Monday, August 17, 2009

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?"


Joel Farnham said...

Quis custodiet ipsos custodes?

Indeed. The "Free" press was the guardians of yore. Now I think it is the Internet.

AndrewPrice said...

So you're saying that letting people police themselves is not the best idea?

I agree with Joel, if the press won't report fairly (or at all) then it's a good thing the internet is here to do it for them.

Unknown said...

JoelFarnham: Ah, the ancient language of classical education. Andrew told me to stop quoting in Latin, so I switched to Greek, and he really chewed me out. So since I have a fellow-traveler, we should be wondering why the Republicans on the Committee voted the way they did. The proper questions is Cui bono? And the answer is corruptisima res publica, plurimae leges. Make enough laws, with sufficient interpretations, and the crooks of both parties can hide behind them lest they be next up on the docket.

Unknown said...

Andrew: I wouldn't trust the politicians to guard the Capitol toilet paper. I'm not so much against the general concept of people policing themselves (the honor system used to work quite well, when there was still such a thing as honor), I just don't want incestuous elected crooks watching each others' backs. I expect this sort of thing from the Democrats, but the ease with which the three Republicans also dismissed such a clear violation means it's time for a house-cleaning, in both houses. It smacks of quid pro quo (yay, Latin again). If I ignore your lack of ethics now, maybe you'll ignore mine later--please? Maybe we should be checking the mortgages of the Republicans on the Committee as well, hmmmm?

CrispyRice said...

Groups like this policing themselves SHOULD work because the group should care about their image, integrity, etc. It doesn't do any congressman any good to ignore the wrongdoing of their compatriots because it weakens the trust of the public in the body as a whole.

But, perhaps, that is pie-in-the-sky wishing, and it is a good thing we have the press... errr, the internet.

How do you say "Trust But Verify" in Latin, anyway??

Joel Farnham said...

LawHawk, to be honest, I remember that from an old Robert Heinlein book. "Space Cadet".

Ethics. Or more precisely, Situational Ethics. If looked at from the point of view of a body, like "Congress", with a perceived attack, the situational ethic is protect the body (Congress and members therein).

The question really is, why did the group allow Scooter Libby to be attacked and protect the senators? Don't tell me that "only" one person knew the truth about who outed Valerie Plame.

DCAlleyKat said...

Ah, the old 'Absolute corruption corrupts absolutely!'...Those three Republicans names are? Oh throw the Democrats names in there also, just for the...uh, equal corruption of it all!

Unknown said...

CrispyRice: I really do say "thank God for the internet." The Countrywide story was reported in the MSM, but only as a throwaway. No big deal. Nothing to see here, move on. Phooey.

And the answer to your question is:
Crede sed proba.

Unknown said...

Joel Farnham: I go so far back that "situational ethics" was still a concept without a name. We dubbed it "the ice cream theory of values" but the other expression is the one that caught on.

As for Scooter Libby, it's the same old story. The Republicans play namby-pamby politics, and the Democrats play hardball. The Republicans are like Charlie Brown falling for Lucy pulling the football away just as he's going to kick it. He always ends up flat on his butt. Then Lucy promises next time she'll play fair. And he always fall for it. The Republicans always fall for the Democrat promises not to fight dirty, and are surprised when they end up on their Charlie Brown butts.

DCAlleyKat: The three Democrats are Barbara Boxer (California), Mark Pryor (Arkansas) and Sherrod Brown (Ohio). More importantly, the Republicans are Johnny Isakson (Georgia), Pat Roberts (Kansas) and James E. Risch (Idaho).

If you want to read the whitewash letter from the Committee to Dodd, here's the link: Letter of Dismissal. The letter to Conrad is nearly identical.

patti said...

good thing i strapped on my helmet before reading this. oye. way past time to clean house.

Tennessee Jed said...

A few thoughts, Hawk:
1) I was not glad to hear they were found non-ethical

2) "illegitimus non carborundum."

3) I actually remember a book titled "Situational Ethics" which was good. It was by a Yale Theology Professor named Joseph Fletcher as part of a course on ethics I took in under-graduate school. In his case, though, it simply said "do the most loving thing" when confronted with two unsavory choices. An example, a woman on a wagon train smothers her baby rather than let the baby cry out and alert the Commanche who would then kill all of them baby included.

As for the friends of jerkweed at Countrywide, I only hope the voters will give them what they really deserve.

Unknown said...

Patti: I think the appropriate expression is "a plague on both their houses."

Unknown said...

Tennessee: I think you showed admirable restraint. Frankly, I was pissed.

And as you said, we can't let the bastards get us down. This is a fight worth fighting, and it's a never-ending battle. Relax for a minute, and they're at it again.

I'm not that fond of psychologists, but occasionally they get it right. They broke down ethics into false and true propositions. They are:

The "approach-approach" conflict (a choice of doing one of two things, both of which are perfectly ethical, and both of which are personally beneficial).

The "avoidance-avoidance" conflict (both choices are bad, neither is perfectly moral, but one is less unethical than the other, and will produce the better result, i.e., the example you gave. Religious people call this "choosing the lesser of two evils").

The third is the "approach-avoidance" conflict, which is the true and serious ethical conflict (to do that which is easy and personally beneficial over that which is difficult but morally and ethically correct. That's the problem which exists on the Senate Ethics Committee. It was easy to let Dodd's dishonesty go unpunished, but also beneficial to all the members since there will be no great public outcry, and they are now immunized [at least somewhat] from the same type of charges against them).

The Committee made the unethical choice. The difficult choice would have been to do the ethical thing, at personal risk and the chance of political retaliation. If the Ethics Committee won't do that, what's the point of having it, and how can we expect any other political body to act ethically?

StanH said...

Lawhawk, there you go again with that honor thingy, that’s for other people. I see one of the Republican Senators (Senator Isakson) is one of mine, …goody. He’s gonna hear from one of his favorite constituents, “in no uncertain terms” my displeasure in his act of sleazy cronyism. Washington is a cesspool and needs to be drained right and left. Articles like this really piss me off, I can’t wait for 2010 …I think I’ll vote at least ten times : )

StanH said...

Sorry for the second post. Isakson owns one of the largest real estate companies in Atlanta “Northside Realty.” I find it somewhat interesting he sits in judgment over someone involving rigged mortgages. I wonder if he is a super-duper best bud of Angelo, just an interesting tid-bit.

Unknown said...

StanH: I imagine a request under the Freedom of Information Act might produce results on Isakson, but I'm not sure it would accomplish anything. I don't know your Senator, but I know that telling mine (Barbara Boxer) to act ethically would be like telling a jackass to do calculus. A simple impossibility. The shady land-deals, mortgages and clear conflicts of interest exhibited by Boxer, Feinstein and Pelosi are considered charming in these here parts.

Writer X said...

How I wish I could vote in the state of Connecticut. With any luck, Dodd's constituents will wake up and vote him out in 2010. I hear it's going to be a close election; Dodd deserves to lose in a landslide.

I don't care which party a politician is from, that type of behavior makes me sick. And it also makes me wonder about all the sweetheart deals we don't know about.

Joel Farnham said...

LawHawk, The third approach-avoidance conflict is what Sarah Palin did in Alaska. She found a smelly situation. Rather than keep the job with the oil company, she quit.

I think this is the real reason she is reviled by some Republicans. If she was on the ethics committee, she would have blown the whistle.

She represents a severe disruption of good ole boy networks and nepotism.

Unknown said...

WriterX: There really is an uprising going on in Connecticut. A joint group of Democrats and Republicans got together and set up a website called Dump Chris Dodd. It couldn't happen to a nicer person.

JoelFarnham: I guess I hadn't followed all the twists and turns of the Palin resignation. But the oil company connection makes sense. I wish her well.

Writer X said...

LawHawk, thanks for the link. Great web site. I think I may ask them to send me a yard sign for my front yard. It can't hurt. That would be some kind of good karma if they succeed in kicking him out of Congress.

Unknown said...

WriterX: In the words of the melancholy Dane, "'Tis a consummation devoutly to be wished."

Individualist said...

One of the guiding tenets for a Certified Public Accountant performing an audit is "Even the Appearance of a Lack of Independence is enough to disqualify one from issuing an opinion on financial statements".

This is demanded of every private business and corporation. Guess where it is not impelmented with the same resolve. The Accounting Books of the Federal Government.

Remember the motto of congressional regulation is this.

"Do as I say not as I do"

Unknown said...

Individualist: You are absolutely correct. And in this case, the accountants who did actually submit reports found it all, reported it to the Committee, and they were completely ignored. There was a great deal more than the mere appearance of impropriety. It was pure special treatment (a "gift" under federal law), and a clear ethical violation. But who cares about accountants and company CFOs when the "integrity" of Congress is involved? This whole affair is simply disgusting.

Individualist said...

I think they hit a nerve with you here LawHawk.

Mayhaps one of the duties of the Bolier Room Elves is to keep your blood boiling in order to fuel your insightfulo posts. Hmmm........

Unknown said...

Individualist: Thanks for the comment. In reality, I think Andrew hired them to kill me. And they're doing a great job.

BevfromNYC said...

So call me a real cynic, but doesn't anyone think that Dodd's sudden diagnosis of prostate cancer was rather well timed to coincide with his dismissal? The investigation ends in a vote to dismiss and then he is unavailable for comment because of impending surgery. I wish him well in his recovery, but the timing is interesting.

Unknown said...

Bev: You're not the only one who had that thought. I know I should give the benefit of the doubt to a sick man, but it is an awfully strange coincidence. And by dismissing Conrad at the same time, he gets cover too. If they weren't such a sleazy bunch, I doubt the thought would have occurred to either of us.

DCAlleyKat said...

DCAlleyKat: The three Democrats are Barbara Boxer (California), Mark Pryor (Arkansas) and Sherrod Brown (Ohio). More importantly, the Republicans are Johnny Isakson (Georgia), Pat Roberts (Kansas) and James E. Risch (Idaho).

If you want to read the whitewash letter from the Committee to Dodd, here's the link: Letter of Dismissal. The letter to Conrad is nearly identical.

Thanks LawHawk! Boxer on ethics...laughable, absolutely laughable. Congress 2010/12 You're Fired is my motto!

Unknown said...

DCAlleyKat: I'm not sure which expression applies. "They've put the fox in charge of the henhouse," or "The inmates have taken over the asylum."

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