Two Democrats buck Rep. Towns, call for Countrywide probe

Two junior Democrats are urging their leaders to open an investigation into the Countrywide VIP mortgage program.

Rep. Paul Hodes (N.H.), who is in his second House term, and freshman Rep. Mike Quigley (Ill.) called on the House Oversight and Government Reform panel to initiate an investigation into Countrywide Financial’s “Friends of Angelo” VIP program and whether it was used to gain influence over federal officials.

They made their case for the investigation in a letter to Rep. Edolphus Towns (D-N.Y.), the panel’s chairman, and Rep. Darrell Issa (R-Calif.), the ranking member.

Towns has stood firmly against opening an investigation in the face of months of pressure from Issa and Republicans.

Towns, who received two mortgage loan from Countrywide unit that processed VIP loans but insists he received no special favors, has said he does not want to interfere with a Justice Department probe into the matter.

“The American people deserve to know the truth about these lending practices, and if they had undue influence on federal housing or financial policy based on awarding VIP loans to federal officials,” wrote Hodes and Quigley. “We look forward to working with you to undertake a thorough investigation of this program and provide transparency and answers for our constituents.”

The letter went on to say that the Committee needs to gain access to all documents related to the VIP program, including the details of Countrywide loans taken out by federal employees, any correspondence with federal employees or administrators of the program, and any and all records of internal correspondence among Countrywide employees relating to eligibility or potential for inclusion of any federal employees in the program.

Information relating to members of Congress should be referred to the appropriate investigative bodies, as investigating lawmakers is not within the Oversight Committee’s jurisdiction, they said. 

“However, members of Congress must ultimately be subject to the same level of scrutiny as all other government officials,” they wrote. “We hope that this initial inquiry can lead to a broader investigation by the committee on whether or not any other mortgage lenders carried out similar programs with the goal of influencing public officials.”

House Democrats are worried that a number of members, including prominent Democrats, could be implicated in an investigation. This could create a far-reaching scandal similar to the House banking controversy of the early 1990s, when it was revealed that the House allowed members to overdraw their House checking accounts without being penalized by the bank. The scandal implicated 22 members.

The Senate Ethics Committee has already investigated two Democratic senators, Christopher Dodd (Conn.) and Kent Conrad (N.D.), but ultimately determined the pair did not knowingly receive favorable loan terms.

It’s unclear whether Hodes and Quigley’s letter forces Towns’s hand on the matter of issuing subpoenas.

Issa has been threatening to force a vote on issuing subpoenas to Countrywide all week. Democrats canceled a markup Tuesday because of the threat, leading the GOP to videotape their empty committee seats. They later found the Committee Democrats streaming out of another room, and posted the video of the empty seats with “Hit the Road, Jack” as the theme song on their panel’s minority webpage.

Hodes wouldn’t say whether he would vote yes or no on a subpoena vote right now, but noted in a brief interview with The Hill that a thorough investigation would require subpoenas. Quigley has indicated that he supports subpoenas.

If Hodes and Quigley voted yes, Issa could pass any vote for subpoenas in the national security and foreign affairs subcommittee of the panel the next time it meets.
Issa has the support of all Republicans on the full committee on the subpoena issue.

Quigley told The Wall Street Journal that he believes the Oversight committee should forward to the House ethics panel all the names on the VIP list that turn up from any subpoenas issued. The Oversight panel also could direct members to send the results of the subpoenas directly to the ethics committee without the Oversight panel receiving the information on lawmakers first.

Countrywide, now owned by Bank of America, was reported to have given VIP loans and treatment to lawmakers and officials at the federal and local level who were in a position to influence policy affecting the mortgage giant. Issa has repeatedly reminded committee Democrats that Bank of America officials had said they would turn over records on the VIP program — but only in response to a subpoena.