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House members’ VIP loans excluded from subpoena
Question of the Day
WASHINGTON (AP) — A Democratic committee chairman overrode his own subpoena three years ago in an investigation of former subprime mortgage lender Countrywide to exclude records showing that he, other House members and congressional aides got VIP discounted loans from the company, documents show.
The procedure to keep the names secret was devised by Rep. Edolphus Towns, D-N.Y. In 2003, the 15-term congressman had two loans processed by Countrywide’s VIP section, which was established to give discounts to favored borrowers.
The effort at secrecy was reversed when Towns‘ Republican successor as chairman of the House Oversight and Government Reform Committee, California Rep. Darrell Issa, issued a second subpoena. It yielded Countrywide records identifying four current House members, a former member and five staff aides whose loans went through the VIP unit. Towns was on the list.
Most of the names had dribbled out to the media by the time Issa issued the committee’s final report last month on Countrywide’s use of loan discounts to buy influence with government officials. But there was no official confirmation until Issa made his report public.
Towns’ effort to keep the loans secret was at odds with statements by Republicans and Democrats alike that full disclosure of lawmakers’ financial dealings was the best means for keeping the public aware of congressional perks, unethical conduct and fundraising.
Countrywide had been the nation’s largest home loan originator before the housing market collapse. Many of its borrowers were left unable to repay mortgages that, in many cases, required no proof of income or a down payment. The company was purchased in 2008 by Bank of America, which now holds the VIP loan files.
The original Towns subpoena had asked for all files that went through the Countrywide VIP unit and specifically mentioned House members and aides. Bank of America sent a spreadsheet that identified 18,000 files that listed a borrower’s employer, but without names to maintain privacy.
The spreadsheet identified several files listing the House or Congress as the employer. Since the vast majority of the employers in the spreadsheet were of no interest to the committee, committee Republicans — then in the minority — and majority Democrats each drew up a separate list of loan files to be turned over by the bank.
The Republican list totaled 3,000 files and included borrowers listing the House as an employer. Towns narrowed the files to about 300 and excluded references to the House. It was Towns‘ truncated list that went to Bank of America.
“The committee provided the bank with specific instructions and modifications regarding the scope of the subpoena, and the bank followed and fulfilled all instructions and fully complied with the subpoena as modified by the committee,” the bank said.
The AP reviewed the original bank spreadsheet of 18,000 and confirmed there were references to the House or Congress. The AP also obtained a copy of the subsequent instructions from Towns to the bank that excluded the House or Congress as an employer.
Some borrowers on the VIP list became known as “Friends of Angelo” because they received discounts on orders from then-Countrywide chief executive Angelo Mozilo.
The foremost benefit of being a Countrywide VIP was access to discounted loans in which borrowers received a reduction in points and fees. Usually between $350 and $400 was waived.
For several months in 2009, Towns refused to issue a subpoena for VIP loan documents to Bank of America, a position that became politically untenable after it was revealed in the media in August that year that he himself had two Countrywide loans.
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