[Sign Up Now] to Receive Our FREE Daily SCVTV-SCVNews Digest by E-Mail

SCVNews.com | Ethics Committee Ends Inquiry, Takes No Action Against McKeon in Countrywide Matter | 12-28-2012
Inside
Weather
Santa Clarita CA
Clear
Clear
76°F
 
Calendar
Today in
S.C.V. History
August 22
1891 - Future First Lady Lou Henry (Hoover), 17, poses for photo at R.E. Nickel's Acton store [story]


Statement from Rep. Howard “Buck” McKeon’s office

U.S. Rep. Howard "Buck" McKeon

U.S. Rep. Howard “Buck” McKeon

The Ethics Committee has unanimously decided to end their review of the FOA program and take no further action.  The Committee has found that there are no grounds for opening an investigation and that any further review is unwarranted.  The Committee found that customers often didn’t know their loans were being processed through any different channel, the loans were required to meet the same underwriting standards as any other loan, the loan conditions were often not the best “deals” available in the marketplace and were typical of commonplace negotiated loans and can not be considered “gifts”, and that mere inclusion in the program was not a violation of any House rules or ethics.

The committee found that the FOA program was first designed as merely a customer service program, and evolved into a larger program  in the early 2000’s.  Most of these FOA loans were originated during the mortgage boom between 2002-2004, well after Congressman McKeon’s 1998 home re-finance.  In particular, the committee found that: “the V.I.P loan unit handled thousands of loans worth billions of dollars for a very broad spectrum of individuals, large numbers of whom had never met, let alone befriended, Mr. Mozilo.  Overall it appears that V.I.P.s were often offered quicker, more efficient loan processing and some discounts.  However, it also appears that all V.I.P. loans, including F.O.A. loans, were required to meet the same underwriting standards and conditions for resale on the secondary market as non-V.I.P. loans.  Furthermore, there is evidence on the record that the discounts offered to V.I.P.s and F.O.A.s were not the best deals that were available at Countrywide or in the marketplace at large.  In sum, participation in the V.I.P. or F.O.A. programs did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders.

Therefore, mere inclusion in one of these programs is not, in and of itself, a violation of any rules, laws, or standards of conduct governing Members, officers, or employees of the House of Representatives.  In addition, insofar as the widely available and indisputable evidence indicates that loan “discounts” or “discount points” are labels applied to standard and publicly available terms in every day arms-length negotiations with commercial lenders, they are not the kind of “gift” which would be, in and of itself, outside the realm of reasonable market rates for commercially available loans.  Finally, given that the standard market practices on negotiating for desirable loan customers varies widely, it is not evident that any of the fee structures presented by the evidence are outside of reasonable market rates for commercially available loans, even if those loans were within the jurisdiction of the Committee.”

From the beginning Mr. McKeon has been completely upfront and transparent about his 1998 home re-finance loan.  Congressman McKeon never knew about the Friends of Angelo program, had never met Angelo Mozilo and was unaware of any V.I.P designation given to his loan.  Upon learning of the FOA program, Congressman McKeon immediately provided the media and the public all his personal loan documents, including an itemized closing statement and all supporting documentation, showing that he paid over $2500 in applicable closing costs, and paid an interest rate of 6.75%, well above the 6.49% national average. Additionally, Mr. McKeon was never aware of Countrywide’s internal discussions and emails regarding his loan.  All of these facts have been confirmed.  Congressman McKeon is pleased that the conclusions made by the Committee on Ethics confirm what he has always known to be true.

 

Statement of the Chairman and Ranking Member of the Committee on Ethics Regarding Allegations Concerning the “V.I.P.” Loan Unit of Countrywide Financial Corporation

DEC 27, 2012

Today we announce the conclusion of the Committee on Ethics’ review of the allegations related to the “V.I.P.” program of the Countrywide Financial Corporation (Countrywide).  In accordance with Committee Rules, this review was conducted in order to determine whether the allegations presented warranted further investigation by the Committee.  After a lengthy and deliberate review, including over 2,000 of pages of documentation provided by Countrywide or its successor, Bank of America, as well as giving careful and serious consideration to the submission and reports of the Chairman of the Committee on Oversight and Government Reform, the Committee has unanimously agreed to end its review with the publication of this statement, and the issuance of a general advisory issued simultaneously on the subject of the use of one’s position in the House of Representatives for personal gain or benefit.

Numerous allegations have been made that certain Members and employees of the House of Representatives acted improperly when they received “discounts” on personal residential or vacation property loans, or when their loan applications were handled by an office within Countrywide called the “V.I.P Loan Unit,” or handled as “Friends of Angelo,” referring to Angelo Mozilo, the former CEO of Countrywide.  In addition, the evidence suggested that certain House employees made explicit requests to Countrywide lobbyists or spoke to a Countrywide lobbyist about their personal loan needs, and that the lobbyists then facilitated those loans.

While these allegations concern serious matters, almost all of the allegations concerned actions taken outside, or well outside, the jurisdiction of this Committee, as designated in House Rule XI, clause 3(b)(3), because they occurred before the third Congress prior to the current Congress.  In addition, several of the Members and employees mentioned in the allegations are no longer serving in or employed by the House, and therefore are outside the Committee’s jurisdiction pursuant to House Rule XI, clause 3(a)(2).

However, while there are no allegations of actual violations that fall within the Committee’s jurisdiction, we take this opportunity to provide the House community and the public at large with an analysis of these allegations, and guidance that may be helpful in considering future conduct and avoiding even the appearance of impropriety.

To begin with, the Committee conducted its own analysis of the role and practices of the Countrywide V.I.P. loan unit to determine if participation on its own indicated something improper had occurred.  The Committee reached largely the same conclusion as the Senate Select Committee on Ethics, which indicated in 2009, in public letters to Senators also involved in the V.I.P. unit, that:

It appears the V.I.P. Loan unit was initially established for the purposes of originating, processing, and funding home loans as a courtesy to senior-level employees and V.I.P. customers, but it increasingly grew in scope and size.  A large subset of V.I.P. loans referred by Angelo Mozilo, former Countrywide C.E.O., were known as the “Friends of Angelo” or F.O.A.  During the mortgage boom that occurred from late 2002 through 2004, the V.I.P loan unit handled thousands of loans worth billions of dollars for a very broad spectrum of individuals, large numbers of whom had never met, let alone befriended, Mr. Mozilo.

Overall it appears that V.I.P.s were often offered quicker, more efficient loan processing and some discounts.  However, it also appears that all V.I.P. loans, including F.O.A. loans, were required to meet the same underwriting standards and conditions for resale on the secondary market as non-V.I.P. loans.  Furthermore, there is evidence on the record that the discounts offered to V.I.P.s and F.O.A.s were not the best deals that were available at Countrywide or in the marketplace at large.  In sum, participation in the V.I.P. or F.O.A. programs did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders.

Therefore, mere inclusion in one of these programs is not, in and of itself, a violation of any rules, laws, or standards of conduct governing Members, officers, or employees of the House of Representatives.  In addition, insofar as the widely available and indisputable evidence indicates that loan “discounts” or “discount points” are labels applied to standard and publicly available terms in every day arms-length negotiations with commercial lenders, they are not the kind of “gift” which would be, in and of itself, outside the realm of reasonable market rates for commercially available loans.  Finally, given that the standard market practices on negotiating for desirable loan customers varies widely, it is not evident that any of the fee structures presented by the evidence are outside of reasonable market rates for commercially available loans, even if those loans were within the jurisdiction of the Committee.

To be clear, however, whether terms are within or without a commercially reasonable range, it is improper to knowingly use one’s position or influence within the House of Representatives to obtain a personal benefit.  Therefore, if a Member, officer, or employee has reason to believe there was such an explicit connection between their position and some personal business transaction, it is incumbent on that Member, officer, or employee to take steps to ensure they are being treated no differently than a member of the public who is similarly situated in other relevant ways.  Without doubt, there is a wide range of possible and appropriate steps.  For instance, while the steps reportedly taken by Representative Pete Sessions, rejecting any offers of negotiated discounts, are an excellent way to avoid even the appearance of impropriety, there is still no requirement that a Member, officer, or employee refuse to participate in normal negotiations, or refuse to accept terms of negotiation regularly available to a member of the public..  In other words, while Members, officers, and employees must not personally benefit in a manner directly caused by their position, they also need not suffer financially due to nothing but their position.

Instead, other steps that may be taken if and when a Member or employee is given specific reason to believe they may be treated differently based on their position include receiving reasonable assurances or certifications that the offered terms are commercially reasonable and would be available to the borrower based entirely on reasons unrelated to the individual’s position in the House. Another option that is always available to all Members, officers and employees is calling the Ethics Committee for assistance in examining the nature of the loan offer and negotiations.

While these are just some of the steps that may be taken to avoid the appearance of impropriety, they would not be required under normal commercial circumstances when one visits or calls a commercial institution for a loan, indicates their place of employment onlyon a loan application (as is almost always required) and continues to be handled by the regular loan department.  In this matter, for instance, with one exception occurring well outside the Committee’s jurisdiction, there has been no evidence presented that the Members or employees of the House of Representatives were aware of their inclusion in the V.I.P. unit or that they were labeled “Friends of Angelo.”  If, however, they were referred by, or handled by, persons who were not regular loan officers, or, more significantly, persons involved in congressional affairs, then steps should have been taken to ensure that no improper connection was being made between their sphere of influence and their personal loan negotiations.

Of greatest concern to the Committee, therefore was email evidence regarding the specific conduct of some employees of the House of Representatives  who may have reached out to lobbyists or other government affairs officials at Countrywide for assistance with their personal loans (there was no such credible evidence that Members engaged in this kind of conduct).  Had any of these actions occurred within the Committee’s jurisdiction, further investigations would have been conducted that may have led to disciplinary action against these staffers or former staffers.     This is because, as most Members, officers, and employees understand, it is improper to, for instance, take a meeting with a representative of an outside organization or a constituent seeking some action or general assistance, and then immediately make a request for assistance with one’s own personal finances at the same meeting.  This conduct is not made any less improper merely because there is some separation in time between a past or future meeting and the personal request.

Therefore, every member of the House community should understand that, when your relationship with a representative of a particular business or outside organization is based on your power to affect that person’s organization, and their efforts to influence you or your office in the exercise of that power, that is a relationship that should never be used for your personal benefit.  Where there is credible evidence of such conduct within the jurisdiction of this Committee, the Committee will act to enforce this standard.

However, for all the reasons indicated above, and after lengthy and careful consideration, it does not appear that there is any specific credible evidence of actual violations that remain within the jurisdiction of the Committee.  The Committee therefore has unanimously determined to end its consideration of allegations related to improper participation in Countrywide’s V.I.P. program.

Comment On This Story
COMMENT POLICY: We welcome comments from individuals and businesses. All comments are moderated. Comments are subject to rejection if they are vulgar, combative, or in poor taste.
REAL NAMES ONLY: All posters must use their real individual or business name. This applies equally to Twitter account holders who use a nickname.

0 Comments

You can be the first one to leave a comment.

Leave a Comment


SCV NewsBreak
Loading...
Related Content
LOCAL NEWS HEADLINES
Tuesday, Aug 22, 2017
Officers Investigating Fatality on Highway 126
The Castaic-area crash that killed a motorcyclist on Highway 126 Tuesday morning is still being investigated by CHP officers.
Tuesday, Aug 22, 2017
Deputies Investigating Stevenson Ranch Bank Robbery
A bank robbery at the Wescom Credit Union in Stevenson Ranch is under investigation by deputies, officials reported Monday afternoon.
Monday, Aug 21, 2017
SCV Deputies Investigate Reported Valencia Warehouse Burglary
Deputies from the Santa Clarita Valley Sheriff’s Station responded to a possible burglary call at a warehouse in the 29000 block of Avenue Sherman in Valencia Monday morning.
Keep Up With Our Facebook

Latest Additions to SCVNews.com
With funding from Measure H, Los Angeles County and its cities are teaming up to quickly place thousands of homeless people into permanent housing that comes with the supportive services, rental subsidies and other assistance needed to thrive.
Permanent, Supportive Housing for Homeless Thanks to Measure H
A Domestic Violence Center, Senior Center and homeless shelter partnership is looking for solutions to the countywide homelessness crisis in Santa Clarita.
Three Local Non-Profits Look to Tackle Housing Crisis
The Gibbons Conservation Center is holding a Back to School special. Buy your 2018 membership today and get the rest of 2017 free.
Gibbons Conservation Center Holding Back-to-School Special
Tonight on SCV NewsBreak, CHP is investigating a fatal collision that happened early Tuesday morning near Castaic. Plus, photographers can get ready to submit their Santa Clarita-centric photos for the Fall 2017 Photo Contest. Watch these stories and more on tonight's edition of SCV NewsBreak.
SCV NewsBreak for Tuesday, August 22, 2017
WiSH Foundation Executive Director Amy Daniels is about climb for education.
WiSH Foundation’s E.D. to Climb Kilimanjaro for Public Education
Registration for the Fall session is now open.
Lil’ Kickers Fall Registration Underway
The CSUN Art Galleries are pleased to present part two of an exhibition featuring artwork made by full and part-time faculty in the Department of Art. More than thirty artists showcase current bodies of work, using a variety of materials and processes.
CSUN Faculty Artwork on Display in “Full and Part (Two)” Exhibit
Here are the upcoming times and dates for the Santa Clarita Valley Chamber of Commerce Emerging Leaders Series:
Chamber’s Emerging Leaders Series Resumes Wednesday
Mayor Cameron Smyth, Mayor Pro Tem Laurene Weste and Councilmembers Bill Miranda, Marsha McLean and Bob Kellar cordially invite you to party like it’s 1987 at the 2017 State of the City Luncheon to be held on Thursday, October 26, 2017 at 11:30 a.m. at the Hyatt Regency Valencia.
Oct. 26: State of the City 30th Anniversary Luncheon
Join The Painted Turtle on October 14, 2017 for the 8th annual bike ride and 2nd annual walk/run/roll to benefit the non-profit.
Oct. 14: Tour de Turtle, Turtle Trek Bike Ride
Here is a round-up of Santa Clarita arts-related events for Aug. 25-26th.
Aug. 25-26: Santa Clarita Arts Calendar
The 2017 CIF Southern Section Football Pre-Season Rankings have been released and a local team finds itself at the top of its division.
CIF Pre-Season Rankings Lists Saugus Football No. 1 in Division
The Castaic-area crash that killed a motorcyclist on Highway 126 Tuesday morning is still being investigated by CHP officers.
Officers Investigating Fatality on Highway 126
The County and City of Los Angeles are asking that residents complete the Purposeful Aging Los Angeles (PALA) Age-Friendly Survey between now and September 15, 2017.
Officials Urge Residents to Complete Survey on Aging
The Board of Supervisors unanimously approved a motion by Supervisors Kathryn Barger and Hilda L. Solis which seeks to organize and enhance efforts by county departments and community partners to help foster youth transition to successful adulthood.
County Expands its Efforts in Foster Youth Programs
A bank robbery at the Wescom Credit Union in Stevenson Ranch is under investigation by deputies, officials reported Monday afternoon.
Deputies Investigating Stevenson Ranch Bank Robbery
The contenders for the Best FIFA Women's Player 2017 have been revealed and voting is now underway.
Blue Heat’s Castellanos Makes FIFA’s Shortlist for Best Women’s Player 2017
1891 - Future First Lady Lou Henry (Hoover), 17, poses for photo at R.E. Nickel's Acton store [story]
Deputies from the Santa Clarita Valley Sheriff’s Station responded to a possible burglary call at a warehouse in the 29000 block of Avenue Sherman in Valencia Monday morning.
SCV Deputies Investigate Reported Valencia Warehouse Burglary
Tonight on SCV NewsBreak, a once-in-a-century solar experience took place Monday. Plus, on Saturday, dozens of people gathered in Newhall to celebrate the legacy of the old Saugus Speedway, its racers and its crew. Watch these stories and more on tonight's edition of SCV NewsBreak.
SCV NewsBreak for Monday, August 21, 2017
The 28th Annual Fine Art Show & Gala presented by the Santa Clarita Artists Association and the county of Los Angeles takes over Hart Hall on Saturday afternoon, October 14.
October 14: SCAA, County’s 28th Annual Art Classic at Hart Park
Organizers of the city of Santa Clarita's quarterly photo contest are now accepting entries for the fall 2017 competition.
City Opens Entries for Fall 2017 Photo Contest
The Santa Clarita Valley Boys & Girls Club invites everyone who shares a special connection with the club to the Alumni BBQ on Saturday afternoon, September 9.
September 9: Boys & Girls Club Alumni & Friends BBQ
Comedian and magician Fritz Coleman brings his stand-up show to Santa Clarita with an intimate, one-time performance at the Keyboard Galleria Music Center on Saturday, August 26.
August 26: Comic Fritz Coleman Stands Up at Keyboard Galleria
Deputies from the Santa Clarita Valley Sheriff's Station issued 38 traffic citations Friday and arrested a Newhall man on a parole violation warrant on Saturday.
Deputies Cite Speeders, Arrest Parolee
Lancaster JetHawks right-handed pitcher Jesus Tinoco has been named the California League Pitcher of the Week for August 14-20, 2017.
JetHawks’ Tinoco Named Cal League Pitcher of the Week
The Los Angeles Dodgers have acquired outfielder Curtis Granderson and cash considerations from the New York Mets in exchange for a player to be named later or cash considerations.
Dodgers Aqcuire Outfielder Curtis Granderson from Mets
The TMU Mustangs' women's volleyball home opener proved to be exactly what the doctor ordered as the hosts dispatched Lewis & Clark State College (ID) in straight sets 25-19, 25-22, 25-17.
Lady Mustangs Dispatch Lewis & Clark in Straight Sets
The Master's University's men's soccer team inaugurated their 2017 season with a 5-0 win over Northwest of Washington on Reese Field Saturday afternoon.
TMU Men’s Soccer Blanks Northwest in Season Opener
The Master’s University women’s soccer team’s 2017 record improved to 2-0 after beating the No. 8 ranked Northwest University Eagles 3-1 on Saturday morning at Reese Field.
TMU Women’s Soccer Team Grounds Eagles 3-1 Saturday
CalArtians Mathieu Libman (Film/Video BFA 19) and Aram Sarkisian (Film/Video BFA 17) are among the seven finalists for Student Academy Awards in the Animation category.
Two CalArtians Named 2017 Student Academy Awards Finalists
Western singer and songwriter John Zipperer headlines the next episode of "SCVTV Presents The OutWest Concert Series" at The MAIN in Old Town Newhall the evening of Friday, August 25.
August 25: John Zipperer Headlines ‘SCVTV Presents The OutWest Concert Series’
The Lancaster JetHawks clinched a franchise-record sixth consecutive winning season with their 71st victory, a 7-2 win over the Inland Empire 66ers, on Sunday afternoon at San Manuel Stadium.
JetHawks Sweep Sixers Sunday, Secure Winning Season
The Santa Clarita Valley Sheriff’s Station and the city of Santa Clarita launch the “Heads Up” campaign this week to combat distracted driving and increase pedestrian safety.
City, Sheriff’s Station Launch ‘Heads Up’ Safety Campaign
An 18-year-old man from Lancaster surrendered to the Santa Clarita Valley Sheriff’s Station’s Special Victims Unit Monday morning in connection with an alleged sexual assault earlier this month on College of the Canyons' Valencia campus.
Suspect Arrested in Alleged COC Sexual Assault
The Lancaster JetHawks scored seven runs in the fifth inning, propelling themselves to a 9-4 win over the Inland Empire 66ers on Saturday night at San Manuel Stadium.
Seven-Run Fifth Inning Carries JetHawks to Win Saturday