Countrywide Crooks Are Not Unethical

You'll all be glad to know that the two Democratic Senators from Countrywide Financial have been cleared of wrongdoing by the Senate Ethics Committee. Now mind you, that was a six to nothing vote, and the Committee is made up of three Democrats and three Republicans. So it all must be on the up-and-up, right?

The two Senators who were under investigation for ethics violations were both Democrats, and now that they've been cleared, the mainstream media have started mentioning their parties whenever the subject appears. Previously they were simply Senators, with no discernible political party. When a Republican Senator or Representative gets caught for non-payment of a parking ticket, the press always makes sure you know which party he or she belongs to. But when a Democrat is charged with serious financial hanky-panky during a banking crisis, they don't belong to any party until cleared (which they frequently are not--see William "Freezer" Jefferson of Louisiana, Party Unknown).

Senator Kent Conrad (D-North Dakota) and Senator Chris Dodd (D-Connecticut) had both denied wrongdoing. But Chris Dodd, being the more famous of the two, was very vocal about his utter innocence and lack of knowledge about any possible shadiness in his dealings with Countrywide Financial. The investigation has been going on for nearly a year, but it has been very public for Dodd. Neither of the two walked away completely clean. The Committee "admonished" the two for the "appearance of impropriety."

The investigation began when a watchdog group called Citizens for Responsibility and Ethics in Washington (CREW) complained to the Ethics Committee about a mortgage Dodd had taken out with Countrywide. They charged him with violating the prohibition against knowingly accepting gifts, and loans at special interest rates are defined in the rules as "gifts." The Senators are allowed to take out loans at special rates, but only if those special rates are "generally available to the public at large." They are called "sweetheart loans" for short. By February, with interest rates at an historic low, Dodd did refinance with another financial institution, but will still be paying a rate similar to the original loans which were taken out when interest rates were considerably higher. Getting the new loans at a rate generally available to the public does not make the original loans at the favorable rate any less unethical.

One hundred ninety three days into the investigation, Dodd was taking so much heat from his constituents and the local press that he decided to call a news conference back in February. The Wall Street Journal gave it the name "the peek-a-boo disclosure," and the name stuck. After denying that he had been given any special treatment of any kind, Dodd at the conference conceded that he had been given special treatment, but he thought it was "a courtesy." Calling the special rate a "courtesy" instead of a "gift" is a distinction without a difference. But the underlying ethics question, and the more than 100 pages of documents, concerned a very special kind of treatment. They are known as "Friends of Angelo" loans, and the treatment was given only to very important politicians. And Dodd was indeed very important, considering that Angelo is Angelo Mozilo, CEO of Countrywide Financial, and Dodd is the chairman of the Senate Banking Committee.

The peek-a-boo conference was comprised of Dodd taking a few questions, then allowing a few reporters (not including the Wall Street Journal) to take a quick look at the general documents. No copies were released to anyone. But he did release a memo claiming that what he had just let reporters take a peak at proved that the terms he received were not particularly favorable terms. Included with the memo was a consultant's report claiming the same thing. Of course the consultants were hired by Dodd's attorneys. Dodd at the meeting then apologized that he didn't release the documents earlier. Hold on, Chris, you still haven't released them, so what's with this "earlier" stuff?

Dodd also failed to explain in any way the testimony prior to the conference from Robert Feinberg, a Countrywide accountant, that Dodd had been told repeatedly that he was getting very special treatment. Mozilo had said so to Dodd himself, adding "what's the point of being a 'friend of Angelo' if we're not giving you special treatment?" Countrywide for many years had been the largest single customer of Fannie Mae, the gigantic government-sponsored mortgage guarantor governed in large part by Dodd's Banking Committee. Mozilo became an expert in selling very shaky mortgages to Fannie Mae, and Dodd was of considerable assistance by constantly pressuring Fannie Mae to support "affordable housing." Now you know why Dodd was a very good "Friend of Angelo." And now you also know that with friends like Dodd and Barney Frank, Fannie Mae was headed for the poor house. The taxpayers are now shouldering the burden of the Fannie Mae failure and receivership.

The "kind of a courtesy" that Dodd got was completely unavailable to anyone who was not a Friend of Angelo. It was a gift pure and simple under the Rules of Ethics, and very clearly forbidden. But that doesn't stop the old boys network in the Senate from looking the other way. The Ethics Committee looked at documents and took some testimony from outsiders, including Robert Feinberg. Feinberg testified again, under oath, with documentation that both Dodd and Conrad received very special treatment and very favorable loans, that they both knew it, and were repeatedly reminded of it. But golly, the Committee never called either of the two Senators to testify, let alone under oath. Well--that's one way to avoid tainting your buddies with charges of perjury. Instead of a full-on censure, plus contempt charges, removal from office, and subsequent perjury charges if they lied under oath, these two sterling upright Senators got a slap on the wrist.

The Ethics Committee members are the guardians of proper behavior in the Senate. They are there to keep Senators from straying from the path of good stewardship of the public trust. When they do something as blatantly deceitful as this, the ancient question arises: "Who will guard the guardians?"