Investigators say 4 Reps got discounted loans

LARRY MARGASAK

Asso­ci­ated Press

WASHINGTON — Four House law­mak­ers received VIP dis­counted loans from the for­mer Coun­try­wide Finan­cial Corp., the lender whose sub­prime mort­gages was largely respon­si­ble for the nation’s fore­clo­sure cri­sis, accord­ing to con­gres­sional investigators.

Rep. Dar­rell Issa, R-Calif., chair­man of the House Over­sight and Gov­ern­ment Reform Com­mit­tee, declined to name the four but has told the House Ethics Com­mit­tee that it should inves­ti­gate the lawmakers.

Con­gres­sional sources said three of the four are Repub­li­cans. The sources spoke on con­di­tion of anonymity, because they were not autho­rized to pub­licly dis­cuss the investigation.

In 2009, Demo­c­ra­tic Rep. Edol­phus Towns of New York was iden­ti­fied in the media as hav­ing two loans that went through the Coun­try­wide VIP pro­gram. On Mon­day, Towns insisted he was not involved in a VIP pro­gram of the lender and did not receive ben­e­fits that weren’t avail­able to every cus­tomer of the lender.

Issa, in a let­ter dated Fri­day and released Mon­day, said there could be addi­tional law­mak­ers who received dis­counted loans.

The most favored cus­tomers of Coun­try­wide were known as “Friends of Angelo,” who were given dis­counts in a VIP sec­tion under con­trol of the company’s CEO Angelo Mozilo. How­ever, Issa said his inves­ti­ga­tors dis­cov­ered that other sec­tions of Coun­try­wide also processed VIP loans to pub­lic offi­cials and oth­ers in posi­tion to help the company.

Coun­try­wide was taken over by Bank of Amer­ica, which has given Issa’s com­mit­tee 100,000 doc­u­ments in response to subpoenas.

Issa’s let­ter to ethics Chair­man Jo Bon­ner of Alabama and rank­ing Demo­c­rat Linda Sanchez of Cal­i­for­nia said: “Tes­ti­mony and doc­u­ments show that Coun­try­wide used the VIP pro­gram to build rela­tion­ships with gov­ern­ment offi­cials and oth­ers posi­tioned to advance Countrywide’s busi­ness interests.

“Between Jan­u­ary 1996 and June 2008, Countrywide’s VIP unit gave dis­counted loans to employ­ees of the fed­eral gov­ern­ment, includ­ing the U.S. Congress.”

He added, “My staff is also aware of the pos­si­bil­ity that loans with VIP ben­e­fits were con­ferred to other mem­bers and ser­viced by a sep­a­rate loan pro­cess­ing branch.”

The ethics com­mit­tee deter­mines whether House mem­bers vio­lated stan­dards of con­duct, includ­ing a vir­tual ban on gifts. The com­mit­tee also can refer cases to the Jus­tice Depart­ment for a crim­i­nal investigation.

It was pre­vi­ously revealed that Sen. Kent Con­rad, D-N.D. and Chris Dodd, D-Conn., while still a sen­a­tor, had received VIP loans from Coun­try­wide. Both said they did not know they were get­ting unique deals and Dodd main­tained he received no pref­er­en­tial treatment.

Oth­ers named as recip­i­ents of the VIP pro­gram were James John­son, for­mer head of Fan­nie Mae who later stepped down as an adviser to Barack Obama’s first pres­i­den­tial cam­paign, and Franklin Raines, who also headed Fan­nie Mae. Still other “friends” included retired ath­letes, a judge, a con­gres­sional aide and a news­pa­per executive.

The Senate’s ethics com­mit­tee looked at the Dodd and Con­rad cases and cleared them of wrong­do­ing, but warned that they should have exer­cised bet­ter judgment.

The com­mit­tee said the sen­a­tors should have ques­tioned why they were in the VIP pro­gram, because it should have raised red flags.

The Secu­ri­ties and Exchange Com­mis­sion in Octo­ber 2010 said that Mozilo would pay a $22.5 mil­lion penalty to set­tle charges that he and two other for­mer Coun­try­wide exec­u­tives mis­led investors as the sub­prime mort­gage cri­sis began. Mozilo also was banned from ever again serv­ing as an offi­cer or direc­tor of a pub­licly traded company.

He also agreed to pay another $45 mil­lion to set­tle other vio­la­tions for a total set­tle­ment of $67.5 mil­lion that was to be returned to investors who were harmed.

Posted by AP News on Dec 19 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.