Two Democratic Party senators, Chris Doss and Kent Conrad have been “caught” receiving Sub-Prime “VIP” Loans from lender Countrywide Inc. The Loans were at favorable interest rates. Despite the fact that the lender has testified that both men knew that they were getting a sweetheart deal, Senator Dodd claims he didn’t know he was getting favorable rates.
This revelation came from Robert Feinberg, the official who handled their loans in testimony to congress. According to the Washington Post:Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad’s two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.
Robert Feinberg, who worked in Countrywide’s VIP section, told congressional investigators last month that the two senators were made aware that “who you know is basically how you’re coming in here.”
“You don’t say ‘no’ to the VIP,” Feinberg told Republican investigators for the House Oversight and Government Reform Committee, according to a transcript obtained by The Associated Press.
California Republican Darrell Issa, has been trying for months to get Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee to subpoena Bank of America for Countrywide’s records (BOA bought Countrywide). Issa wants to know the details of the two loans above, but also to find out who else in congress got the VIP treatment. So far Towns has resisted preferring to stonewall any investigation:
Democrat resists subpoenaing VIP mortgage records
By LARRY MARGASAK
WASHINGTON (AP) – House Democrats have declined to subpoena available records that might reveal whether other members of Congress got discounted VIP mortgages from subprime lender Countrywide Financial Corp. similar to the sweetheart deals given Democratic Sens. Chris Dodd and Kent Conrad.
Republicans say they are willing to risk that the records now held by Bank of America may show that GOP lawmakers were also “friends of Angelo” who got preferential terms on personal mortgages at the behest of then-Countrywide CEO Angelo Mozilo.
Countrywide, after losing billions of dollars on defaulted subprime loans that triggered last year’s financial crisis and the consequent recession, was taken over by Bank of America a year ago.
Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee, said he has other work to do on the causes of and fixes for the financial crisis and will not interfere with other investigations of the VIP loans.
Towns’ committee in recent months has focused on how much pressure the Federal Reserve and former Treasury Secretary Henry Paulson put on Bank of America to take over brokerage giant Merrill Lynch, another financial company with losses in the billions of dollars.
The senior Republican on Towns’ committee, California Rep. Darrell Issa, has been trying for months to get Towns to subpoena Bank of America for Countrywide’s records. He said in an interview with The Associated Press that he asked Towns again this week to issue the subpoena.
Any subpoena must be issued by the committee’s chairman. But because Democrats control Congress, there are no Republican committee chairmen. Speaker Nancy Pelosi said through a spokesman Thursday that neither she nor her staff discussed the subpoena with Towns.
Daniel Frahm, a Bank of America spokesman, said the bank is ready to turn over the Countrywide VIP documents if it receives a subpoena. The bank’s lawyer sent Issa the same message in a June letter.
“They have it packed and ready to go,” Issa said in the interview.
The AP reported earlier this week that the Countrywide loan officer who handled the VIP mortgages for Dodd and Conrad provided secret testimony last month to the Senate Ethics Committee and Issa’s committee staff investigators about the loan arrangements with the two senators.
Dodd, of Connecticut, chairs the Senate Banking Committee, which oversees the housing and financial industries and is helping shepherd President Barack Obama’s health care program in the Senate. Conrad, of North Dakota, chairs the Senate Budget Committee.
Others who have been found in the VIP program: Postmaster General John Potter; James Johnson, a former head of Fannie Mae who later stepped down as an adviser to Obama’s presidential campaign; and Franklin Raines, who also headed Fannie Mae. Still other “friends” include retired athletes, a judge, a congressional aide and a newspaper executive.
Issa said a subpoena is the only way to learn the full story of how the VIP program “was used as a tool by Countrywide to buy influence and who was involved.”
“It’s well over a year that this (the Countrywide VIP program) has been known to be going on. We know only a fraction of the names who sought or accepted preferential treatment,” he said. “You can’t do government oversight if you protect your friends.”
Towns said his committee is now focused on overseeing the $787 billion stimulus program aimed at helping bring the country out of the recession and investigating what role the lack of government oversight played in the financial crisis.
He said the Countrywide VIP program “is the subject of current proceedings before the Justice Department and Senate Ethics Committee and it is not appropriate for the committee to interfere with those proceedings.”
Both Dodd and Conrad denied seeking special terms. Dodd’s mortgages were for residences in Connecticut and Washington; Conrad’s were for a Delaware beach house and an eight-unit apartment building in Bismarck, N.D.
Dodd insists he did not receive special treatment because similar rates were available from other lenders. Conrad, after initially denying that he received discounts, changed course after reviewing documents showing he got special treatment. He announced he was donating $10,500 to charity and refinancing the loan on the apartment building with another lender.
Robert Feinberg, who worked in Countrywide’s VIP section, told both Issa’s investigators and the Senate Ethics Committee that Dodd and Conrad were made aware that they were getting special deals on their mortgages.
The Ethics Committee’s investigation is limited to whether the two senators violated standards of conduct, and the committee has no jurisdiction beyond investigating senators or Senate employees.
It is unclear whether the Justice Department is still investigating Dodd, Conrad or the Countrywide VIP program. Elana Goldstein, one of Feinberg’s lawyers, said Justice Department prosecutors interviewed Feinberg last October but have not contacted her or her client since then.