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Towns Announces Probe Into Countrywide, Other Mortgage Lenders

Updated: 4:20 p.m.

House Oversight and Government Reform Chairman Edolphus Towns (D-N.Y.) announced Friday his panel will launch its own investigation of mortgage lenders, including the Countrywide VIP loan program that Rep. Darrell Issa (R-Calif.) has pursued for months without the panel’s formal blessing.

In a statement issued on the committee’s Web site, Towns said the panel will subpoena records from Countrywide’s VIP loans, now owned by Bank of America, as part of an investigation that will focus on “deceptive and predatory lending practices,— as well as whether mortgage companies deployed “improper tactics to thwart regulation.—

The New York lawmaker’s announcement comes amid sharply escalating partisan tensions over Issa’s demands to subpoena Countrywide, including an incident this week in which Democratic staff changed the locks on the door Republicans use to access the main committee chamber and declined to provide the minority staff with new keys.

“It is my goal to work through this matter in a bipartisan fashion and conduct a complete review of the role of mortgage companies in the current financial crisis,— Towns said in the statement. “As part of this, we need to clarify unanswered questions about Countrywide Financial’s VIP program, so I am issuing a subpoena to gather information about how that program worked and whether it provided special benefits to government officials. I am prepared to issue additional subpoenas if other companies fail to respond to our document requests.—

Towns had previously resisted the ranking member’s demands to subpoena reams of information related to the program, arguing that the dragnet could expose sensitive, personal information of innocent people and that the Justice Department is best-equipped to look into the matter.

Should the committee’s investigation uncover information about loans made to House or Senate lawmakers, however, Towns indicated the documents would be turned over to the House ethics committee.

“In line with the commitment to an ethical and accountable Congress, the subpoena to Countrywide covers records that could show special treatment for Members of Congress. For reasons of jurisdiction, the subpoena directs that any such documents be sent to the House Committee on Standards of Official Conduct,— Towns said.

Earlier this year the Senate Ethics Committee found no misconduct by Sens. Chris Dodd (D-Conn.) or Kent Conrad (D-N.D.) regarding loans each received through the Countrywide VIP program but chastised the pair for not being more vigilant to ensure against the appearance of special treatment. Both lawmakers had denied wrongdoing for participating in the program and said they never asked for favorable terms on their loans.

The Wall Street Journal reported earlier this year that Towns may have also received loans via that Countrywide program, citing mortgage documents that showed an address and branch number corresponding to the VIP program.

At that time a Towns aide said Towns was not aware of whether his loans, including a mortgage of a Lutz, Fla., home, were processed through the VIP program and said he received no special treatment.

“As far as he knew, he was just getting a loan as a regular person,— Towns’ office told the Wall Street Journal.

The committee’s investigation will also seek documents from Wells Fargo, Bank of America, JPMorgan Chase, Citigroup, Residential Capital and U.S. Bank Home Mortgage.

In his statement, Towns also addressed his decision to change locks on doors connecting Republican offices to the committee’s hearing room.

“Finally, I would like to address the widespread false reports that I locked Republicans out of their offices earlier this week,— Towns said. “These reports are incorrect. Republicans have at no time been denied access to the hearing room or their offices. The Ranking Member and I discussed how we can cooperate to prevent violations of House rules governing the use of hearing rooms, we reached agreement, and I consider this matter resolved.—

Majority staff confirmed Tuesday that Democrats ordered the locks changed in retribution for Republicans filming a video of Democratic members exiting the room in what the minority charged was an attempt to avoid a vote on issuing Countrywide subpoenas.

At that time, Towns said the decision to change the locks was made “because they don’t know how to behave,— according to spokeswoman Jenny Thalheimer Rosenberg.

But a Republican committee aide said Friday an Architect of the Capitol employee dismantled the newly installed lock “a few days ago— at the minority staff’s request.

The GOP aide said the lock remains intact but is not functional, and there are no immediate plans to replace it. “We don’t really see a reason to lock anything,— the aide said.

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