed by its seduction of public officials. Countrywide’s V.I.P.-loan officer at the time, Robert Feinberg, speaks exclusively to Golden about the program. Feinberg explains that V.I.P.’s almost always received better deals than those available to most borrowers, and those V.I.P.’s were often told they were getting special treatment. “The vigor with which Countrywide chased V.I.P.’s was matched only by the aggressiveness with which it marketed loans to risky borrowers,” Golden writes. In 2003, Franklin Raines, Fannie Mae’s chairman and C.E.O., had his assistant call Countrywide to relay a message, “Per Angelo, Frank needs to refi,” according to Golden. Feinberg received instruction to give Raines “one point off, no junk.” (In company parlance, junk referred to the fees charged to borrowers.) Fannie Mae’s code of conduct prohibits directors from using their position to receive “improper personal benefits.” In 2005, Countrywide spent $1.5 million lobbying the federal government, more than five times its 2000 level and about the same as mortgage and banking giant Wells Fargo, Golden reports. “Countrywide had an incredibly good relationship with Congress,” says retired managing director Sidney Lenz, who oversaw government relations for Countrywide. “It was not unusual for us to get a call saying, ‘A bill’s being introduced. It’s a little technical, and there are parts we don’t understand. Can you help educate us on this?’”

Plus, in the sidebar piece “What Was Ken Lewis Thinking?” Anthony Bianco looks at Bank of America’s purchase of Countrywide, about which he suggests the debate on Wall Street is not whether it’s a good or bad deal—but whether it will be C.E.O. Ken Lewis’ last deal.

“The Last Media Tycoon” (p. 74). Lloyd Grove profiles Katharine Weymouth, the Washington Post’s new publisher, who has taken on the twin missions of saving the family empire and proving that newspapers have a future. “The numbers suck in our business,” the 42-year-old granddaughter of legendary Post publisher Katharine Graham declares. “Though Weymouth has no journalism experience, the newsroom chatter about her has been positive so far, in part because she seems down-to-earth and decisive at a time when morale is low and apprehensiveness is high,” Grove writes. On the style of billionaire Tribune Co. owner Sam Zell, Weymouth jokes, “Sam Zell may be a loon with Tourette’s syndrome, but he’s not crazy.” Despite publicly denying that she was in a hurry to replace executive editor Leonard Downie, Weymouth appointed former Wall Street Journal managing editor Marcus Brauchli to the post in July. When asked what she was looking for in an executive editor, Weymouth says, “One is obviously intellectual caliber—the ability to run our newsroom and identify good stories. Two is charisma and leadership … and the third is the ability to think strategically about the newsroom of the 21st century.”

“Enemy of the State” (p. 94). In an exclusive profile, contributing editor Christopher S. Stewart talks to Robert Amsterdam, the lawyer from the Bronx who’s defending Mikhail Khodorkovsky—former head of the oil company Yukos, who was once the richest oligarch in Russia—in one of the biggest corporate-fraud cases in history. Stewart reports that after imprisoning Khodorkovsky in Siberia, the Kremlin devoured Yukos, declared the company bankrupt, then sold it off to state-owned companies in rigged auctions. “Amsterdam has become the leader of a full-throated campaign to free Khodorkovsky, Russia’s most famous and richest prisoner…. In part, Amsterdam has become a Soviet-style propagandist,” Stewart writes. In taking on the Kremlin, Amsterdam says, he’s lost track of the number of times his life has been threatened.

“God Wants Me to Be Rich” (p. 102). Contributing editor Karl Taro Greenfeld takes a look at the man who may well be one of the biggest beneficiaries of the slumping economy—pastor Joel Osteen. “Osteen hasn’t necessarily tailored his message for the downturn. Instead, he has continued his feel-good preaching … his reminders that God wants you to have a good job, a beautiful home, and a decent cash flow,” Greenfeld writes. Osteen presides over an empire that takes in tens of millions of dollars a year, and although he donates much to his church, his take is still ample enough to allow him and his family to live in 5,000 square feet of leopard-skinned luxury in one of Houston’s tonier neighborhoods, Greenfeld reports. In response to critics who suggest that he has watered down Scripture to win over worshippers, Osteen says, “The accessibility of my message doesn’t bother me a bit…. I think the success of the message in the marketplace is because we are optimistic, encouraging.”

“What’s Project Runway Worth?” (p. 46). Miriam Datskovsky does a back-of-the-napkin analysis to calculate how much the cult cable-TV show Project Runway would bring in if the Weinstein brothers decided to sell it. Datskovsky comes up with an estimated total value of $243.5 million.

“Gold-Medal Schmoozer” (p. 48). Senior writer Peter Waldman profiles the official corporate concierge of the 2008 Beijing Olympics, Sead Dizdarevic, whose firm, Jet Set Sports, pays millions of dollars in formal sponsorship fees, just like Nike and Hilton, in order to secure all the top-tier tickets and hotel rooms for bundled corporate packages. Waldman reports that while Dizdarevic is considered the official hospitality coordinator of the Olympic Games, some of his competitors claim that this control of the market is unfair and possibly an illegal monopoly.

“Facebook Creeps Me Out” (p. 21). In this month’s Viewpoint, Simon Dumenco maintains that although Facebook has become the most hyped workplace obsession since the BlackBerry, something about the social-networking site makes executives squirm. “The ease with which Facebook can be used to broadcast your whereabouts adds a particularly disturbing dimension for executives who would surround themselves with security in real life but are lulled into complacency by Facebook’s tidy veneer,” Dumenco writes.

This month on Portfolio.com
The August issue of Condé Nast Portfolio, plus a sit-down with Related Companies boss Stephen Ross on his big bet to redevelop the west side of Manhattan, a package on the one-year anniversary of the credit crunch, and an Eat Sheet on the ins and outs of gourmet salt.

 

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