Panel probes ‘VIP’ loans
Under pressure from Republicans, a House committee has subpoenaed documents related to Countrywide Financial Corp.’s VIP program, which offered preferential treatment to well-connected or powerful mortgage customers.
The subpoenas were issued Friday as part of a broad investigation into the role of the nation’s largest mortgage companies in the financial crisis, said Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee.
The probe -- which involves demands for information from Wells Fargo & Co., Bank of America Corp. (which now owns Countrywide), JPMorgan Chase & Co., Citigroup Inc., U.S Bancorp and GMAC’s Residential Capital -- will try to determine whether the companies “employed deceptive and predatory lending practices, or improper tactics to thwart regulation,” Towns said in a statement.
Calling for documents related to the VIP loan program operated by Countrywide was a significant step for Towns. The move came after months of pressure from Republicans, who contended that Towns was afraid to investigate the program because some Democrats received loans through it.
Towns received a mortgage from Countrywide, but his office has said he doesn’t know whether it involved the VIP program.
The program, known informally as “Friends of Angelo” for former Countrywide Chief Executive Angelo R. Mozilo, offered discounted loans and other perks. Federal regulators have filed civil charges against Mozilo for fraud and insider trading related to the downfall of Calabasas-based Countrywide, which was the nation’s largest mortgage lender before the housing market crashed.
The question of whether to investigate the VIP program has caused partisan tensions to flare on the committee, culminating this week when Republicans said Democrats locked them out of the panel’s hearing room. Towns on Friday denied that Republicans were ever “denied access” to the room.
The panel’s top Republican, Rep. Darrell Issa (R-Vista), who has been leading the push for an investigation of Countrywide’s program, said the lender “orchestrated a deliberate and calculated effort to buy powerful friends for the purpose of using these relationships to manipulate public policy and further their bottom line.”
Towns said he wanted to determine whether the VIP program “provided special benefits to government officials.” Any documents showing special treatment to members of Congress would go to the House Ethics Committee, he said.
Sens. Christopher J. Dodd (D-Conn.) and Kent Conrad (D-N.D.) said they received loans through the program but thought it simply offered special customer service. The Senate Ethics Committee in August cleared the two of breaking ethics rules.
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