CREW has written 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 in light of a news report detailing favorable loan terms given to current and former public officials by Countrywide Financial. The letter can be found here.

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 has 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.

Melanie Sloan, executive director of CREW, said:

Today’s story raises more questions than it answers. Did Senators Dodd and Conrad know they were getting particularly favorable loans? Were the terms of the loans too good to be true? Should the terms have raised a red flag for the senators? Is this the tip of the iceberg? Are there other public officials who received similarly beneficial loans? The fact that senators may have unknowingly received loans on terms not available to the public suggests that members of Congress need a way to vet their loans. The ethics committees should pro-actively establish such a vetting process or at least guidelines for members of Congress seeking loans. The public needs to have confidence that members of Congress are not taking advantage of their elected positions to get better deals on their mortgages.

Given the current crisis swirling in the nation's mortgage market, today's blockbuster from Conde Nast's Portfolio is going to require some additional investigation . CREW will be weighing in shortly:

Two U.S. senators, two former Cabinet members, and a former ambassador to the United Nations received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.

Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents and emails and a former employee familiar with the loans.

Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.

Yesterday, the controversial Secretary of Housing and Urban Development, Alphonso Jackson, announced his resignation. Melanie Sloan appeared on CNN to discuss Jackson's ethical woes:

Alphonso Jackson, the Secretary of the Department of Housing and Urban Development (HUD) is expected to announce his resignation later today.  As we've reported, Jackson has been at the center of numerous investigations, including an FBI investigation.

MSNBC has the latest update: 

Housing and Urban Development Secretary Alphonso Jackson is resigning, a government official said Monday. 

The official did not disclose the reason for the resignation and spoke on condition of anonymity because the announcement had not yet been made. The department has scheduled a 10 a.m. announcement.

The news about Jackson's resignation was first reported by The Wall Street Journal.

Jackson is under criminal investigation at the same time the housing industry is in a crisis so serious that it has imperiled the nation's credit markets, placing the country on the brink of what some economists predict will be a major recession.

Chances are this won't be the last news we hear about Mr. Jackson. 

Our friends at TPM Muckraker led us to National Journal's extensive report on the controversy swirling around the Bush Administration's Secretary of Housing and Urban Development:

In February 2004, a lobbyist named Scott Keller joined Housing Secretary Alphonso Jackson as his deputy chief of staff. Over the next three years, Keller became Jackson's indispensable man -- his "right arm," insiders say -- at the Housing and Urban Development Department. In January, President Bush nominated Keller to be HUD's assistant secretary for congressional and intergovernmental relations. But his nomination languished in the Senate, and Keller resigned from the department in August.

Keller, 37, resumed his lobbying career and says he left HUD under his own steam to provide for his family. But at the same time, sources say, the former Jackson aide has emerged in recent months as a central figure in the government's criminal investigation of the HUD secretary. In one instance, Keller played an important role in a decision by the Housing Authority of New Orleans, or HANO, which is controlled by HUD, to award a $127 million redevelopment project to a team that included an Atlanta company, Columbia Residential. That firm has significant financial ties to Jackson: It owes him between $250,000 and $500,000 "for past services," according to the HUD secretary's public financial disclosure reports.

Separately, according to people familiar with the investigation, federal agents are closely examining whether Keller aided Jackson in arranging lucrative housing work for two of Jackson's close friends. One of them got work at HANO, and the other received a contract to manage the Virgin Islands Housing Authority. Last month, a federal agent served a search warrant at Keller's home in Alexandria, Va., the sources said.

Keller declined to comment for this story. But two months ago, he suggested in an interview that the investigation was much ado about nothing. Maybe so, but the fact is that Jackson now faces the biggest crisis of his career. Investigators from HUD Inspector General Kenneth Donohue's office, FBI agents, and Justice Department prosecutors are examining whether Jackson lied when he testified that he never intervened in HUD contracting. During an earlier inquiry, Jackson declared under oath to HUD investigators in July 2006 that he did not "mess" with contracts. And testifying in May before the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, the HUD boss said, "I don't touch contracts."

Last spring, CREW examined executive branch corruption in our report, Criminals & Scoundrels: The 25 Most Corrupt Officials in the Bush Administration.  There were plenty to choose from to make that list.  Based on news reports, it looks like there is one more candidate -- the Secretary of Housing and Urban Development:

The FBI is examining the ties between Housing Secretary Alphonso Jackson and a friend who was paid $392,000 by Jackson's department as a construction manager in New Orleans, three federal law enforcement officials said Thursday.

Jackson's friend got the job after the HUD secretary asked a staff member to pass along his name to the Housing Authority of New Orleans, a spokesman for Jackson said in a statement.

At the time, the housing authority was in desperate need of a construction manager because there was a severe shortage of reputable local contractors after Hurricane Katrina, the spokesman for Jackson said.

The inquiry was first reported by The National Journal, which identified the contractor as William Hairston of Hilton Head Island in South Carolina. The magazine's Web site said Hairston and Jackson are social friends and golfing buddies.