CREW URGES SENATE AND HOUSE ETHICS INVESTIGATIONS INTO COUNTRYWIDE “VIP” LOAN PROGAM

13 Jun 2008 // In light of a news report detailing favorable loan terms given to current and former public officials by Countrywide Financial, Citizens for Responsibility and Ethics in Washington (CREW) wrote to both the Senate and House Ethics Committees asking for investigations into members of Congress that may have received loans in violation of existing gift bans.

According to Portfolio.com, Countrywide had a “V.I.P.” program that waived points, lender fees, and company borrowing rules for prominent people, including at least two members of the U.S. Senate, Senator Christopher Dodd (D-CT) and Senator Kent Conrad (D-ND).

In 2003, Sen. Dodd received two loans under the program: $506,000 to refinance his Washington, D.C. home and $275,042 to refinance a Connecticut home. Countrywide waived three-eighths of a point on the first loan and one-fourth of a point on the second. The interest rate on the loans, which both started at 4.875% was reduced to 4.25% on the Washington home and 4.5% on the Connecticut home by the time the term of the loans began to run.

In 2004, Sen. Conrad borrowed $1.07 million to refinance his vacation home, a loan for which Angelo Mozilo, Countrywide’s chief executive, ordered a Countrywide employee to “take off 1 point.” Later that year, Sen. Conrad refinanced an eight-unit apartment building he owned with his brothers in North Dakota. A former Countrywide employee told Portfolio that the loan violated Countrywide’s normal policy of providing loans only for buildings containing four or fewer units. An April 23, 2004 email from Countrywide’s CEO Anthony Mozilo told an employee to “make an exception due to the fact that the borrower is a senator.”

Although there is no evidence that either Sen. Dodd or Sen. Conrad were aware they were receiving special treatment from Countrywide, their receipt of the unusually favorable loans creates exactly the sort of appearance of impropriety that the gift rule was designed to address.

Moreover, given that “loans” are included in the definition of “gifts” in the Senate ethics manual, if they knew they were receiving loans from Countrywide on terms generally not available to the public, Sen. Dodd and Sen. Conrad may have violated Senate gift rules.

CREW asked that the Senate Ethics Committee investigate Senators Dodd and Conrad, and that both the Senate and House Ethics committees look into whether any other members of Congress received similarly favorable loans from Countrywide. CREW also suggested the committees consider creating a system to review loans applied for by members, or create guidelines to ensure that loan terms meet the requirements of the gift rule.