Congress Covers Up Countrywide Loan Scandal

Indicating an extensive cover-up effort, the chairman of the U.S. House’s main investigative committee has blocked subpoenas to obtain records of a special mortgage program for the politically connected because he too benefitted from it. 

As chairman of the powerful Committee on Oversight and Government Reform, New York Democrat Edolphus Towns is supposed to investigate federal wrongdoing not cover it up. This is why it seems suspicious that the 26-year congressional veteran has ardently rebuffed efforts to obtain records involving a controversial program that offered heavily discounted loans to politically influential figures like him.

The secret low-mortgage rate deals were part of a VIP program available only to powerful friends of the now-defunct bank’s (Countrywide Financial Corp.) crooked Chief Executive Officer, Angelo Mozilo, a key player in the nation’s subprime-mortgage meltdown who has been charged with fraud and insider trading. 

When Countrywide’s bad mortgages inevitably led to its collapse, the shady undercover deals were exposed and triggered investigations by two congressional committees because numerous lawmakers were involved. Among them is a pair of high-profile Democratic U.S. Senators (Christopher Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee and North Dakota’s Kent Conrad, chairman of the Senate Budget Committee) who recently said the perk was merely a courtesy similar to frequent flyer miles offered by airlines.

In an effort to fully investigate all the players involved in the unethical deals, members of Congressman Towns’ investigative committee proposed subpoenaing bank records. Towns has gone out of his way to make sure that doesn’t happen, probably because he received two Countrywide loans, according to the newspaper that broke the story this week.

A former Brooklyn social worker and community activist, Towns was conveniently unavailable to comment on his deals but his spokesman assured that if the loans came through the VIP program “it was without his knowledge.” As far as the veteran legislator knew, his spokesman said, he was just getting a loan as a “regular person.” 

Towns and senators Dodd and Conrad are hardly the only high-profile politicians to benefit from the questionable secret mortgages that many—including President Obama—blame for infecting the economy and creating a home foreclosure crisis. A top Obama advisor and longtime Democratic Party power player (James Johnson) received millions under Mozilo’s VIP program and so did George W. Bush’s Secretary of Housing and Urban Development (Alphonso Jackson), Bill Clinton’s Secretary of Health and Human Services (Donna Shalala) and Jimmy Carter’s assistant Secretary of State (Richard Holbrooke).