Angelo Mozilo has lots of friends. Or at least, he used to. The former chief executive of Countrywide Financial now faces a series of federal lawsuits, including one brought by the Securities and Exchange Commission for fraud and insider trading. Suddenly, some of the most powerful Washington politicians are eschewing the shameful appellation “Friend of Angelo.”
Back in the early 1990s, when Countrywide was climbing to the top of the mortgage industry, Mr. Mozilo was looking to make friends on Capitol Hill. According to documents obtained by congressional oversight investigators, these key VIPs were afforded preferential and personalized treatment, including specially priced home mortgage loans at below-market rates. This generosity was not limited to elected officials but was extended as well to select congressional staff members, administration officials and Washington lobbyists.
In his aggressive pursuit of market dominance, Mr. Mozilo tried to make friends everywhere, especially among people who had a primary responsibility to craft legislation and oversee government enterprises with a stake in the U.S. housing market.
In March 2009, the minority staff of the House Committee on Oversight and Government Reform produced a detailed, 63-page report that analyzed Countrywide’s VIP program and Mr. Mozilo’s successful scheme to buy political influence and manipulate public policy decisions.
At that time, I renewed my call for congressional hearings into the Countrywide scandal, but my requests have been denied repeatedly and obstructed by the Democratic majority.
While some have attempted to characterize our efforts to uncover the true scope and depth of this pay-for-play program as a partisan attack targeting specific members of Congress, it should be noted that Republicans controlled both Congress and the White House at the height of the Countrywide VIP program’s influence.
It stands to reason, therefore, that more Republicans than Democrats could have been the beneficiaries of Mr. Mozilo’s special treatment. The undisputed fact remains: We know there was corruption. We know Countrywide’s intent was to influence decision-makers to pursue policies that favored Countrywide’s portfolio.
Yet congressional Democrats seem afraid to move forward with the investigation into a bribery scandal that contributed to the housing crisis and the financial collapse.
A variety of excuses have been offered for Congress’ failure to launch a full-scale probe into the Friends of Angelo program. At first, it was argued that deference was needed for the Senate Ethics Committee to conclude an investigation into the conduct of two senators.
Then speculation concerning a Justice Department investigation was cited to trump congressional oversight. Never mind the fact that Democrats and Republicans in Congress had worked together to investigate the Jack Abramoff scandal, even though the Justice Department continues to prosecute actions connected to this wrongdoing to the present day.
Once the final report of the Senate Ethics Committee was released, however, the way was cleared for the House oversight committee to subpoena the records of the Friends of Angelo program to determine the full nature and scope of Countrywide’s efforts to manipulate Congress and purchase political favor.
The limited focus of the Senate investigation was the actions of two elected officials, not the actions of an entire division of a billion-dollar corporation designed to curry favor with those officials.
Unfortunately, the chairman of the House Committee on Oversight and Government Reform, Edolphus Towns, New York Democrat, does not believe the Countrywide VIP program is worth the committee’s time. In a letter sent to oversight committee members on Sept. 30, Mr. Towns characterized the VIP program as “… enhanced customer service, in a manner similar to airline frequent flier programs or supermarket discount cards.”
Countrywide Financial and Angelo Mozilo clearly are at the nexus of the current economic crisis. It was Countrywide’s packaging of subprime mortgages that helped inflate the housing bubble, and it was Mr. Mozilo’s VIP program that sought to minimize congressional scrutiny and derail housing policy reforms that could have mitigated the crisis.
The documents that can lift the veil from Countrywide’s VIP program are readily available, however, and their custodians are prepared to provide them to Congress upon receipt of a subpoena.
But somewhere in Washington, Mr. Mozilo’s secrets are getting cover.
“Public investigating committees … have always been opposed by groups that seek or have special privileges,” wrote former Supreme Court Justice Hugo Black in 1936. “The spokesmen of these greedy groups never rest in their opposition to exposure and publicity. That is because special privileges thrive in secrecy and darkness and [are] destroyed by the rays of pitiless publicity.”
As Congress continues to assess the causes of the current economic crisis, the protests of those most responsible doubtless will grow louder and efforts to block congressional inquiry will only intensify.
Ironically, it was the Democratic leadership in Washington that promised a new era of transparency and accountability, but so far those promises have proved empty. No subpoenas have been issued. No hearings have been scheduled, and the Justice Department appears to have shelved its criminal investigation.
The only reason the American people are not learning the whole truth about Countrywide, it seems, is that Angelo Mozilo still has a few friends left on Capitol Hill.
Rep. Darrell Issa of California is the ranking Republican of the House Committee on Oversight and Government Reform.