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A U.S. lawmaker said Friday he will issue a subpoena to Countrywide Financial, now part of Bank of America, as part of a probe into whether the lender gave favored terms to lawmakers and other VIPs.
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CNBC.com Capital Money |
Representative Edolphus Towns, chairman of the House Oversight Committee, said Countrywide has thus far failed to cooperate with his investigation into a program that offered loans to politically influential figures and other favored borrowers at more attractive terms.
A wider panel probe is looking at predatory lending practices at banks, and what role it may have had in the financial crisis that exploded in 2007.
"The actions of mortgage lenders contributing to the foreclosure and financial crisis are of serious concern to many Americans and to the members of this committee," Towns said.
Bank of America bought Countrywide, which has come to symbolize the excesses of the lending industry, for a fire-sale price of $2.5 billion last year. It had collapsed under the weight of bad mortgages and defaults.
Towns himself received two loans from the lender, and had rebuffed calls by the top Republican on the panel, Darrell Issa, to demand documents from Countrywide. Towns has said he had no knowledge of the VIP program.
A spokesman for Bank of America said the company has not yet seen the subpoena and would reserve comment.
At the same time, Towns wrote letters to Wells Fargo [WFC
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], JPMorgan Chase [JPM
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], Citigroup [C
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], US Bank Home Mortgage and GMAC seeking information in his panel's wider mortgage probe.
In a letter dated Oct. 23 to the banks, Towns asked for data on VIP-type programs, foreclosures, marketing strategies, and potential anti-trust behavior.
The letter asks for information on whether attempts were made by lenders to identify whether loan applicants had regulatory authority over them. It also asks for details on the types of mortgages offered and sold. Also, it asks whether the companies helped draft legislation or regulatory language to propose to federal or state officials.
Towns says he is prepared to subpoena other companies if they do not comply with requests.
The panel chair said "there are indications that members of the financial services industry conspired to deceive regulators and the public to obtain regulatory favors, lax enforcement, and regulatory protection for schemes intended to deceive and defraud," home buyers, owners, regulators and investors.
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