The chairman of the House Committee on Oversight and Government Reform is considering an investigation into Countrywide Financial’s questionable lending policies.
Rep. Edolphus Towns (D-N.Y.) said he’ll make an announcement by the end of the week on the possible probe.
Rep. Darrell Issa (Calif.), the panel’s ranking Republican, has been investigating Countrywide’s activities as part of a larger probe into the nation’s housing crisis for more than a year, and has been calling on Towns to open a full committee investigation.
But launching an investigation could prove politically sensitive for Towns, since Issa wants it to focus on Countrywide’s subprime loans to credit-strapped borrowers as well as a VIP program that has embroiled Sens. Chris Dodd (D-Conn.) and Kent Conrad (D-N.D.) in political trouble.
Both senators have been accused of receiving sweetheart deals to finance their properties. They have denied knowing they were part of a preferential program, and Dodd’s office this week again said the senator received loans at market rates.
Towns would not say whether the committee would specifically investigate the allegations against Dodd and Conrad, but indicated an investigation would be wide-ranging if launched.
“If we decide to go ahead, it would be a broad investigation,” he said. “We would take a look at all of this.”
Led by Issa, Oversight Republican investigators issued a sprawling report earlier this month that skewered the policies and activities of lawmakers on both sides of the aisle, as well as housing-industry lobbyists for their role in the housing crisis and the country’s financial collapse.
Issa’s work at first focused on mortgage giants Fannie Mae and Freddie Mac.
“This investigation began more than a year ago based on information we uncovered while investigating Fannie Mae and Freddie Mac,” said Issa spokesman Kurt Bardella. “To this day, the full size and scope of the Countrywide VIP program has not yet been exposed.”
But the minority lacks the ability to subpoena information and testimony, a power only the full committee can wield. An executive at Bank of America, which acquired Countrywide last year, recently told Issa that it would cooperate if Congress subpoenaed details of the VIP loan program. Issa is seeking records from 2000 to 2008.
“We know that documents exist that can reveal the who knew what, who got what and when,” Bardella added. “Bank of America has indicated their willingness to cooperate with our investigation if we provide a subpoena and we have repeatedly asked the majority to join us in this effort. Our committee is uniquely suited to conduct these kinds of investigations and we are hopeful that committee Democrats will join with us so we can move forward with our committee's investigation."
The Countrywide story re-emerged this week after The Associated Press reported that a Countrywide loan officer who handled Dodd's and Conrad’s loans told GOP investigators on the House Oversight Committee, as well as the Senate ethics panel, that both senators were aware they received special deals as VIP borrowers in the “Friends of Angelo” program. Angelo Mozilo, Countrywide’s former chief executive, now faces civil fraud and insider-trading charges for his policies.
Conrad and Dodd repeated this week that they didn’t know they were getting favorable loans from Countrywide. A spokesman for Dodd called the loan officer’s testimony “old news” and said Dodd had received loans at market rates.
Rep. Dennis Kucinich (D-Ohio), who chairs the domestic policy subcommittee on the Oversight panel, declined to comment about a potential full-committee investigation, citing “tangential issues” that are still being worked through.
Other Democrats on the panel, including Rep. Lacy Clay (D-Mo.), believe a broad investigation is overdue.
“An investigation is required — not just on favoritism but on the way they cheated a lot of people — my own constituents,” he said. “They gave them loans that they knew they couldn’t afford [to] pay off.”
When asked why the committee hasn’t launched an investigation into Countrywide yet, Clay said: “We probably haven’t gotten around to it.
“We have a lot of fish to fry,” he added.