WASHINGTON (Legal Newsline) -- California Rep. Darrell Issa says some key legislators benefited from discounted Countrywide Financial loans.
Issa, a Republican who is chairman of the House Oversight and Government Reform Committee, issued a report Thursday about the Committee's three-year long investigation into Countrywide Financial's practice of making discounted mortgages to Washington's politically powerful.
The report said Countrywide used its VIP Program to advance its interests and to cement ties with the taxpayer-sponsored home mortgage enterprise the Federal National Mortgage Association - more commonly known as Fannie Mae.
"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," Issa said. "A former lobbyist for Countrywide testified that Members of Congress, staff, and other government officials were directed to the company's VIP program as part of an effort to create a favorable impression of the company on Capitol Hill.
"This preferential treatment - that varied depending on the influence of the borrower - was not routinely offered to the public.
"In addition, this report sheds new light on Countrywide's relationship with Fannie Mae and how Countrywide used its VIP Program to cement its ties to its taxpayer backed business partner. Other than Countrywide, no other entity's employees received more VIP loans than Fannie Mae.
"Even as Countrywide's CEO Mozilo mocked Fannie Mae and top executives for its crony capitalism business model, he would nonetheless personally intercede to ensure executives had access to discounted Countrywide loans. These relationships helped Mozilo increase his own company's profits while dumping the risk of bad loans on taxpayers."
The report found that between "January 1996 and June 2008, Countrywide's VIP loan unit made hundreds of loans to current and former members of Congress, congressional staff, high ranking government officials, and executives and employees of Fannie Mae, including Chairmen James "Jim" Johnson, Franklin Raines, and Daniel Mudd. VIPs who worked at Fannie Mae enjoyed expedited loan processing and pricing discounts. Countrywide also waived company guidelines for Fannie Mae's senior executives to a greater extent than it did for 'regular' VIPs."
This is important because Fannie Mae and Countrywide opposed reform legislation that would have "diminished Fannie Mae's ability to acquire and hold subprime mortgages originated by Countrywide." Countrywide lobbied against predatory lending bills and documents indicate that VIP loans were granted to several members of Congress and their staff who worked on that legislation.
The committee also learned that Countrywide's gave VIP loans to former Senate Banking Committee Chairman Christopher Dodd (D-Conn.); Senate Budget Committee Chairman Kent Conrad (D-N.D.); and Mary Jane Collipriest, Communications Director for former Senator Robert Bennett, (R-Utah) who served on the Banking Committee.
Other names mentioned include, Congressmen Howard "Buck"McKeon (R-Calif.); Pete Sessions (R-Texas); Edolphus Towns (D-N.Y.); Elton Gallegly (R-Calif.), Rep. Tom Campbell (R-Calif.) and two former Secretaries of Housing and Urban Development received VIP loans - Bush administration's Alphonso Jackson and Clinton's Henry Cisneros.
Clinton's Secretary of Health and Human Services Donna Shalala was referred to the VIP unit as well.
Sessions however, "requested not to receive a discount from Countrywide. Countrywide commemorated Sessions' request in internal e-mail. Countrywide did not apply the standard VIP discount to Sessions' loan."
It must be noted that the report says, "Senator Christopher Dodd claimed not to be aware that he was enrolled in Countrywide's VIP loan program. In fact, Dodd 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."
It also must be noted that Fannie Mae's former CEO, Franklin D. Raines, said in testimony before the Committee Dec. 2008, that "I did not [get any preferential treatment] in terms of the terms of my mortgage," and "I am unaware of any preferential treatment."
The report said that there were a total of 29 Countrywide VIP loans made to 12 different Members of Congress and staff.
I cannot say I am surprised but certainly it shows how inappropriate it was for any member of Congress to receive a favorable loan from a financial institution," said Hans von Spakovsky Manager of the Heritage Foundation's Civil Justice Reform Initiative.
Regarding the congressional testimony by Franklin Raines in which he denied receiving favorable treatment by Countrywide von Spakovsky said it possible that the committee should inquire as to the possibility of perjury by Raines.