Countrywide Corruption

[Psycho4Bud]

The U.S. Senate is about to enact a massive subsidy for Countrywide Financial less than a week after revelations that the companyâ??s â??Friends of Angeloâ?� sweetheart-loan program included two U.S. senators. It seems unthinkable, but itâ??s true. Whatâ??s worse? One of the two senators sponsored the bill.

The principal author of the Dodd-Shelby housing-bailout bill is Sen. Christopher Dodd, a Connecticut Democrat who chairs the Senate Banking Committee, which has jurisdiction over the mortgage market. Last week, Portfolio magazine revealed that Dodd was one of two U.S. senators who benefited from a program under which Countrywide Financial gave loans at favorable terms to the influential and the powerful. The other senator was Kent Conrad, a Democrat from North Dakota.

The allegations against Conrad are damning enough. Though he denies having known he received preferential treatment, Conrad admitted to a Wall Street Journal reporter that he called Countrywide CEO Angelo Mozilo to ask for a loan on the advice of former Fannie Mae CEO Jim Johnson, another beneficiary of the program. (Johnson resigned from Barack Obamaâ??s running-mate vetting team after his involvement in the program was revealed.)

But as powerful as Conrad is, the allegations against Dodd are more disturbing because he wields so much power over Countrywideâ??s fortunes and because he has used that power to benefit Countrywide. According to Portfolioâ??s calculations, the preferential loan rates Dodd received on two mortgages could end up saving him $75,000. (Like Conrad, Dodd denies knowing that he received preferential treatment.)

The troubling nature of this arrangement becomes clear when one looks at the fine print of the Dodd-Shelby housing bill. Under the bill, mortgage lenders â?? of which Countrywide is the largest in the U.S. â?? would agree to renegotiate their most troubled home loans in exchange for a federal guarantee on those loans. If the borrowers who took out those troubled loans end up defaulting, the government would cover any losses the mortgage lenders incur.

Under the Dodd-Shelby bill, a fee collected from the government-sponsored enterprises Fannie Mae and Freddie Mac would fund this program. The House version of the bill would fund the program with tax dollars. Either way, the program would be â??a government buyout of problem mortgages disguised as a refinancing plan,â?� as David C. John of the Heritage Foundation puts it in his analysis.

Defenders of Doddâ??s bill insist that itâ??s not a bailout, because the lenders have to write down 15 percent of the value of a troubled loan in order to qualify for the program. The lenders, they insist, are taking a loss and bearing the consequences of the irresponsible lending in which they engaged during the housing boom.

But this argument omits the fact that if a troubled loan goes into foreclosure â?? a most likely destination for many of them â?? the lender faces an average loss of one-third of the value of the loan. Faced with this kind of loss, many lenders have an incentive to work something out with borrowers anyway, and many already have, taking advantage of the Bush administrationâ??s voluntary Hope Now program to do just that.

The kind of loans that lenders would dump on the government under the Dodd-Shelby bailout would be the most radioactive on their books â?? the ones likely to default anyway. So concluded the Congressional Budget Office, which found that up to 35 percent of the loans refinanced through the Dodd-Shelby program would eventually default. The lenders wouldnâ??t have any exposure to those losses â?? they would be paid back through the fund created by the Dodd-Shelby bill.

And this is where we come full circle, back to Sen. Dodd and his sweetheart deal from Countrywide. The Dodd-Shelby housing-bailout bill would be bad public policy under any conditions. Lenders are already under severe pressure to write down loans for borrowers who still have a chance to make it. The bill is overwhelming slanted toward protecting lenders, like Countrywide, that lowered their standards dramatically on a bet that home prices would never go down and subsequently find themselves holding a lot of bad debt.

Congress should launch a full investigation of Countrywideâ??s program to influence the powerful; that much should go without saying. But if the Senate passes the Dodd-Shelby housing bailout before such an investigation can run its course â?? especially if that investigation finds that members of Congress were improperly influenced â?? it will have allowed Countrywide to take the money and run.
The Editors on Countrywide Financial on National Review Online

Relating to the elections...one man/woman can't clean up this mess we call Washington. A complete revamp of ALL the officials with term limits on both the House and Senate in the same order as the Executive office.

Have a good one!:s4:

Psycho4Bud Reviewed by Psycho4Bud on 06-18-2008. Countrywide Corruption The U.S. Senate is about to enact a massive subsidy for Countrywide Financial less than a week after revelations that the companyâ??s â??Friends of Angeloâ?� sweetheart-loan program included two U.S. senators. It seems unthinkable, but itâ??s true. Whatâ??s worse? One of the two senators sponsored the bill. The principal author of the Dodd-Shelby housing-bailout bill is Sen. Christopher Dodd, a Connecticut Democrat who chairs the Senate Banking Committee, which has jurisdiction over the Rating: 5

[killerweed420]

God but what a bunch of crooks. No way should they bail Countrywide out. I think Dodd is one of Obama's candidates for vp too.

[stinkyattic]

I think Dodd is one of Obama's candidates for vp too.

Lol... something tells me... not anymore! At least Hils already had her moment in the news over a real estate scandal... as I said in the other thread... Democrat or Republican, the rich are the rich are the rich. They are way too out of touch for my comfort.

[killerweed420]

This is what happens when the only people that get elected are attorneys. I've never seen the percentage of attorneys in congress but its got to be pretty high.

[epxroot]

All of Washington needs a good cleaning. No more voting, no more patience, no more being understanding! This corruption has to stop!