Ethics Questions Plague Congress as Financial Reform Heads to Obama

The Wall Street sign is juxtaposed against the sculpture on the facade of the New York Stock Exchange, Friday Oct. 3, 2008. Stocks surged while credit markets remained strained Friday ahead of an expected House vote on the government's $700 billion financial rescue plan and after Wells Fargo Co. agreed to buy Wachovia Corp. in a $15.1 billion deal. (AP Photo/Richard Drew)
AP Photo/Richard Drew
The Wall Street s
AP Photo/Richard Drew

Congress is poised to send a sweeping financial reform bill to the president's desk today, but ethics questions surrounding legislators' ties to the industry persist.

Rep. Darrell Issa (R-Calif.), who sits on the House Committee on Oversight and Government Reform, sent a letter to the Senate Ethics Committee this week revealing that Countrywide Financial Corp.extended 30 cut-rate loans to U.S. senators or Senate employees -- far more than previously known. Issa's committee is investigating whether the "VIP" loans were offered in order to gain influence in Congress, but the House has no jurisdiction over Senate ethics questions.

The Senate Ethics Committee has already investigated whether "VIP" Countrywide loans given to Sens. Chris Dodd (D-Conn.) and Kent Conrad (D-N.D.) violated ethics rules; both senators were cleared of any rule violations. But documents obtained by the House committee show that 12 "VIP" loans were processed for borrowers who specifically listed the office of Sen. Robert Bennett (R-Utah) as their place of employment. Bennett sits on the Senate Banking Committee.

Additionally, seven such loans were given to borrowers who listed "U.S. Senator" as place of employment. Eleven more loans were given to borrowers who listed "U.S. Senate" as their place of employment.

"The pervasiveness of discounted loans and preferential treatment for Senate employees sheds new light on the purpose and policies of Countrywide's VIP program," Issa wrote in his letter.

Many of the 30 loans were made in 2002 and 2003, in the midst of a "mortgage boom," according to Issa's letter. The expansion of Countrywide's loan portfolio and the company's subsequent collapse contributed to the 2008 financial crisis.

In response to the crisis, the Democratic-led Congress put together a comprehensive financial reform bill that creates a bureau to regulate consumer financial products, regulates the fees banks charge businesses for processing debit card transactions and adds new mortgage lending regulations, among other things. The reform package has cleared the House, and the Senate is set to take a final vote on it this afternoon.

Meanwhile, the Office of Congressional Ethics is investigating a series of fundraisers that took place last year, the New York Times reports, during which eight House members raised money from financial institutions at the same time the House was voting on the measure.

It's unlikely the committee will admonish any members, the New York Times reports, and the fact remains that lawmakers often solicit donations from companies that could be impacted by legislation up for debate. Many members of Congress who held fundraisers in the weeks leading up to the House vote on financial reform were reportedly left out of the current ethics investigation.

The current investigation, the Times reports, are focusing on eight lawmakers who raised relatively significant amounts of money from the financial sector in just the 10 days prior to the initial House vote on December 10. The members under scrutiny are: Reps. Joseph Crowley (D-N.Y.), Tom Price (R-Calif.), Earl Pomeroy (D-N.D.), John Campbell (R-Calif.), Jeb Hensarling (R-Texas), Christopher Lee (R-N.Y.), Melvin Watt (D-N.C.) and Frank D. Lucas (R-Okla.).