Sen. Chris Dodd is overdue for a long talk with his spokesman, Bryan DeAngelis, who wrote: “As the Dodds have said from the beginning, they did not seek or expect any special rates or terms on their loans and they never received any; they were never offered special or sweetheart deals and if anyone had made such an offer, they would have severed that relationship immediately.” That statement is false: Senator Dodd himself has acknowledged that he knew he was given a “VIP” offer from Countrywide, the disgraced mortgage lender where CEO Angelo Mozilo’s “Friends of Angelo” program traded sweetheart deals for the goodwill of prominent and influential people including Senator Dodd (D., Conn.), Sen. Kent Conrad (D., N.D.), and former cabinet secretaries Alphonso Jackson and Donna Shalala (R and D, respectively). Points and fees were waived, and lending rules were bent or ignored. If Mr. DeAngelis cannot see that these arrangements represent “special or sweetheart deals,” then he ought to consult his boss, who is, irritatingly, still chairman of the Senate Banking Committee.
Senators Dodd and Conrad have protested that they did not know that they were being given preferential treatment. We therefore are implicitly asked to believe that the gentle souls at Countrywide were forgoing profits on loans to influential politicians out of a sense of public-spiritedness, and were carefully concealing the sweetheart deals from their beneficiaries. One might hope that the two men who would go on to chair the Senate Banking Committee and the Senate Budget Committee would recognize unusual financial arrangements when they saw them — and signed their names to them. But whether either of these two possesses the financial acumen to assess the sweetness of a mortgage, their banker, Robert Feinberg of Countrywide’s VIP operation, now informs congressional investigators that both men knew they were getting preferential treatment.
“Who you know is basically how you’re coming in here,” Feinberg said. “You don’t say ‘no’ to the VIP.” Pressed directly about whether Senator Conrad was aware of the arrangement, Feinberg said, “Yes, he was aware.” Dodd, too? “Yes, yes.”
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Senator Conrad was given a loan to finance an apartment building in North Dakota, in contravention of Countrywide’s lending rules. Senator Dodd was allowed to list both his Connecticut property and a Washington property as “owner occupied,” also against Countrywide’s rules. Had Senator Dodd been a private citizen, his loans would have entailed charges of .250 and .375 “points”—up-front payments equal to a percentage of the mortgage. Senator Dodd was charged: zero. That saved him about $3,000, but the big money came from reduced interest rates. Senator Dodd’s mortgage rates were knocked down from 4.875 percent to 4.5 percent and 4.25 percent, saving him $75,000. Senators play by their own rules. Mr. Mozilo, for his part, will find out whether the rules apply to him as he faces fraud and insider-trading charges brought by the SEC.
Senator Dodd has a history of oddball real-estate transactions. He purchased a Washington condo in partnership with Edward Downe Jr., later convicted of a fistful of felonies in a massive insider-trading, fraud, and tax-evasion scheme; he received a pardon from President Clinton after Dodd’s intercession. Senator Dodd also got a surprisingly good deal on a glorious seaside estate in Ireland, and two-thirds of the price was put up by one of Downe’s business partners, William Kessinger. So being a friend of felons (Pardon us! Pardoned felons!) is almost as good as being a friend of Angelo.
Senator Dodd will be reforming our banks. Senator Conrad will be minding the budget. Perhaps Senator Dodd can get American taxpayers a sweetheart “Friends of Hu” deal as Senator Conrad helps spend the nation into bankruptcy. As the Senate Ethics Committee ponders these imponderables, we can only wonder if congressional Democrats have lost the ability to blush.
