A new report from Rep. Darrell Issa (R-CA)’s House Committee on Oversight and Government Reform entitled “How Countrywide Used its VIP Program to Influence Washington Policymakers” confirms what Judicial Watch has been arguing for several years – that former Senator Chris Dodd (D-CT) and current Senator Kent Conrad (D-ND) must have known they were receiving special treatment from Countrywide Financial in the form of sweetheart mortgage deals.
The report also “outs” other members of Congress who received special treatment from the mortgage lending giant in a scandal that emerged back in 2008.
“The Committee’s investigation found Countrywide lobbyists and CEO Angelo Mozilo used discounted loans as a tool to ingratiate itself with policymakers in an effort to benefit the company’s business interests,” said Rep. Issa in announcing the report, which documented 29 VIP loans to 12 members of Congress and congressional staff.
The program at issue was known as “Friends of Angelo,” named after the Countrywide’s chief executive at the time, Angelo Mozilo, who was ultimately charged with civil fraud and illegal insider trading. Senators Dodd and Conrad were perhaps the most visible recipients of these favorable loans. Dodd used two “VIP” mortgage loans in 2003 to refinance residences in Connecticut and Washington, DC, while Conrad took two loans the following year to refinance his beach house in Delaware and an apartment building in North Dakota (saving more than $20,000 in the process, so says the report).
The Washington Examiner’s Executive Editor Mark Tapscott summarizes the report’s findings on Dodd:
Sen. Chris Dodd, the Connecticut Democrat who chaired the powerful Senate Committee on Banking, Housing and Urban Affairs, initially claimed not to know about his preferential treatment. He was cleared by the Senate Select Committee on Ethics in August 2009, but he then retired in 2010 after the public learned how close a friend of Angelo he had been. Dodd received waivers of all fees on two mortgages whose combined worth was nearly $800,000.
The Issa panel says Dodd must have known more than he has let on so far, because he also “referred Mary Jane Collipriest, communications director for Senator Robert Bennett, to the VIP unit when she refinanced her mortgage in 2002. Countrywide waived processing and junk fees for Collipriest.” (“Junk fees” is a trade term for assorted upfront lender charges.)
The report concludes that there was a very simple motivation behind the program–to build “good will” with power brokers on Capitol Hill and cast a “wide net of influence” in order to gain favorable treatment in return from Congress. And it worked.
For example, the report notes that “on June 17, 2008, the same day he acknowledged for the first time that he was a Countrywide VIP customer, Dodd announced that he was bringing to the Senate floor a housing bailout to help Countrywide and other struggling subprime lenders.”
It is obvious to any impartial observer that this was a quid pro quo. Dodd got a favorable loan and then proposed a Countrywide bailout.
However, as noted by Politico, Rep. Issa’s report concludes that the “Friends of Angelo” was far more damaging than a waste of taxpayer funds in the form of a quid pro quo mortgage industry bailout. The program also helped to tip the first domino in the financial crisis by playing a “critical part” in blocking efforts to reform the mortgage lending industry, including the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Countrywide also gave sweetheart deals to top officials at those GSEs, who were the biggest buyers of Countrywide’s dubious mortgage loan products.
Rep. Issa’s committee should be commended for thoroughly investigating this massive influence peddling scandal, but it should not have been necessary.
In 2009, the Senate Ethics Committee had all of the evidence it needed to hold Dodd, Conrad, and other recipients of special treatment from Countrywide accountable (the House Ethics Committee also “looked into it,” but has failed to take any action). Instead, the Senate Ethics Committee whitewashed the two Senators’ Countrywide problems, proving yet again that members of Congress cannot be trusted to police themselves.
After all, an official who worked in the Countrywide program testified before Congress that Dodd and Conrad absolutely knew they were receiving special VIP treatment! To take the word of their colleagues, Dodd and Conrad, who had everything to gain by lying about the loans and ignoring the under-oath testimony from the Countrywide official who administered the program, is typical of corrupt Washington “investigations.”
While Dodd and Conrad are the “faces” of the Countrywide scandal, they were not alone in taking advantage of sweetheart mortgages. The report implicates a number of other members of Congress who benefitted from the Countrywide program, including Rep. Edolphus Towns (D-NY), Rep. Pete Sessions (R-TX), Rep. Buck McKeon (R-CA), and Rep. Elton Gallegly (R-CA.).
Sessions, at least, told Countrywide that he didn’t want any special favors. Key congressional staff with significant public policy influence were also invited to Mozilo’s inner circle of “friends.”
Of course, all of these individuals claim that they did not know that they were part of any special program, despite the fact that correspondence uncovered by Rep. Issa’s committee has the words “VIP TEAM” emblazoned at the top of the letter.
Evidently Angelo’s friends were not limited to Congress. Former HUD Secretary Henry Cisneros and HHS Secretary Donna Shalala also reportedly received sweetheart mortgages.
The Countrywide scandal is a lesson for anyone who tries to downplay the significance of crony capitalism, which moves way beyond perks and favors for greedy politicians. These corrupt arrangements influence policies that impact all Americans, and never for the better. Not to mention the fact that these influence peddling scams violate the law and House and Senate ethics rules.
It should go without saying that every “Friend of Angelo” in a position of influence in Congress and in government should be held accountable. It won’t hurt for you call or contact the House Ethics Committee to encourage it to do its job. You can call the Ethics Committee at 202-225-7103.
For more about this scandal and many, many others, order an advance copy of my upcoming book, The Corruption Chronicles, Obama’s Big Secrecy, Big Corruption and Big Government, published by Simon and Schuster. The book hits stores and online book outlets on July 24, but you can preorder your copy now here.