Senate Ethics Committee investigates VIP loans

Friday, July 16th, 2010 By

Countrywide

The VIP loans Countrywide made in 2002 and 2003 are sparking ethics investigations. Image The Truth About/Flickr.

Several Washington D.C. lawmakers have been caught up in an ethics investigation over VIP cash loans given to their staffs. These “VIP” or “sweetheart” loans were all made by Countrywide, which was recently purchased by Bank of America. These VIP cash advances may end up causing ethical or legal problems for a few senators.

Countrywide’s VIP loans

In documents recently released by Bank of America, it was revealed that Countrywide wrote a huge number of “sweetheart” loans. These low interest rate, no credit check loan products appear to have been targeted to senators’ staffs. Republican Senator Issa, who filed an ethics complaint stemming from these loans, points out a “high concentration” of loans to D.C. staffers. The theory is that Countrywide wrote these fast cash loans in hopes of influencing Senator’s staff members and the Senators. The loans were made mostly in 2002 and 2003.

Ethics complaints over loans

Senator Issa filed the ethics complaints against several senators. Last year, Senator Dodd and Senator Conrad were both “scolded” by the Ethics Committee. These two senators were told to “be more careful to avoid the appearance of favoritism from Countrywide.” Despite the scolding, both senators were cleared of actual rules violations. Senator Robert Bennett has been named in the most recent ethics complaint. Twelve of the 30 named “VIP loans” went to members of his staff.

Naming the loan recipients

The Senate Committee on Oversight and Government Reform is doing the latest investigation on Countrywide VIP cheap loans. A subpoena has been issued to Bank of America to provide all loan documents where the VIP loan department issued loans to borrowers who listed “U.S. Senate” as their employer. Thus far, Bank of America has provided 37,000 documents related to Countrywide and their lending practices. If the loan recipients are actually named, it could be a serious issue in upcoming elections.

Senator Burnett responds

Republican Senator Burnett, who is not running for re-election, has responded in detail to the ethics complaint filed against him. In short, Senator Burnett said that he does not make it a point to find out where his staffers do their banking. Mortgages and unsecured loans, he said, are personal matters that he did not specifically ask his employees about.

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