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.