Two Reps Named in VIP Personal Loan Scheme
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Written by
Sara Routhier
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Reviewed by
Joel Ohman
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UPDATED: Jan 16, 2012
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Following the announcement that Countrywide granted special discounted personal loans to four congress members before it was consumed by Bank of America, two of those recipients’ names have just been announced.
Reps. Howard McKeon (R-CA) and Elton Gallegly (R-CA) were both discovered to be recipients of Countrywide’s VIP loans. Both congressmen claimed they didn’t know their loans were given special rates.
Known as the Friends of Angelo program, Countrywide’s VIP program was named after the institutions CEO, Angelo Mozilo, and awarded loans to borrowers who likely could not have qualified for such financing. These special VIP loans usually came with alarmingly low interest rates, and were speculated to be distributed in an attempt to gain various politicians’ favor.
After 25 years in office, Gallegly announced he would not be seeking re-election in 2012. Despite this recent announcement, Gallegly claims he has never heard of the VIP program, and that he has never met Mozilo.
McKeon responded in a different manner, as Alissa McCurley, his spokesperson, said the congressman was “shocked and angry” to hear his loan was put under investigation. “He had no knowledge of the Friends of Angelo designation,” McCurley said. She also claimed the congressman “has never met or spoken to Angelo Mozilo,” according to the New York Times.
Mozilo, co-founder of Countrywide, was never sentenced to any jail time, but was hit with a record $22.5 million penalty that he agreed to pay the U.S. Securities Exchange Commission (SEC) as a result of his company issuing subprime mortgages and contributing to the nation’s financial collapse.
Bank of America, who bought Countrywide out in 2008, ended the VIP program after the merger. Since then BofA has set aside $8.7 billion in order to settle predatory lending charges that the bank foresees coming as a result of lawsuits filed against it by 11 states, according to Time Magazine.