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June 27, 2008

NEW YORK TIMES: "About that Mortgage, Senator . . ."

It turns out that the chieftain of Countrywide — which is smack in the middle of the mortgage mess — extended privileged borrowing status to two Senators, Chris Dodd, Democrat of Connecticut, and Kent Conrad, Democrat of North Dakota. Both Senators deny any ethical violations.

The disclosure of the V.I.P. arrangments by the political website Politico.com left constituents angry and suspicious — particularly because the revelations came just as Congress was rousing itself to do something about the mortgage foreclosure crisis.

It would be nice to think that members of Congress did not go into the process with any undue friendships with the mortgage companies.

The Senate ethics committee, normally known for profound silence in the face of members’ scandals, has proposed having more stringent disclosure rules as a part of the chamber’s standing regulations. Currently, home mortgages are exempt from loan disclosure rules. (Why? we’d like to know. Is there something about graft given in the form of a home mortgage that is less corrupting than other forms of graft?)

Indeed. Plus this: Mortgages: Sleaze-o-rama:

More sleaze oozed out of the subprime mortgage mess this month with news that two U.S. senators got sweetheart loans from a giant mortgage company.

One of them, Christopher Dodd, D-Conn., heads the Senate Banking Committee, which gives him heavy clout over mortgage lenders. The other is Sen. Kent Conrad, D-N.D.

Angelo Mozilo, the controversial chairman of Countrywide Financial, gave both of them loans at low fees and reduced interest rates. . . .

It's difficult to say what is more remarkable about the senators' behavior: the petty venality or the stupidity.

Mr. Conrad was the more crass of the two. While shopping for a loan, he called James Johnson, the former chairman of mortgage giant Fannie Mae and a former top adviser to Illinois Sen. Barack Obama, the presumptive Democratic presidential nominee. Mr. Johnson happened to be with Mr. Mozilo when Mr. Conrad's call came through. Mr. Mozilo got on the line and got the senator's loan application rolling.

Mr. Dodd says he didn't ask for favors from Mr. Mozillo. Maybe so, but the senator knew that Countrywide had placed him in a special program for VIPs. It got him special treatment and an interest rate available only to special customers. Mr. Conrad borrowed more than $1 million, Mr. Dodd more than $775,000.

It also turned out that Mr. Johnson himself got a sweetheart loan from Countrywide. When that fact surfaced, he resigned his position heading Mr. Obama's vice presidential search committee.

Sleaze-o-rama, indeed. And as I've noted before, the real problem isn't so much the mortgages, as the culture of entitlement that made the mortgages seem no big deal.

Heck, even The Socialist Worker sees the problem:

BUT WHILE millions grapple with rising mortgage payments or see their wealth evaporate with falling house prices, members of Congress continue to benefit from favorable treatment by mortgage lenders--the very same lenders who will get a bailout if proposed legislation passes.

The housing bill's key backers in the Senate--Chris Dodd (D-Conn.), head of the Senate Banking Committee, and Kent Conrad (D-N.D.), who chairs the Senate Budget Committee--both got special deals from the nation's biggest mortgage lender, Countrywide, thanks to their connections with the company's CEO, Angelo Mozilo.

"Dodd, the lead sponsor of the bill, secured no-closing-cost mortgages at interest rates of 4 percent and 4.25 percent, and continues to insist he got no special favors," the Rocky Mountain News reported. Conrad admitted calling Mozilo for help with a discount on a $1 million mortgage for a beach house, but also claims that it was legitimate.

Now Dodd and Conrad are in position to return the favor to the mortgage industry. If the current bill passes the House, Countrywide and other lenders will see U.S. taxpayers assume responsibility for mortgage defaults.

Do tell. Plus, from the Hartford Courant: "Come Clean, Senators."

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