Posted on 06/14/2008 7:11:33 AM PDT by Gritty
You're not going to believe this about Countrywide :
"Senators Christopher Dodd, Democrat from Connecticut and chairman of the Banking Committee, and Kent Conrad, Democrat from North Dakota, chairman of the Budget Committee and a member of the Finance Committee, refinanced properties through Countrywide’s “V.I.P.” program in 2003 and 2004, according to company documents and emails and a former employee familiar with the loans.
Other participants in the V.I.P. program included former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke. Jackson was deputy H.U.D. secretary in the Bush administration when he received the loans in 2003. Shalala, who received two loans in 2002, had by then left the Clinton administration for her current position as president of the University of Miami. She is scheduled to receive a Presidential Medal of Freedom on June 19.
.....
"According to company documents and emails, the V.I.P.'s received better deals than those available to ordinary borrowers. Home-loan customers can reduce their interest rates by paying “points”—one point equals 1 percent of the loan’s value. For V.I.P.'s, Countrywide often waived at least half a point and eliminated fees amounting to hundreds of dollars for underwriting, processing and document preparation. If interest rates fell while a V.I.P. loan was pending, Countrywide provided a free “float-down” to the lower rate, eschewing its usual charge of half a point. Some V.I.P.'s who bought or refinanced investment properties were often given the lower interest rate associated with primary residences.
Unless they asked, V.I.P. borrowers weren’t told exactly how many points were waived on their loans, the former employee says. However, they were typically assured that they were receiving the “Friends of Angelo” discount, and that Mozilo had personally priced their loans."
You have to be shitting me.
Is that illegal and/or directly in violation of both House and Senate rules?
The issue is not just that closing costs and points were waived - it is the "float down" provision and even a reduction in interest rate. Grab your trusty computer (e.g. Quicken) and run the difference on an amortization schedule over 30 years of a 1/4% interest rate change, then tell me what you think. The "benefit" involved here adds up to tens of thousands of dollars.
I'm not surprised by a bit of this.
Rumor is that Countrywide had an entire department that dealt with these "FOA" (Friends of Angelo) loans, and I'll bet that a few well-placed subpoenas will show that these loans were disproportionately handed out to people with political influence.
You think that's bad? Take a look at what MSNBC's reporting said Countrywide objected to:
"In a statement Friday, Countrywide did not address questions about the VIP program, but said it regretted the impact its disclosure may have had on customers. The company said it was "very concerned about the improper disclosure of confidential customer information. Protecting customer privacy is of utmost importance and we are aggressively undertaking measures to prevent further disclosure of private customer information."
Oh, so they're very concerned about the disclosure of private customer information even when those "private customers" are United States Senators and Congresspeople, and they got favored rates because of their political connections?
And this from a company that has its franchise and is regulated directly as a consequence of Federal Laws passed by that very same Congress?
Does this constitute bribery on a massive scale?
You be the judge.
Here's something to help you make up your mind (Senate Ethics Rules ):
1. (a)(1) No Member, officer, or employee of the Senate shall knowingly accept a gift except as provided in this rule.
(2)(A)A Member, officer, or employee may accept a gift (other than cash or cash equivalent) which the Member, officer, or employee reasonably and in good faith believes to have a value of less than $50, and a cumulative value from one source during a calendar year of less than $100. No gift with a value below $10 shall count toward the $100 annual limit. No formal recordkeeping is required by this paragraph, but a Member, officer, or employee shall make a good faith effort to comply with this paragraph.
(B) A Member, officer, or employee may not knowingly accept a gift from a registered lobbyist, an agent of a foreign principal, or a private entity that retains or employs a registered lobbyist or an agent of a foreign principal, except as provided in subparagraphs (c) and (d).
(b)(1) For the purpose of this rule, the term "gift" means any gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value. The term includes gifts of services, training, transportation, lodging, and meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred.
"I didn't ask" isn't a defense; you can't accept anything worth more than $100. Oh, and Countrywide spent plenty of money on lobbying, so the "private entity" appears to apply here.
Now let's go on to another piece from that same MSNBC article:
"Conrad obtained a $1.16 million loan from Countrywide in 2002 to buy his vacation home, then refinanced twice through the company. Portfolio reported that an internal e-mail from Mozilo instructed an employee to give Conrad a 1-percent discount off his interest rate on his 2004 refinance of $1.07 million, a savings of about $10,000 a year in interest payments."
Ah, now we're getting somewhere.
Are you beginning to understand how there could be a desire to insure that people can play "bubble house" present in Congress?
What if a bunch of Congressfolk in fact have a bubble house and/or serially refinanced, and thus are underwater themselves? How does that change the calculus of what they're doing in Washington DC?
The bills coming out of Dodd .et.al. are allegedly intended to provide "relief" for American homeowners, never mind that the 80% of Americans got nothing out of the bubble years, did not refinance, and did not participate in the speculation but will get screwed by the debt bomb that is and will go onto the nation's balance sheet as a consequence of these "bailout" proposals!
$165 billion so far in "stimulus" has been blown on this endeavor and another $300 billion or more in Chris Dodd's bill is under consideration - for a total larding up of the public debt by nearly half a trillion dollars - to "work to fix the housing mess", at least in part.
I have to wonder - might not the truth be that some of these Congressfolk are in fact underwater on their homes which, of course, we're not being told about!
Is Congress trying to save you or are they trying to save themselves?
I believe we need to see investigations and, if warranted, indictments and prosecutions. We need a special prosecutor. This investigation must reach members of both the Legislative and Executive branches who may have abused the public trust in this and related matters.
I have documented in previous Tickers that Congress was directly warned before it repealed Glass-Steagall that this sort of abusive practice in the lending and banking system would happen, and they repealed the act anyway.
Have you had enough of this crap yet?
Dodd is at the forefront of trying to "bail out" people. Oh yes, he filed a bill that would be "adverse" to some lender's interests, but his solution always seems to be "spend more public money", when you get down to it.
The "Examining Proposals to Mitigate Foreclosures and Restore Liquidity to the Mortgage Markets" preamble from him (Dodd) is just one example; spend, spend, spend, and bloat up the FHA's balance sheet.
That's nice.
Now Mr. Dodd, would you please explain your "special" loan terms, and further, explain why we the people should put up with you filing bills to spend $300 billion in public funds that we do not have, along with exactly what sorts of conflicts of interest you and those around you in the House and Senate have in this regard?
Perhaps you can tell us how you, as the Banking Committee Chairman and presumably highly-knowledgeable in matters of finance, could have possibly gotten this "deal" on your mortgages without realizing that they were in fact "special" terms that were not available to ordinary people - and further, how you could possibly not know that these "special terms" added up to a net benefit of more than $100, and were therefore not allowed under the Senate's Ethics Rules?
I'd really like to know how you justify that, and I believe the rest of America would too.
In addition I think we the people should know if you, and anyone else in Congress, either as Representatives, Senators, or staffers, "own" one or more homes that are underwater and whether any of these people serially refinanced and withdrew equity - that is, are you as our "elected representatives" trying to save us, or are you trying to save yourselves with our money - and we're an afterthought?
The former head of HUD? HUD pushed lenders to make "affordable housing" a priority, that is, to make subprime loans. Of course the bet was that the good times would continue to roll forever.
Mozillo, by the way, took more than $100 million in 2007 out of Countrywide in stock options as his company's stock price and prospects were collapsing.
I'd say his "Friends" program paid off quite well - for him.
How well did it work out for his shareholders or the millions of American homeowners who either have been foreclosed upon or are now facing same?
Do you remember how every time Angelo Mozillo showed up to "testify" on The Hill he was pitched softball after softball? Anyone remember his testimony months ago where Reps and Senators were literally apologizing for having him there and saying before they started asking questions that they were "not going to grill him"?
Now you know why!
Are you one of those people who got rammed up the chute by these lenders? Did you get a subprime mortgage? Did you pay points, closing costs, and a higher rate?
Well guess what - "Friends of Angelo" apparently didn't, and some of them appear to have been the lawmakers and regulators that dealt with this company and were supposed to insure that the company didn't screw you as a consumer!
Of course Dodd and others wasted no time denying they "asked for any special consideration." No surprise there. But that's not the test Mr. Dodd, as I'm sure you're aware. In case you've forgotten and can't find your copy, I included the relevant portion of the Senate Ethics Code up above.
I believe the bottom line is clear - it certainly appears to me that you and a number of other people in Congress received a benefit that is a clear violation of Senate Ethics rules (and, I assume, the House's version of same) and as you sit as Chair of the Committee that is responsible for much of the regulation in this space this is a particularly egregious matter as it pertains to you.
That conflict of interest is sufficient for me to call for your resignation.
I want the truth on this, and that means a full federal investigation complete with subpoenas and public disclosure of who got these "Friends of Angelo" loans.
All of them.
Every last one.
Haven't we had enough with William Jefferson (D-Lousiana) who was allegedly caught with $90,000 in "cold hard cash" in his freezer?
He's still in office!
As if that's not enough, it appears that "unnamed government officials" are "worried" about the reaction in the bond market to Lehman's ouster of two officials. See, normally default spreads (implied risk of bankruptcy) would widen, or increase. But yesterday, following the announcement, they instead contracted.
Why is this important? Because it signals that Wall Street now believes that the government will prevent market failures - that is, bankruptcies - due to foolish acts, and also sends a clear signal to to the company that they can take risk with impunity, as they will be "saved" if necessary.
Well golly-gee, this is a surprise after Bear Stearns? I think not.
How do you fix this? Simple - a public statement that there is no government or Fed backstop on any institution beyond FDIC coverage, and an immediate withdrawal of the PDCF.
Golly gee, that's difficult to figure out.
Not.
Heh, I wonder - did Bernanke get his mortgage from Countrywide's VIP program? Hmmmmm....
Call Congress folks.
It's your government.
Take responsibility for it.
I’m sure this scandal will be splashed all across the headlines and the crawl bars all week long by the objective, unbiased and oh so trustworthy dinosaur media. /s
President Bush is awarding this crook the Presidential Medal of Freedom on June 19th.
Note to self - Revise to “corrupt”, not corrupted. It’s Saturday morning.
Chris Dodd was also up to his neck in the Chinagate scandal.
We will have to have a congressional investigation into this matter. (So we can charge the Republican closest to the leaker.)
Headline should be where is the media and conservative congressmen grilling these filthy rats for the under the table loans.
a good and thorough post. Well done Gritty.
Payback time from our dear leader, remember - she has an enemies list and she will use it. Please note the timing, more things will follow./Just Asking - seoul62........
Count on the MSM to ignore every single Democrat (even the Banking Chairman!) and focus solely on Bush’s former HUD Secretary—the only Republican on this list.
Sob, sob, blubber.. leave Senator Dodd alone. He's a Democrat. He's never done anything under the table. . .
Wot?
The waitresses? With Senator Kennedy.. well, of course, that. But I meant business deals.
And where is the MSM??? Where is Mitch McConnell??? Why are conservative republicans in the house and senate—I pretty sure there are one or two around somewhere—not in front of every TV camera, sending memos to every newspaper and network, demanding that this issue be placed in the hands of a special prosecutor??? Anyone wonder why the “republican brand is damaged?” It’s because gutless RINOS don’t go over well with the people who sent them to Washington to be conservatives! Naturally the MSM will bury this story if at all possible. There are too many dems involved even to attack the republicans. But the silence of those republicans is deafening.
“Wow, does this mean Dodd, the little rooster is corrupted? “
He can’t help it; it’s genetic. He gets it from his dad (Thomas Dodd).
http://en.wikipedia.org/wiki/Thomas_J._Dodd
“
In 1967 he was censured by the Senate for using campaign funds for
personal purposes.
(big snip)
Ironically, in June 2008 Dodd’s son, Senator Christopher Dodd was
alleged to have acted improperly by obtaining a below-market
“Friend of Angelo” mortgage from subprime mortgage lender Countrywide
Financial, which he received while a member of the Senate Banking
Committee who was a friend of Countrywide boss Angelo R. Mozilo.
“
Remeber Bill and Hillary’s “free mortgage” from Terry McAuliffe. Nobody cared about that. The press won’t care about this. They’re to busy this weekend congratualating themselves on what god watchdogs they are.
There’re probably dirty on another deal and if call Dodd on
his;He’ll can the Reps on theirs.The Congress is almost
totally corrupted.
bump
The GOP probably doesn’t complain because they have their own scandals.
All of them are corrupt, with the exception of a few.
Did the company make any campaign contributions to these creeps? Bet ya!
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