House Ethics Probe of Countrywide Financial Loans to Lawmakers Comes up Empty

Tuesday, January 01, 2013
Former Countrywide CEO Angelo R. Mozilo

Lawmakers who have been the subject of congressional investigations for possible VIP treatment from California-based Countrywide Financial, a firm at the heart of the mortgage meltdown in 2008, got a clean bill of health from the House Ethics Committee last week.

The panel echoed findings by the Senate Ethics Committee that found mistakes were made in “serious matters” and some questionable behavior was beyond its jurisdiction, but that no violations of formal ethics rules were committed. Many of those accused are no longer lawmakers or staffers.

The House panel was tidying up what probably marks an end to the string of inquiries, six months after the House Oversight and Government Reform Committee, chaired by Representative Darrell Issa (R-California), released its 114-page report that found Countrywide had made 29 loans to 12 members of Congress and their staff.   

Issa did not name names in his report, but five House names surfaced: California Republicans Elton Gallegly, Tom Campbell and Buck McKeon, Texas Republican Pete Sessions, and Democrat Edolphus Towns. Democratic Senators Kent Conrad and Chris Dodd were also named.

Countrywide CEO Angelo R. Mozilo operated a program called “Friends of Angelo,” which offered special deals to special people. But the House ethics panel found that while some of those investigated had received special treatment, they had not received the best deals available and were therefore not in violation of the rules.

Bank of America bought Countrywide in 2008 for $2.5 billion. It was known to be damaged goods, but BofA was apparently unaware how damaged. Acquisition of Countrywide cost the bank $40 billion, according to the Wall Street Journal, via losses on real estate holdings, legal expenses and settlements with state and federal regulators.

Mozilo paid $22.5 million in fines to the U.S. Security and Exchange Commission in 2010 over allegations he misled investors as the subprime mortgage mess developed. As part of the settlement, Mozilo was barred from serving in a top position with a public company.   

–Ken Broder


To Learn More:

Lawmakers in VIP Loan Program Violated No Rules, House Panel Says (by Jim Puzzanghera, Los Angeles Times)

House Ethics Closes Countrywide Probe without Taking Action (by Peter Schroeder, The Hill)

Oversight Report: Countrywide Offered Mortgage Discounts to Lawmakers, Staff (by Russell Berman and Peter Schroeder, The Hill)

Members of Congress Received “VIP” Loans from Countrywide (by Noel Brinkerhoff, AllGov)

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