Countrywide Bought Influence With Cut-Rate Loans

Morning Business Memo:

A house report has found Countrywide Financial, whose subprime loans helped start the foreclosure crisis, made hundreds of discount loans to buy influence with members of Congress, congressional staff, top government officials and executives of troubled mortgage giant Fannie Mae. The report said the discounts - from January 1996 to June 2008 - were not only aimed at gaining influence for the company but to help mortgage giant Fannie Mae. Countrywide's business depended largely on Fannie, which at the time was trying to fend off more government regulation but eventually had to come under government control.

British politicians are voting today on what kind of investigation will be launched into the growing scandal over interbank rate manipulation. Bob Diamond, the ex-CEO of Barclays, was grilled yesterday by a Parliamentary committee. Diamond and two other top Barclays executives resigned this week. The ratings firm Moody's took a step towards downgrading Barclays' credit rating. The bank was fined about $450 million by British and US regulators for making false submissions on borrowing costs related to LIBOR loans. Other global banks are still being investigated for possible wrongdoing.

The outlook for jobs may be a little better than it was a month ago when the Labor Department released its May report. But it's nothing to write home about. The next reading will be released tomorrow, and expectations for the number of new jobs created are low. That said, Gallup's monthly Job Creation Index is at a four-ear high. Thirty-six percent of U.S. adult workers say their employers are hiring and expanding the size of their workforces, and 16 percent tell Gallup their employers are letting workers go and reducing the size of their workforces. Some industries are in much better shape than others.

"Healthcare, IT, and engineering are hiring in extra in very strong numbers, and then you have other industries that are struggling," says Jennifer Grasz of Many employers complain they can't find the skilled workers they want to hire. "If we want to see more positive movement in the US market we've got to do a better job in realigning the skills of our labor force," says Grasz, and many other employment experts agree. Most economists expect the US unemployment rate to stay above 6 percent for at least four more years, says a new Associated Press survey.

Richard Davies Business Correspondent ABC NEWS Radio

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