Countrywide's PAC closing amid inquiries

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By Jim McElhatton

The political arm of embattled Countrywide Financial Corp., which has donated more than a half-million dollars to candidates and political groups since 2005, is shutting down amid a corporate buyout and ongoing inquiries into whether lawmakers got sweetheart deals from the California-based subprime lender.

Countrywide's Washington-based political action committee filed termination papers with the Federal Election Commission (FEC) on Friday. The report doesn't say why the PAC is shuttering, and its treasurer did not return telephone and e-mail messages on Tuesday seeking comment.

The firm's shareholders recently approved a deal for its takeover by Bank of America.

The company also has been hit with unwanted publicity over its lending practices and reports of a so-called "Friends of Angelo VIP" program, where prominent people got favorable loans through Countrywide's chief executive, Angelo R. Mozilo.

"I'm not shocked, because their money had become radioactive because of questions about their loan practices and their VIP program," said Meredith McGehee, policy director at the District-based Campaign Legal Center.

"If giving more money brings more scrutiny and more controversy, it's probably a better business decision."

Several well-known political figures have become ensnared in the controversy over the VIP program, including Democratic Sens. Christopher J. Dodd of Connecticut, chairman of the Senate banking committee, and Kent Conrad of North Dakota, chairman of the Senate Budget Committee.

James Johnson resigned as a top adviser to Democratic Sen. Barack Obama's presidential campaign after reports he got discounted mortgage rates through the company, which Mr. Obama has railed against on the campaign trail.

FEC spokesman Bob Biersack said the agency still must approve the PAC's termination by conducting a standard review, which includes ensuring no outstanding debts or pending enforcement actions.

As politicians distance themselves from the company, some lawmakers have declined to cash Countrywide contribution checks, according to FEC records.

"Chris chooses not to accept donations for a variety or reasons, and this was one he chose not to accept," said Kristen Bossi, communications director for Rep. Christopher S. Murphy, Connecticut Democrat, who turned down a $2,000 donation in May.

The Countrywide PAC reported no debts or cash on hand before winding down its operations last month. The PAC began in 1993.

Meanwhile, the company remains the focus of calls for a congressional inquiry into the VIP loan program.

Two weeks ago, a pair of Republican congressmen called on the House Oversight and Government Reform Committee to investigate the Countrywide loans to ensure "tainted" officials recuse themselves from weighing in on legislation favorable to mortgage lenders.

District-based Citizens for Responsibility and Ethics in Washington, citing a June 12 report by Portfolio magazine, also filed an ethics complaint to request an investigation into members of Congress who may have received special loan deals.

Mr. Dodd has previously acknowledged getting "VIP" loan treatment from Countrywide, but has said he never sought any favorable treatment from the company.

Mr. Conrad has said he, too, did not know he was getting a discounted loan through Countrywide. He donated $10,500 last month to offset any gains he said he might have gotten from a discount on a Countrywide loan he used to buy a vacation home in Delaware in 2002.

Despite its waning political contributions this year, the company continued spending hundreds of thousands of dollars in lobbying fees. It spent $249,000 for its employees to lobby federal officials on mortgage, foreclosure and other issues from January through March, according to disclosure reports on file with the Senate.

During the same period, the company also paid $30,000 to the Dewey Square Group and $45,000 to the Eris Group.