Politics

‘Countrywide Chris’ Dodd

When the Associated Press is playing up probable corruption by a Democrat, it’s no surprise that the Democrat — even a multi-term incumbent in a solidly blue state — trails a Republican challenger.  And that’s just the situation that Connecticut’s Chris Dodd finds himself in — according to a recent Quinnipiac poll — as the man most responsible for changing the face of the “culture of corruption” into his own.

In sworn testimony last week, Robert Feinberg, a former executive at Countrywide Financial testified under oath that Sen. Dodd knew he was “getting special VIP treatment” for his mortgage applications.

That VIP treatment came as part of the “Friends of Angelo” program at Countrywide, the once-mighty mortgage firm — formerly run by Angelo Mozilo — which was purchased by Bank of America last July for $2.5 billion.  In June, the SEC filed fraud charges, including for disclosure fraud and insider trading, against Mozilo.

A report based partly on testimony given by Feinberg to members of the House Committee on Oversight and Government Reform concludes:

(I)t was the practice of VIP loan officers to communicate to “Friends of Angelo” they were receiving special pricing and preferential treatment. Documents obtained by the Committee confirm this. VIP borrowers were informed Angelo Mozilo personally priced their loans and they relied on their status as “Friends of Angelo” to guarantee preferential treatment for themselves and others.

Dodd’s two 2003 mortgages, refinances of his residences in Connecticut and in Washington, DC, came with VIP treatment that lowered every cost usually involved in a Countrywide mortgage: origination fees, points, and of course the interest rate. And while Dodd has recently said that he was unaware of any special treatment, Feinberg told Congressional investigators that Dodd (as well as North Dakota’s Democratic Sen. Kent Conrad) was told “who you know is basically how you’re coming in here.”  

Corruption requires not just a willing politician but also a favor-giver who needs a favor from the politician in return. And that was precisely the intent of Countrywide’s VIP program: to give the company influence over public policy and a loud voice in any debate over regulation of the mortgage industry.  The House committee staff report concludes, “Senior Countrywide officials and lobbyists openly and explicitly weighed the value of relationships with potentially influential borrowers against the cost to Countrywide in terms of forfeited fees and payments.”  To put a finer point on it, the report shows an e-mail from a Countrywide Managing Director who says, “I’m usually in favor of settling on the side of the borrower with political influence.”

Does anyone want to guess what Countrywide must have thought of Chris Dodd’s potential influence as Chairman of the most important Senate committee for the mortgage industry?  Was undue influence on Dodd represented in his mortgage company bailout legislation, described by the Heritage Foundation as “a government buyout of problem mortgages disguised as a refinancing plan”? Did expectation of a Dodd-supported bailout encourage Bank of America to buy Countrywide at a price higher than the business appeared to be worth?

Bank of America has said that the bank has relevant Countrywide VIP documents and is ready to provide them to a Congressional committee if the committee will simply subpoena them.  However, both House and Senate Democrats have so far refused to issue the subpoena.

Kurt Bardella, spokesman for Representative Darrell Issa (R-Calif.) and the House Committee on Oversight and Government Reform, offered HUMAN EVENTS these thoughts:

“We’ve been working for more than a year on this investigation. It’s not about one particular lawmaker or targeting lawmakers.  It’s about uncovering a scheme which targeted lawmakers for the purposes of affecting public policy.  The guilt or innocence of Senators Dodd or Conrad is not for us to say, and it’s not the focus of our investigation. You would think, however, knowing these documents do exist, that they would be among the first to want them to be released so that they can clear their names.  We have at our disposal the ability to uncover the full scope of this program.  For reasons I cannot explain, Democratic leaders in Congress refuse to get the proof that can answer all these questions — proof which is literally one subpoena away.”

AlthoughDodd denies ever having heard of either Angelo Mozilo or the “Friends of Angelo” until Portfolio revealed the program’s details, Dodd’s mortgage deal represents either illegal cronyism or inexcusable bad judgment, either of which should disqualify him from serving as Chairman of the Senate Banking Committee — the committee which is has jurisdiction over the mortgage industry.  

Dodd’s dalliances with Countrywide were not his first stroke of good luck in real estate.  In 1994, he also got a sweetheart deal buying an Irish cottage from Edward Downe, Jr., a friend of Dodd’s who had pled guilty to felony securities fraud and insider trading charges.  Dodd’s cottage more than tripled in value in a few years.  But Downe was probably not too upset about not owning such a rapidly appreciating asset because in 2001 Dodd bypassed the usual Justice Department procedures, going directly to then-President Bill Clinton, who, on his last day in office, gave Downe a full pardon.

As if these two examples weren’t enough to prove Dodd’s lack of fitness for his job, we also have his involvement in putting protection for the infamous AIG bonus payments in an amendment to the so-called “stimulus bill.”  

On a Tuesday in March, as the Chicago Tribune noted, “Dodd had said he was not a member of the conference committee that crafted the compromise bill and said the exception had not been in the bill as he drafted it.  But late Wednesday, Dodd admitted he had been involved in the change.”  The bonuses, which included $165 million to the financial products unit which was primarily responsible for the company’s collapse, may have been protected by law in any case. But Dodd’s actions ensured they would be paid — with taxpayer money. 

Is it coincidence that Dodd was the largest recipient of campaign contributions from AIG in 2006 and the second largest in 2008 behind only Barack Obama — which may explain why it was a “Treasury Department official” who asked Dodd to make the bill modification regarding the bonuses. Is it coincidence that the financial products unit’s derivatives branch, where much of that bonus money went, was based in Connecticut?  

Now that Ted Kennedy is sick, Dodd has become the key player in crafting the Senate’s health care “reform” legislation.  I’m sure that has nothing at all to do with Dodd’s continuing good fortune in suddenly receiving hundreds of thousands of dollars in support (by way of pro-Dodd advertising) paid for by the Pharmaceutical Research and Manufacturers of America. 

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