Alright, let's start with the Senate ethics rule, which actually sets a pretty clear standard on loans to Senators:
No Member, officer, or employee of the Senate shall knowingly accept a gift except as provided in the rule....[Exceptions include] loans from banks and other financial institutions on terms generally available to the public. (Emphasis mine)
Dodd opponents, journalists and bloggers all have a responsibility to either (1) prove that Dodd's loan terms were not generally available, or (2) argue that Dodd's conduct violated some other standard of behavior that the Ethics Committee was not charged to investigate. (Don't worry, we'll get there)
Let's get to the loan itself. From a report compiled by the firm CrossCheckCompliance (PDF): The $506,000 loan, which closed on June 10, 2003, was a cash-out refinance of a Washington, D.C., townhouse...The note granted on this loan was a 30-year adjustable with the first five years at a fixed rate of 4.25%. The HUD statement for this transaction revealed settlement charges (excluding prepaid interest and taxes) paid of $2,286.30 (0.45% of the loan amount). The $275,042 loan, which closed on July 3, 2003, was a streamline refinance of a single family residence located in East Haddam, Connecticut...The note granted on this loan was a 30-year adjustable note with the first ten years at a fixed rate of 4.5%. The HUD statement for this transaction revealed settlement charges paid of $2,020.25 (0.73% of the loan amount).
So-- 1 half-million-dollar loan, five years fixed below 5%, 30 years total, closing costs of less than .5% of the loan. The other loan fixed for ten full years at a good rate. Favorable terms indeed, although remember that these were high-flying times in the real estate market.
Now, the really damning piece of this story boils down to 6 letters:"VIP" and "FOA." Certainly the Dodds refinancing was placed into these programs by Countrywide. But there's not one piece of evidence that the Dodds actually knew Angelo Mozilo. The burden of proof is on the accusers, and no-one has been able to demonstrate that Sen. or Mrs. Dodd had ever known the man, let alone been an actual "Friend of Angelo." The only motive to designate him as such would have been to try to influence him. Only, it didn't work: Dodd gets a 100% score from Progressive Punch on votes to regulate the banking industry. And in case you've forgotten the awful bankruptcy bill from 2005, it was Dodd's staunch opposition to that bill and repeated attempts to add progressive amendments to it that made him the obvious (for many of us) choice for Chair of the Banking committee after 2006. You wanna talk about undue influence on a Senator's vote? Check out then-Senator Biden's zeal in driving that bill through to passage without any changes to protect consumers. Incidentally, Delaware is America's corporate headquarters.
But I digress-- my point is not to condemn the Vice President for his actions as a Senator, nor do I wish to deflect attention from Senator Dodd's mortgage. Quite the opposite. No one seems to have paid very good attention to the totality of this story. Everyone loves a good knee-jerk, and it's so much easier to believe an accusation of influence-peddling than it is to muddle around with pesky facts. The motive for Countrywide is so obvious, the suspicion of all politicians so high, that we all heard "Dodd," "VIP," and "Sweetheart deal" and then shut off our brains.
The assumption from all quarters is that the Dodds received these rates and terms as part of some sort of quid-pro-quo, or in an attempt to influence Senator Dodd. As demonstrated by Sen. Dodd's voting record on financial reform, there was no "quo" provided to Countrywide. That gives the lie to the notion that the favorable loan terms were a "quid" in the first place. I say the presumption of innocence applies even to politicians, so let's see if there might be some other explanation for the good terms.
CTNewsJunkie reporter Christine Stuart: According to documents related to the three loans, Dodd had a credit score of 768 and Mrs. Dodd had a credit score of 821 when they sought to refinance their loans with Countrywide in 2003.
Now I'm a humanities student from a liberal arts college, and I've barely begun to build a credit history, but even I know that those are very good credit scores. Good enough that a lender would know, beyond any real doubt, that they will see over 4% return for 5+ years. And good enough that a lender knows that other lenders will undercut her if she offers too high a rate, or too short a locked-in period.
Indeed, it appears the Dodds shopped around and found comparable rates with WaMu, Lending Tree and First Union/Wachovia, before deciding to stay with Countrywide, the lender that had provided the mortgages they wished to re-fi. Wouldn't you do the same if there wasn't a massive difference in terms? Who wants to keep track of a whole second set of lenders, loan servicers, etc? And when you've got credit scores like those, you can play those companies against each other and get a better rate. Everybody fights points on a mortgage (or so my parents tell my unemployed PoliSci/Spanish/Film ass).
So-- where does all this leave us? From the Ethics committee's letter of exoneration: Dear Senator Dodd,
[....Y]our mortgages were made in a commercially-reasonable manner based on terms and conditions available to borrowers with similar loan profiles....[T]he service you received was available to thousands of other non-Senate customers...[The Dodds] were excellent loan candidates and established Countrywide customers in good standing. You sought competing mortgage offers from other lenders that offered terms substantially similar to the ones Countrywide provided. There is no evidence that the interest rates for your Countrywide mortgages were below prevailing market rates. Emphasis mine again.
The defense rests.
Now I'm not saying that rates like these were widely available, and I fully understand how people can be outraged that a sitting Senator bought a good re-fi when so many of us got absolutely hosed by lenders over the past decade. But this kind of loan would have been readily available to anyone holding these kinds of properties and these kinds of credit scores. Here's where the aforementioned "higher standard of behavior" comes in. I think I've demonstrated that there was no "sweetheart deal" here. So if you're still reading this and saying Sen. Dodd did something wrong, you're saying you know something that no-one else has been able to ferret out, or that he should have been so magnanimous as to turn down the loans because they were better than what average Americans were getting. Um....Huh?
The Ethics Committee may seem like a whitewashing body to you, but stop and think-- if there were even any little bit of credible evidence to suggest Sen. Dodd behaved unethically, don't you think the GOP would have rammed that evidence down our throats all summer? Instead, the charge was repeated ad nauseam without any evidence to support it. I'll say it again: If you believed this garbage, then you fell victim to the power of suggestion and you owe it to yourself to reclaim your mind by pursuing the facts. And if you didn't, and you consider yourself a progressive, then you owe it to Senator Dodd to try to help get the real story out.
UPDATE In comments someone remarked that they were confused about why I'm posting this today. It's because every time that I've heard, seen or read a piece about Sen. Dodd's retirement, the journalists in question have thoughtlessly regurgitated this false accusation. Examples: "Angelo Mozilo, chief of subprime lending giant Countrywide Financial, had arranged special low mortgage loans for Dodd,"
It was soon revealed that Dodd was a beneficiary of a discounted mortgage program for VIPs offered by Countrywide Financial
There was also a piece on public radio in CT the day of the announcement where the reporter introduced a man-on-the-street interview segment by repeating that Dodd had gotten a "sweetheart deal" from Countrywide. Can't find the link, any help appreciated. |
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