The Washington Times reports that Senate Democrats Christopher Dodd and Kent Conrad were cleared of any ethics violations by the Senate Ethics Committee.
'The committee, after a yearlong investigation, said it found "no substantial credible evidence" that the home loans secured with Countrywide Financial Corp. violated Senate ethics rules.
Mr. Dodd of Connecticut, who is chairman of the Senate banking committee, and Mr. Conrad of North Dakota vehemently have denied any wrongdoing or ethical lapse in the mortgage deals. Both said they knew they got low mortgage-rate deals in Countrywide's VIP program but thought the special treatment was a "courtesy" on par with "frequent flier" discounts.'
Although Dodd and Conrad claim otherwise, in secret testimony before the House Oversight and Government Reform Committee, former Countrywide employee Robert Feinberg said they both knew they were getting special treatment.
'Asked by a House Oversight investigator if Conrad, the North Dakota senator, "was aware that he was getting preferential treatment?" Feinberg answered: "Yes, he was aware."
Referring to Dodd, the investigator asked:
"And do you know if during the course of your communications" with the senator or his wife "that you ever had an opportunity to share with them if they were getting special VIP treatment?"
"Yes, yes," Feinberg replied.
Bryan DeAngelis, Dodd's spokesman, said Feinberg has repeatedly made allegations of special treatment that were not true.'
As it turns out, the Senate Ethics Committee decided that the senators did not receive special treatment, but even if they did it was OK. Here is an excerpt from the Committee's letter to Dodd giving him the good news.
'To reach the conclusion that you did not violate ethics rules, the Committee carefully examined whether your conduct violated the Senate Gifts Rule, which states: “No Member, officer, or employee of the Senate shall knowingly accept a gift except as provided in the rule.” The rule provides an exception for opportunities and benefits “in the form of loans from banks and other financial institutions on terms generally available to the public, “thereby allowing Senators to accept opportunities offered only to a group that is not defined on the basis of one’s status as a Senate employee. The Committee also considered whether your conduct violated Senate Rule 37, which prohibits Senators from using their position for personal gain.'
For one thing, there was at least one person who was not in the Senate who got a special deal as a "Friend of Angelo." That takes care of the public availability part. And second, there is an exception to the ethics rule against receiving gifts if the gift is a loan from a bank or other financial institution. Finally, the senators say they didn't know they were getting special treatment. Bingo! It's all OK!
Or not. Here is an AP description of some of the terms Dodd and Conrad got. You decide if the senators might have gained personally, or if these terms sound like they're generally available to the public.
'In Conrad's case, an e-mail from Feinberg to Mozilo indicates Feinberg informed Conrad that Countrywide had a residential loan limit of a four-unit building. Conrad sought to finance an eight-unit apartment building in Bismarck that he had bought from his brothers.
"I did advise him I would check with you first since our maximum is 4 units," Feinberg said in an April 23, 2004, internal e-mail to Mozilo.
Mozilo responded the same day that Feinberg should speak to another Countrywide executive and "see if he can make an exception due to the fact that the borrower is a senator."
Feinberg said in his deposition with House Oversight investigators last month that exceptions for the type of loan Conrad received were not allowed for borrowers outside the VIP system.
"If there was a regular customer calling, and of course you say, 'No, we're a residential lender. We cannot provide you with that service,'" Feinberg said.
Feinberg also told House investigators that Countrywide counted both of Dodd's homes as primary residences.
"He was allowed to do both of those as owner-occupied, which is not allowed. You can only have one owner-occupied property. You can't live in two properties at the same time," he said.
Normally, Feinberg said, a second home could require more equity and could have a higher mortgage rate.'
It's clear that both Dodd and Conrad gained personally by their relationships with Angelo Mozilo. It's also clear that they got special treatment. So how did Senate Ethics Committee conclude that it was OK?
'First, your mortgages were made in a commercially-reasonable manner based on terms and conditions available to borrowers with similar loan profiles. While your Countrywide loans were handled through the V.I.P. loan unit and designated as F.O.A. loans, the service you received was available to thousands of other non-Senate customers at Countrywide and the loans you received appear to have been available industry-wide to borrowers with comparable loan profiles.'
In other words, because there were other influential people receiving special treatment from Countrywide, it's OK for the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs to get special treatment as well. Never mind that Countrywide was in a business that was directly affected by the Dodd's committee.
'Second, there is no credible evidence that you sought or knowingly received any financial benefits not available to other borrowers with similar loan profiles.'
In other words, the good senator did not have to ask for special treatment. Angelo just gave it to him on his own, so it's all good. And again, since Senator Dodd was well aware that there were other special borrowers, there was nothing wrong with cashing in himself. "Similar loan profiles" refers to other "Friends of Angelo."
'Third, there is no credible evidence that you used your official position for personal gain. The Committee found no evidence that you fully understood the scope of the V.I.P. program, knew that you were in the “Friends of Angelo” program, or attempted to use your status as a Senator to receive loan terms not available to the public.'
In other words, the good senator may have gotten special treatment because he has great fluffy white hair. Who knows? The Committee doesn't. Committee members only know that there's no proof that Dodd's position as Chairman of the Senate Committee on Banking, Housing, and Urban Affairs had anything to do with it. Angelo just gave him the deal, and it's all quite ethical in the Committee's view because Dodd made a point of knowing nothing. I mean, why would the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs be interested in any first hand knowledge of industry lending practices? What an absurd thought!
The Senate Ethics Committee has acquitted itself admirably in protecting its own. They rationalize the routine influence peddling that goes on among senators and shield them when they get caught at it. And of course, it doesn't hurt to be a Democrat. There's no surprise at the timing of Committee's announcement. So what if it's taken them a year to come to a decision. The important thing is that the Committee was able to wrap it up with over a year to go before Dodd stands for re-election. That gives Connecticut voters plenty of time to forget about all this.
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