As the Senate last week moved to pass President Obama’s financial-regulation overhaul, word came that the Countrywide VIP loan scandal on Capitol Hill had just gotten a whole lot bigger.
And that congressional ethics probers are looking into the dealings of eight House members — including New York Reps. Joseph Crowley and Christopher Lee — who raised significant sums of Wall Street money in the 10 days prior to voting on their version of the reform bill.
Any wonder why voters are cynical?
Rep. Darrell Issa (R-Calif.), who has doggedly pursued the Countrywide scandal despite Democratic stonewalling, disclosed that Senate staffers got 30 cut-rate mortgages as part of the lender’s “Friends of Angelo” — as in Countrywide’s then-President Angelo Mozilo — program.
Fully 12 of those loans went to staffers of Utah Republican Robert Bennett, a Senate Banking Committee member.
The others went to unidentified staffers who identified their employers simply as “US Senator” or “US Senate,” according to company records obtained by Issa.
That’s a dramatic expansion of the scandal, which initially was believed to encompass only Banking Committee members Chris Dodd and Kent Conrad.
Countrywide, of course, was once the nation’s biggest issuer of subprime mortgages — and its collapse helped spark the 2008 financial crisis.
Fully 90% of its loans were bought and/or backed by Fannie Mae and Freddie Mac, of which Dodd — a co-author of the overhaul bill — was the biggest champion.
And, notably, Fannie and Freddie are barely touched by the bill — which does little to end the kind of loose-lending practices, such as those Countrywide engaged in, that ignited the crisis in the first place.
“The pervasiveness of discounted loans and preferential treatment for Senate employees sheds new light on the purpose and policies of Countrywide’s VIP program,” wrote Issa, as he relayed the information to the House Ethics Committee.
That purpose, he said, was to “build relationships with government officials.”
Meanwhile, who knows what the Office of Congressional Ethics will turn up on Crowley, Lee and the others?
Dodd and Conrad — both of whom were found to have violated no Senate rules — were each told before getting their sweetheart deals, according to testimony by a former Countrywide exec: “Who you know is basically how you’re getting in here.”
And what lawmakers get in return seems to determine how Capitol Hill works.
At everyone else’s expense.