The former Countrywide Financial Corp. sent four house lawmakers VIP discounted loans, even though the lender’s subprime mortgages were largely responsible for the nation’s foreclosure crisis. The chairman of the House Oversight and Government Reform Committee, Representative Darrell Issa (Republican from California), did not name the four recipients in question but he did tell the House Ethics Committee that the lawmakers should be investigated.
Back in 2009, Edolphus Towns, a Democratic Representative from New York, was accused of receiving two loans from the Countrywide VIP program. Towns insisted on Monday that he was not involved in the program and that he did not receive any loans that were not also available to customers of the lending institution, according to AOL.
Bank of America took over Countrywide, giving the committee Issa runs over 100,000 documents in response to subpoenas. A letter from Issa sent to ethics chairman Jo Bonner, from Alabama, and Democrat Linda Sanchez of California, read:
“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. 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 is responsible for determining which House members violated standards of conduct, including virtual bans on gifts. The committee also has the power to send cases to the Justice Department for criminal investigations.
Earlier, Senator Kent Conrad (Democrat from North Dakota) and Chris Dodd (Democrat from Connecticut) were revealed as receiving loans from Countrywide. Both claim that they did not know they were receiving special benefits from the institution.
The former head of Fannie Mae, James Johnson, was also named as receiving benefits from Countrywide. Johnson stepped down as an adviser to Barack Obama’s initial presidential campaign. Franklin Raines, another former head of Fannie Mae, also received benefits from Countrywide.
The cases involving Dodd and Conrad were investigated by the Senate ethics committee and the two men were cleared of any wrongdoing. The ethics committee did warn them that they should have exercised better judgment though. The ethics committee said that the two senators should have questioned why they were in the VIP program, claiming it should have raised red flags.
Back in October of 2010, the Securities and Exchange Commission said that Mozilo would have to pay $22.5 million in penalties to settle charges that he and two other former Countrywide executives misled investors. The misleading occurred as the subprime mortgage crisis started in the country. Mozilo has also been banned from ever returning to the company as an executive. Mozilo also has to pay $45 million to settle other violations, totaling $67.5 million in penalties Mozilo has to pay.