By STEPHEN B. MEISTER

Last Updated: 12:26 AM, July 27, 2010

Democrats claim their sweeping financial-sector reforms will guard against the kind of problems that triggered the recent economic meltdown. But if they really wanted to do that, they would've focused on how so many US officials were simply . . . bought. Fat chance.

Nonetheless, Rep. Darrell Issa (R-Calif.), ranking member of the House Committee on Oversight and Governmental Reform, is demanding just such a review -- and, for the sake of the nation, he should get one.

Last week, Issa wrote to Alfred Pollard, general counsel to the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, asking for a probe of "VIP" mortgage loans given to Fannie and Freddie executives by Countrywide Financial Corporation. He also disclosed that Senate staffers got 30 low-rate mortgages under the program.

Founder Angelo Mozilo built Countrywide into the nation's largest mortgage lender, with a portfolio at one point worth $1.4 trillion, by selling billions in mostly subprime loans to Fannie and Freddie. Clinton Attorney General Janet Reno, using the anti-redlining statute -- the Community Reinvestment Act -- relentlessly pressured banks to make loans to "the underserved." But the banks could not make enough subprime mortgage loans to satisfy our lawmakers unless the federal government bought the loans they originated. That's where Fannie and Freddie came in.

Eventually, Congress and the Department of Housing and Urban Development ordered Fannie to spend 50 cents of every dollar buying subprime loans. Today, Fannie and Freddie are wards of the state and own, or are responsible for, $5.5 trillion worth of mortgages.

Documents strongly suggest that, through a VIP loan program at Countrywide for "Friends of Angelo," Mozilo helped spur officials to keep up Fannie and Freddie's multitrillion-dollar mortgage-spending spree and, especially, buying Countrywide's junk mortgages. Special account executives were hired to administer the "FOA" loan program. Their business cards contained the designation "VIP Loan Program," so that the VIPs who received these discounted loans would know they were being given special treatment. Thousands of dollars were saved by each VIP borrower, and each had to have known it.

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