The House Ethics Committee has decided to close its investigation into preferential mortgages doled out under a controversial VIP program without taking any action.
The panel said it was not taking any action on members who received more affordable mortgages under the program, instituted by the now-defunct Countrywide Financial because while allegations surrounding the program and lawmakers involved "serious matters," they largely fell outside its jurisdiction.
For example, many of the allegations pertain to actions outside the Ethics Committee's statute of limitations — greater than three Congresses ago — and many of those accused are no longer working in Congress either as members or staffers.
Nonetheless, Chairman Jo Bonner (R-Ala.) and ranking member Linda Sanchez (D-Calif.) took the opportunity to underscore what is and is not permissible behavior by lawmakers and their staffs when it comes to personal financial decisions.
"If a Member, officer, or employee has reason to believe there was such an explicit connection between their position and some personal business transaction, it is incumbent on that Member, officer, or employee to take steps to ensure they are begin treated no differently than a member of the public who is similarly situated," they wrote in a joint statement.
The two noted that there is a "wide range" of possible steps in this regard. For example, Rep. Pete Sessions (R-Texas) made explicitly clear that he did not want any preferred rates on his mortgage from Countrywide. But lawmakers need not "suffer financially" simply because of their status as public officials under Ethics guidelines; rather, they simply must receive "reasonable assurances or certifications" that their negotiations are being conducted as they would with any comparable person not working in Congress, the two said.
The members also issued a memo to the House, reiterating the rules prohibiting the use of an official position for personal financial gain.
The statement draws to a close one of the broader scandals to involve Congress in recent years. A range of lawmakers in both chambers were accused of improper activity surrounding Countrywide's VIP program, dubbed the "Friends of Angelo" program after its disgraced former CEO, Angelo Mozilo.
The House Oversight Committee issued a sweeping report in July, which found Countrywide used its VIP program to provide preferential treatment to members of Congress, their staffers and other government officials, while at the same time lobbying Congress and regulators on pertinent issues.
Among the lawmakers receiving VIP loans were Sen. Kent Conrad (D-N.D.), former Sen. Chris Dodd (D-Conn.), Rep. Buck McKeon (R-Calif.), Rep. Edolphus Towns (D-N.Y.) and a senior staffer for former Sen. Bob Bennett (R-Utah). Sessions also had a loan processed by Countrywide's VIP team, but did not receive a discount at his request.
The report found that in total, the Countrywide VIP unit made 29 loans to 12 different members of Congress and staff, as well as officials at the Department of Housing and Urban Development and Fannie Mae.
The Ethics Committee said there was no evidence to suggest that members or staff were aware of their VIP treatment, save for one exception "well outside the Committee's jurisdiction."
However, the panel said their "greatest concern" was emails indicating that some employees may have reached out to lobbyists or others at Countrywide for help with personal loans, although those too fell outside the committee's reach.
"Had any of these actions occurred within the Committee's jurisdiction, further investigations would have been conducted that may have led to disciplinary action against these staffers or former staffers," they wrote. "Every member of the House community should understand that, when your relationship with a representative of a particular business or outside organization is based on your power to affect that person's organization, and their efforts to influence you or your office in the exercise of that power, that is a relationship that should never be used for your personal benefit."
Bank of America purchased the mortgage lender in 2008 for $2.5 billion, after it faced trouble following the subprime mortgage crisis. And Mozilo paid a record $22.5 million penalty to the Securities and Exchange Commission (SEC) in 2010 to settle charges he and other Countrywide executives misled investors as that housing crisis developed. Mozilo is barred from ever again serving as an officer or director of a public company.