SUBPRIME SIX UPDATE: Winners, Losers, and “Friends.”
Democratic Sens. Chris Dodd of Connecticut and Kent Conrad of North Dakota still rank high in the loser category. They had to admit that they received special treatment on mortgage loans from Countrywide. They insist they had no idea they got a break—everybody else in the country is saying, “gimme a break.” Conrad is chairman of the Senate Budget Committee and Dodd is chairman of the Senate Banking Committee. They are two very powerful senators whose committees have jurisdiction over Countrywide’s business. It turns out they were also “Friends of Angelo,” as revealed by Conde Nast Portfolio Magazine. That’s Angelo as in Angelo Mozilo, chairman and CEO of Countrywide.
It’s a pretty seedy story: When Conrad was looking to buy his Delaware beach house in 2002, he called his good friend, former Fannie Mae CEO James Johnson, Conde Nast reported. Mozilo happened to be in Johnson’s office and Johnson handed the phone to him. Countrywide financed the beach house and, later, an investment property of Conrad’s. Mozilo instructed a subordinate via email to “(T)ake off 1 point” and in another email wrote, “Make an exception due to the fact that the borrower is a senator.” Dodd never spoke directly to Mozilo, but Dodd was aware that his two Countrywide mortgages were in a “VIP section.” Dodd says he assumed that was just some kind of “courtesy.” The Senate Ethics Committee is investigating.
Incidentally, Johnson is the same guy who was briefly tasked by Obama to vet potential running mates. Johnson stepped aside when it was revealed that he had received preferential loans from Countrywide.
As of this writing, 17 senators still haven’t responded to Politico.com’s request for information on their mortgages.
Read the whole thing. Meanwhile, here’s a followup from Portfolio Magazine.
Plus, Angelo’s Ashes: “Countrywide Financial is becoming more of an embarrassment for Bank of America just days before it completes a takeover of the mortgage lender. At the same time, the Senate is pushing ahead with sweeping legislation on housing while facing questions about why some of its members received below-market-rate mortgages from Countrywide.”
UPDATE: Bill Allison notes that Bank of America wrote the bailout bill, but observes: “Given that Sen. Chris Dodd, D-Conn., doesn’t know what the interest rates are, it’s probably better that he’s not writing the bills anyway.” Contra Allison, however, I did note this the other day.