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Lawmakers who accepted VIP loans cleared by House panel

Ethics Committee says participants in special Countrywide program violated no rules.

December 29, 2012|Jim Puzzanghera
  • The U.S. House Ethics Committee found no rules violations by lawmakers who used a VIP loan program, also known as "Friends of Angelo," a reference to former Chief Executive Angelo Mozilo, seen in Van Nuys in 2010.
The U.S. House Ethics Committee found no rules violations by lawmakers… (Irfan Khan, Los Angeles…)

WASHINGTON — The House Ethics Committee has found no rules violations by lawmakers who used a VIP loan program from Countrywide Financial Corp.

The committee's leaders said its investigation largely led to the same conclusions as the Senate Ethics Committee, which determined in 2009 that there was "no substantial credible evidence" that two of its members had broken rules by accepting loans through the special program.

Although the House Ethics Committee likewise cleared members of that body, committee Chairwoman Jo Bonner (R-Ala.) and top Democrat Linda T. Sanchez of Lakewood said in a statement that there were serious concerns about some allegations against House staffers.

Emails among the 2,000 pages of documents reviewed by the committee showed that some staffers "may have reached out to lobbyists or other government affairs officials at Countrywide for assistance with their personal loans."

For The Record
Los Angeles Times Tuesday, January 01, 2013 Home Edition Main News Part A Page 4 Local Desk 1 inches; 35 words Type of Material: Correction
Countrywide loans: An article in the Dec. 29 Business section about former Countrywide Financial Corp.'s VIP loan program referred to Rep. Jo Bonner (R-Ala.) as the House Ethics Committee chairwoman. Bonner is the committee's chairman.

Those contacts could have led to further investigation and possible disciplinary action against the staffers, the statement said. But the actions, like other allegations, fell outside the committee's jurisdiction because too much time had passed and some of the people involved no longer worked for the House.

There was no credible evidence of any such contact by House members, the committee leaders said.

Countrywide's VIP program -- also known as "Friends of Angelo," a reference to former chief executive Angelo R. Mozilo -- offered special treatment on mortgages.

The former Calabasas lender, acquired by Bank of America, helped fuel the subprime mortgage boom. Mozilo worked to cultivate relationships in Washington, and several lawmakers and staffers got mortgages through the VIP program.

After an investigation last year, Rep. Darrell Issa (R-Vista), who chairs the House Oversight and Government Reform Committee, alleged "possible wrongdoing" by four House members and some staffers for purportedly receiving discounted loans.

Issa did not identify the lawmakers, but three names later surfaced: Reps. Elton Gallegly (R-Simi Valley), Howard "Buck" McKeon (R-Santa Clarita) and Edolphus Towns (D-N.Y.).

Gallegly and Towns did not seek reelection this year. McKeon was reelected in November. Spokespeople for McKeon and Gallegly did not have any comment. A spokesman for Towns did not respond to requests for comment Friday.

The House Ethics Committee statement said that people in the VIP program appeared to be offered "quicker, more efficient loan processing and some discounts." But the committee said evidence showed those discounts "were not the best deals that were available at Countrywide or in the marketplace at large."

Because participation in the program "did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders," it was not a violation of House rules to participate, according to the Ethics Committee.

But Bonner and Sanchez in a statement provided guidance to their colleagues and House staffers about how to avoid "even the appearance of impropriety" when encountering such programs: If a lawmaker or staffer believes there was "an explicit connection between their position and some personal business transaction," they should "take steps to ensure they are being treated no differently than a member of the public."

Issa said that although the Ethics Committee took no action, its statement that some actions by staffers could have warranted disciplinary action "clearly indicated that Countrywide's efforts were inconsistent with House rules."

"While short of formally determining a violation, this sends an unmistakable warning to any entity that might try to duplicate Countrywide's lobbying strategy," Issa said.

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jim.puzzanghera@latimes.com

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