Towns issues subpoenas for Countrywide

Two days ago, Rep. Edolphus Towns (D-NY) changed the locks on the House Oversight Committee room’s door to keep Rep. Darrell Issa (R-CA) from demanding that Towns authorize subpoenas to investigate Congressional ties to Countrywide Mortgage’s Friends of Angelo program.  Today, Towns has retreated after his publicity stunt backfired.  Politico reports that Towns has unexpectedly authorized wide-ranging subpoenas for information possibly linked to lawmakers who got sweetheart deals from Countrywide CEO Angelo Mozilo:

House Oversight and Government Reform Chairman Ed Towns (D-N.Y.) said Friday he would issue a wide-ranging subpoena of Countrywide Financial, demanding the company hand over records that could show whether preferential loans were given to influential people in government.

The subpoena letter, obtained by POLITICO, was sent to Countrywide Friday and gives the lender less than a month to hand over a slew of documents, including a detailed description of any program that provided “enhanced benefits” to people with regulatory or legislative power in federal or local government.

Republicans, who have been pushing for weeks for such a subpoena, were caught off-guard by Towns’ move and met with committee Democrats late Friday to work out more details on the effort.

Towns stopped short of demanding a list of lawmakers that were part of the VIP program, a concession made by Ranking Member Darrell Issa (R-Calif.). Issa previously was pushing for a list of congressmen, which he would then hand over to the ethics committee. A source said Towns thought the request was not proper, as the committee is not meant to investigate misdeeds by members. Still, the subpoena is a big victory for Issa, who has repeatedly tried to force Towns’ hand on subpoenas of Countrywide documents.

A subpoena, however, could still ensnare members of Congress, a statement from Towns says. Lawmakers whose names surface in the investigation will be handed over to the Committee on Standards and Ethics.

This is a significant climbdown, but one necessitated from the Democrats’ own strategy of class warfare.  They have consistently demonized Wall Street executives, and this week the White House Pay Czar slashed compensation plans at bailed-out firms.  With that kind of rhetoric and action being hailed by Democratic leadership, stonewalling on the collapsed Countrywide doesn’t sell for long.

Unfortunately for Towns, his strategy didn’t help, either.  He could easily have defeated a motion from Issa that would have kept Chris Dodd, Kent Conrad, and other prominent Democrats’ records from getting revealed by the Oversight Committee and published to the media — as long as he kept it in the committee.  Issa had been trying to get media attention to this issue for weeks, to little avail, until Towns locked Republicans out of the room.  That got the media interested, which meant that Democrats either had to retreat or explain why they spent the week demonizing Wall Street while covering up for Mozilo … and his friends on Capitol Hill.

How significant is this reversal?  The committee has asked for information from a number of companies involved in the housing bubble — but only Countrywide got a subpoena.  Stay tuned.

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