Members of Congress scrambled to distance themselves Wednesday from subprime lender Countrywide Financial Corp. amid calls for an ethics probe and House investigation into whether some lawmakers got sweetheart loan deals through the company's chief executive.
Nearly a dozen House and Senate members have reported mortgage liabilities from Countrywide or its subsidiaries on personal financial disclosure forms, House and Senate filings show.
Congressional offices contacted yesterday said the members never got any special treatment and pointed out that Countrywide is one of the nation's largest home lenders.
Stephanie DuBois, spokeswoman for Rep. Connie Mack, Florida Republican who reported a pair of Countrywide mortgages worth at least a half million dollars, said the congressman got the loans before he was elected to Congress through a broker "the same way millions of Americans do."
But congressional scrutiny heightened Wednesday over reports of another sort of lending practice involving favorable loan deals arranged for prominent people through Countrywide chief executive Angelo Mozilo.
James Johnson, a former top adviser to Democratic Sen. Barack Obama's presidential campaign, resigned after reports that he got discounted mortgage rates through the company, which Mr. Obama has railed against on the campaign trail.
Other names that have surfaced in connection to the so-called "Friends of Angelo" loan program include Sen. Christopher J. Dodd, Connecticut Democratic and chairman of the Senate Banking Committee, and Sen. Kent Conrad, North Dakota Democrat and chairman of the Senate Budge Committee.
"After reviewing the e-mail traffic at Countrywide provided to me by reporters, it appears Countrywide waived one point on my mortgage," Mr. Conrad said. "Although I did not ask for or know that I was receiving a discount, and even though I was offered a competitive loan from another lender, I do not want to have received preferential treatment.
"Therefore I am writing a check today to Habitat for Humanity for $10,500," he said.
Mr. Dodd told reporters he was aware that he was a part of a special VIP program at Countrywide, but never thought it had anything to do with his political position.
D.C.-based Citizens for Responsibility and Ethics in Washington, citing a June 12 report by Portfolio magazine, has filed an ethics complaint seeking an investigation into members of Congress who may have received special loan deals.
"The fact that senators may have unknowingly received loans on terms not available to the public suggests that members of Congress need a way to vet their loans," said Melanie Sloan, executive director of the watchdog group.
On Wednesday, two Republican congressmen also asked the chairman of the House Oversight and Government Reform Committee to investigate the Countrywide loans. The request came in a letter to Rep. Henry A. Waxman, California Democrat, signed by Reps. Darrell Issa of California and Mark Souder of Indiana. They said an inquiry was needed to make sure "tainted" officials recuse themselves from weighing in on legislation favorable to mortgage lenders.
"With an allegation that the chairman of the Senate committee managing legislation to bailout the mortgage industry may have received an improper benefit, Congress´ investigative committee needs to ask questions about this alleged 'VIP' program - including the question of who else may have benefited," Mr. Issa said.
Former House Republican Leader Dick Armey, working with a Conservative Washington-based government watchdog agency FreedomWorks, also called on Mr. Dodd to resign his chairmanship. The group sent an intern in a panda suit to Capitol Hill on Wednesday to symbolize what it called the "panda-monium" caused by the Countrywide controversy.
The intern carried an oversized check for $75,000 made out to Mr. Dodd from Countrywide.
The fallout also prompted nine Republican senators to send a letter Wednesday to Senate Majority Leader Harry Reid asking him to delay voting on a housing bill they say could provide up to $2.5 billion in benefits to Countrywide.
Meanwhile, financial disclosure reports show that other members of Congress have reported mortgages through Countrywide in recent years.
Rep. Jim McGovern, Massachusetts Democrat, for example, reported a mortgage worth at least a quarter million dollars on a home he purchased on Capitol Hill.
"The congressman was never part of any Friends of Angelo program or VIP program and has never met Angelo Mozilo," said spokesman Michael Mershan. He said Mr. McGovern applied to Countrywide because the company owned a foreclosed property he was interested in buying in the District.
Several other members, including Reps. Thomas Feeney, Florida Republican; Peter A. DeFazio, Oregon Democrat; and Jim Langevin, Rhode Island Democrat, all say they originally got mortgages from other companies, but the loans eventually were bought out by Countrywide. All say they received no special treatment.
A spokesman for Virginia Republican Rep. Thelma Drake said she applied for a mortgage through Countrywide before joining Congress. "It was obtained like any other citizen obtains a mortgage - through a local mortgage broker," said Drake spokesman Travis Burk.