Dodd Explains His VIP Status, Bring on the Hearings
Sen. Christopher Dodd, D-Conn., weighs in today with his explanation of how he never sought special treatment from Countrywide Financial Corp. through its “Friends of Angelo” program. You might recall that Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, explained earlier that he never asked for or received special treatment on his four mortgage refinancings, despite having called the company’s CEO with a phone number supplied by former Fannie Mae CEO James Johnson. Conrad said on Tuesday he realized he got loans on favorable terms after seeing a Countrywide e-mail from former CEO Angelo Mozilo, telling a loan officer to knock off a point for Conrad, due to his position as a U.S. Senator.
Dodd takes his turn in the Washington Post, saying that he and his wife were, unlike Conrad, well aware of being members in Countrywide’s VIP program, because the company told them so. But the couple knew little more than that when they refinanced two loans in 2003, he said. From the Post:
The couple assumed the plan gave them unspecified courtesies and did not ask whether it included a waiver of the fees, known as points, or a reduced interest rate on their loans, the senator said.
“I don’t know that we did anything wrong. I negotiated a mortgage at a prevailing rate, a competitive rate. . . . I did what I was supposed to do,” Dodd told reporters at a news conference called to discuss the matter and legislation to address the nation’s housing crisis.
So just to be clear on this: Dodd, at the time of his refinancings a longtime senior member of the powerful Senate Banking Committee, which includes among its duties the regulation of the mortgage industry, is told by one of the nation’s top mortgage lenders that he’s part of a special VIP program for select customers, and he just says: Sure, that’s fine by me. He doesn’t ask why he was chosen, or what this special status might mean. He doesn’t offer that, given his position, he has to be particularly careful about being granted favorable treatment, especially from a mortgage lender. He doesn’t question whether the VIP program might entitle him to discounts on his loans, which he knows might run afoul of ethics rules. He and his wife, as repeat Countrywide customers, assumed the plan gave them “unspecified courtesies.” Were they expecting flowers and chocolates?
The Senate ethics committee has begun a preliminary investigation. Johnson, of course, resigned from his post as vetter for Democratic Sen. Barack Obama over loans he received from Countrywide. Some think this is all a bit unfair. Not me.
Bring on the investigations. Convene the hearings. But don’t stop at Dodd and Conrad. Just keep opening the door to the way the mortgage market worked. Put on display how lenders showered special treatment on people at the top, while profiting from subprime loans made on misleading terms to people at the other end of the market. Talk about the reverse redlining that has led minority and low-income borrowers to be far more likely to be stuck with high-rate loans than white borrowers with similar credit scores. Shine a spotlight on companies like Citigroup and H&R Block, which bought up subprime companies and profited from their predatory and exploitative loans while trying to keep their names and financial reputations above it all. Ask where Congress - and the Senate Banking Committee - were when all this was going on.
And don’t stop there. Take a closer look at the nation’s two-tiered system of credit, where politicians, judges, and others in power are treated better, and in the case of credit bureaus, more fairly than the rest of us. The VIP lists that Dodd, Conrad, and the others found themselves flourish elsewhere in the credit system. Maybe they’re not illegal, but they’re also not OK, and the subprime mess serves as an example of what happens when some borrowers are treated differently - and far worse - than others. Dodd and Conrad deny knowing about any favoritism at the time they took out their loans, but they are well aware of it now, and so are the rest of us. Whether the credit system will change as a result depends, in large measure, on whether they and other VIPs in this world decide it’s time to fix it.