NY GOP Wants Investigation Into Rep. Steve Israel's Sketchy Mortgage "Bailout"

Congressman Steve Israel
Congressman Steve Israel

The New York Post ran an "exclusive" story yesterday suggesting that Long Island Congressman Steve Israel's 2008 support of the Troubled Asset Relief Program (TARP) for financially strapped banks is the reason he was granted a "bailout" on the mortgage for his Dix Hills home.

The bank that holds Israel's mortgage -- and approved the "bailout" for his mortgage -- is J.P. Morgan Chase, which received $25 billion from the federal government as part of the Israel-approved bank bailout.

Obviously, this arrangement has led to a few questions for the Democratic lawmaker -- and New York Republicans are pouncing on the story, calling on the House Ethics Committee to investigate Israel's shady arrangement.

"The Congressman has taken advantage of his position to qualify for a debt reduction that is supposed to be reserved for hard working families that are experiencing a financial set back," New York GOP Chairman Ed Cox says. "It is not for a congressman that wants to avoid his obligations and a personal financial loss."

The Post story outlines how Israel and his wife, Family Court Judge Arlene Budd, bought their seven-room home for $580,000 in 2004. It's now valued at $553,000.

Israel, however, managed to "wiggle" out of roughly $100,000 he owes the bank, leaving J.P. Morgan Chase on the hook for what should be Israel's $93,000 loss.

From the Post:

Israel's financial statement shows he has a separate mortgage and home-equity loan valued at between $250,000 and $500,000 on a second residence -- an apartment he owns in Washington.

"I don't understand how he [Israel] is eligible for this program when numerous other homeowners are struggling and are not being given this same opportunity," said Grace Slezak, owner of Destiny International Realty.

"In my professional opinion," the 26-year real-estate vet said, "I don't see how he would qualify for this; it appears highly irregular."

Cox says there's the possibility that the deal is the result of Israel's abusing his power as a sitting congressman who approved the bank bailout.

"On the surface it appears that [Israel] would not qualify for such a reduction, so we ask that the House ethics committee investigate the circumstances that surround what looks to be a highly questionable transaction and an potential abuse of power," Cox says.

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