Panel Split on Need to Probe VIP Loans
OCTOBER 2, 2009.
By JOHN R. EMSHWILLER
A congressional battle is heating up over whether to subpoena records of Countrywide Financial Corp.'s controversial VIP mortgage program.
Rep. Edolphus Towns, the Brooklyn Democrat who is chairman of the House Oversight and Government Reform Committee, reiterated in a Sept. 30 letter to panel members his opposition to Republican calls to subpoena the VIP program's records. In the letter, Mr. Towns, who public mortgage documents indicate received two Countrywide VIP loans, likened the program to "a customer loyalty" initiative, "similar to airline frequent flier programs or supermarket discount cards."
The letter followed a Sept. 29 letter from the panel's ranking Republican, Darrell Issa of Southern California, seeking support from committee members for subpoenaing the records from Bank of America Corp., which purchased Countrywide last year. Mr. Issa's letter said the VIP program "engaged in a systematic campaign to buy influence" from public officials, and the subpoena is needed to determine the extent of that effort. A spokesman for Mr. Issa said the congressman was close to gaining majority support on the panel for a subpoena. A spokeswoman for Mr. Towns didn't return requests to comment.
In his letter, Mr. Towns noted that the Senate Ethics Committee had looked into the VIP program in connection with loans obtained by Democratic Sens. Chris Dodd and Kent Conrad. That committee determined the senators, who denied any wrongdoing, hadn't violated ethics rules.
Mr. Towns wrote that his staff's review of the VIP program didn't find evidence of special favors to government officials. The letter didn't say what the review entailed. His letter also noted that there is a Justice Department criminal investigation of Countrywide. It added that of 28,000 VIP program borrowers, "the vast majority" were private citizens and not government officials.
Mr. Towns's letter didn't mention the two loans he received from Countrywide in 2003. In August, The Wall Street Journal reported that the public mortgage documents from the two loans indicated that both had gone through Countrywide's VIP unit. At the time of the Journal story, Mr. Towns's spokeswoman said his decision not to issue a subpoena had nothing to do with his Countrywide mortgages. She said that if Mr. Towns received VIP loans, it was without his knowledge, and he didn't believe he received any favored treatment from Countrywide.
Write to John R. Emshwiller at john.emshwiller@wsj.com
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