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Records on Countrywide's VIP Loans Subpoened

Source: John Emshwiller, WSJ

Posted on 17 Feb 2011

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Backed by the increased powers Republicans have as the new majority in the chamber, the new chairman of the House oversight committee, is renewing and expanding a high-profile investigation into a controversial mortgage program operated by Countrywide Financial Corp.

Rep. Darrell Issa (D-CA) said Wednesday he had issued a new subpoena for information on Countrywide's so-called VIP lending program, which in some cases provided loans on favorable terms to public officials and other influential figures. He issued the subpoena to Bank of America Corp., which purchased Countrywide in 2008.

This latest action is a follow-up to a subpoena issued by the House committee in 2009 when Democrats were in the majority and the panel was headed by Rep. Edolphus Towns (D-NY).

However, the wording of the new subpoena indicates that—unlike with the original subpoena—the oversight committee will get the names of any current members of Congress who received VIP loans. Under the previous subpoena, such information would have gone to the House ethics investigators, who generally don't identify whom they are investigating. The original subpoena automatically expired at the end of the previous Congress.

"The American people have a right to know the totality of who participated in Countrywide's VIP program and what they did in return for access to it," said Mr. Issa in a prepared statement announcing the subpoena.

A Bank of America spokesman said the bank is "obliged by Congress to respond to this subpoena." He added that Bank of America discontinued the VIP loan program when it purchased Countrywide in July 2008 and said it has never had any such program itself.
In late 2008, Mr. Issa, then the ranking Republican on the oversight committee, began delving into the Countrywide VIP program. However, for a time,

Mr. Towns, who was then the chairman of the committee, refused to issue a subpoena to obtain VIP records.

In August 2009, the Wall Street Journal ran an article saying public property records suggested that Mr. Towns had himself received two VIP loans from Countrywide. At the time, Mr. Towns, through a spokeswoman, said he was unaware whether his loans had come through the VIP program. He also said his decision not to issue a subpoena wasn't connected to his mortgages.

Later in 2009, Mr. Towns agreed to issue a subpoena for VIP records. On Wednesday, a spokesman for Mr. Towns didn't return a call seeking comment.

That original subpoena has provided some information. Last July, for example, Mr. Issa revealed that U.S. senators or Senate employees received 30 VIP loans, a far larger number than had previously been known. The names of the individuals weren't disclosed.

As reported, Sen. Kent Conrad (D., N.D.) and former Sen. Christopher Dodd (D., Conn.) received loans through the VIP program. Both denied wrongdoing and both were cleared by Senate ethics investigators.