Darrell Issa's House Oversight Committee Spills The Beans On Buck McKeon: Bribery From Corrupt Mortgage Giant
Two things happened over the sleepy 4th of July holiday that California Republican Congressmen Buck McKeon and Darrell Issa hoped no one would notice. Issa released his long-awaited 136 page investigation, How Countrywide Used its VIP Loan Program To Influence Washington Policymakers, and McKeon fired his Deputy Chief of Staff and district director Bob Haueter. No one is paying attention to the news-- other than fireworks displays and hot dog eating contests-- over the 4th of July break.
If McKeon thinks he can somehow shift the blame for all his incessant bribe-taking onto Bob Haueter, he's not paying enough attention to all the money he loses gambling at Sheldon Adelson's casinos in Las Vegas when he makes those eye-popping bets. Voters in Santa Clarita, Porter Ranch, Simi Valley and the Antelope Valley are getting wise to McKeon's little tricks. And Issa releasing his report on July 4th won't save his scrawny neck.
Short version-- McKeon was about to go bankrupt so he reached out to Mike Farrell, sleazy chief lobbyist and legislative strategist for the Mortgage Bankers Association of America, who helped him get a sweetheart deal from Angelo Mozilo, head of Countrywide. He then voted against legislation to regulate mortgage dealers like Countrywide, legislation that could have averted the mortgage meltdown for which Countrywide was primarily responsible. McKeon, of course, denies everything, even that he was under investigation or that he got any special treatment. John Bresnahan's report in Politico yesterday was clear that Issa's investigation proves otherwise:
While the identities of the lawmakers who received the VIP loans have been public for years-- and all vehemently dispute that they received or were aware of getting any special treatment-- Issa asserts that the efforts by Countrywide and its former CEO, Angelo Mozilo, to woo political power brokers played a critical part in blocking legislation that would have reformed the mortgage industry, specifically the roles played by the Fannie Mae and Freddie Mac in the U.S. housing bubble of the mid-2000s.
“Documents and testimony obtained by the Committee show the VIP loan program was a tool used by Countrywide to build goodwill with lawmakers and other individuals positioned to benefit the company. A Countrywide lobbyist described the VIP program as a means to create a favorable impression of the company on Capitol Hill,” states a draft copy of the Oversight and Government Reform Committee report that was reviewed by Politico.
“Documents and testimony show that Angelo Mozilo and Countrywide’s lobbyists may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”
The report adds: “Countrywide’s effort to build goodwill on Capitol Hill worked. Countrywide became a trusted adviser and was consulted when the House Financial Services Committee and the Senate Banking Committee considered GSE reform and predatory lending legislation. If Countrywide’s lobbyists, and Mozilo himself, were more strictly prohibited from arranging preferential treatment for Members of Congress and congressional staff, it is possible that efforts to reform the GSEs would have been met with less resistance.”
According to the L.A. Times, McKeon was able to take about $47,000 out of his home loan just days before he made the deal with Mozilo and then another $30,000 right after. That $77,000 saved him from having to declare personal bankruptcy. He had already driven the cowboy dress-up shops he inherited from his parents, Howard & Phil's Western Wear, into bankruptcy by then.
Even McKeon supporters are seeing this news because Fox is running the story: "Countrywide made discount loans to buy influence with members of Congress, House report says."
The Justice Department has not prosecuted any Countrywide official, but the House committee's report said documents and testimony show that Mozilo and company lobbyists "may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence."
The Securities and Exchange Commission in October 2010 slapped Mozilo with a $22.5 million penalty to settle charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis began. Mozilo also was banned from ever again serving as an officer or director of a publicly traded company.
He also agreed to pay another $45 million to settle other violations for a total settlement of $67.5 million that was to be returned to investors who were harmed.
The report said that until the housing market became swamped with foreclosures, "Countrywide's effort to build goodwill on Capitol Hill worked."
The company became a trusted adviser in Congress and was consulted when the House Financial Services Committee and Senate Banking Committee considered reform of Fannie and Freddie and unfair lending practices.
"If Countrywide's lobbyists, and Mozilo himself, were more strictly prohibited from arranging preferential treatment for members of Congress and congressional staff, it is possible that efforts to reform (Fannie and Freddie) would have been met with less resistance," the report said.
The report said Fannie assigned as many as 70 lobbyists to the Financial Services Committee while it considered legislation to reform the company from 2000 to 2005. Four reform bills were introduced in the House during the period, and none made it out of the committee.
Hit with staggering losses, Fannie and Freddie came under government control in September 2008. As of Dec. 31, 2011, the Treasury Department had committed over $183 billion to support the two companies-- and there's no end in sight.
Most of the bribes were half point waivers-- but McKeon, well known on Capitol Hill as a Congressman always ready to sell his votes, got double what everyone else got. He wasn't just a Friend Of Angelo; he was a Very Special Friend Of Angelo. Here's Issa's report on fellow Republican Buck McKeon, a disgrace to his party and his state:
In October 1998, McKeon and his wife used Countrywide to refinance a mortgage on a property in Stevenson Ranch, California. The VIP unit processed the loan. On February 12, 2012, the Los Angeles Times reported that a spokesperson for Congressman McKeon’s office said McKeon “had no knowledge of the Friends of Angelo designation. "McKeon told the Times he paid garbage fees and did not get a point off on the loan.
Internal Countrywide documents show that Angelo Mozilo ordered a point off McKeon’s loan and waived garbage fees. The discount is not reflected on documents signed by McKeon. However, internal Countrywide documents show that one point was in fact waived.
In an internal e-mail from September 29, 1998, Kay Gerfen noted that McKeon was referred to Countrywide by “Mike Farrell/MBA.” Farrell was the chief lobbyist and legislative strategist for the Mortgage Bankers Association of America (MBA). At the time, Farrell was working on “leading the industry’s successful campaign... to raise the maximum loan amount for FHA single-family insured mortgages.” Mozilo served as the President of the MBA from 1991 to 1992 and remained closely connected to the association, which represented the interests of the real estate finance industry.
A September 29, 1998 e-mail from Kay Gerfen to Stephen Brandt described Mozilo’s instructions for pricing and processing McKeon’s loan. Gerfen stated: “Per Angelo-- ‘take off 1 point, no garbage fees, approve the loan and make it a no doc.’” Brandt forwarded Gerfen’s e-mail to Joseph Reed in the VIP unit.
On October 5, 1998, Reed updated a “Countrywide Comment Sheet” for McKeon’s loan. Reed’s comments about the McKeon loan reflected the content of a series of telephone conversations with McKeon, his wife, and his secretary. Reed stated:FOA [Friends of Angelo] referral, Please order appraisal ASAP. You may call the borrower at his Washington office [number redacted] and get the Sons phone number for the appraiser contact. The borrower would like to hear from the appraiser this week.
The borrower is a bit difficult to deal with. He seems on the edgy side.
On October 7, 1998, Countrywide sent an “opening package” of loan documents to the McKeon’s at their Stevenson Ranch home. The cover letter stated: “Thank you for allowing COUNTRYWIDE’s VIP TEAM to assist you with your financing needs on the above referenced property.”
October 7, 1998... the day before-- one day before, October 6, 1998 McKeon didn't think to resuse himself for a vote on HR 4194 which passed with him voting for it. Ostensibly a funding bill for the Departments of Veterans Affairs and Housing and Urban Development, another California GOP crook, McKeon's pal, Jerry Lewis, had inserted a provision to raise the Federal Housing Administration's maximum borrowing limit from 75% to 87% of the home value. Although Ron Paul led a group of outraged congressmen from both parties against this tactic, it passed largely because of the efforts of sleazy lobbyists-- particularly the same Mike Farrell who got McKeon his sweet deal with Countrywide. His job was to give lawmakers special deals to coax them into raising the FHA limit. And it worked but who would have though McKeon would do it the day before his VIP mortgage letter was mailed? Angelo Mozilo, apparently.
He still claims he didn't know he was getting a VIP package, which is like pleading incompetence. But the question that no one is asking is: where's Buck's #1 ally and protector, John Boehner, on all this? Boehner pledged to have zero tolerance for these kinds of shenanigans. Remember when Charlie Rangel was accused of helping a charity named after him and Speaker Pelosi made him step down as the Chairman of House Ways and Means? There's been no such move for Boehner to get McKeon out of his Armed Services Committee chairmanship-- which he uses to squeeze more money out of arms manufacturers and war contractors than any two Members of Congress combined! And solicited illegal donations for his wife's failed state Assembly campaign, something that isn't just an ethics violation, but a clear law violation that dictates an indictment, trial and, if found guilty, a prison term.
UPDATE: Lee Rogers Wants McKeon To Pay Back The Countrywide Money
Good idea but why not just ask for a unicorn? McKeon's a crooks and he's not paying back anything to anyone. He doesn't even pay his gambling debts to Sheldon Adelson... at least not in cash. This is what Rogers had to say this morning:
“Representative McKeon’s claims that he received no special treatment are in fact false. He profited because he was a Member of Congress and Countrywide wanted to buy influence. In addition to waiving the fees, one percent interest savings on a home mortgage of $315,000 would have saved McKeon tens of thousands of dollars over the life of the loan. McKeon should finally come clean and be honest with his constituents about the special perks he received. Additionally, I’m calling on McKeon to pay this money back, not to Countrywide, but to the US Treasury since it was the taxpayer who absorbed Countrywide’s losses through TARP, which McKeon also voted for.”