Dodd Sponsors Lender Bailout, Takes VIP Loans

Senator Chris Dodd is one of the driving forces behind the $300 billion FHA-mortgage-refinancing bill currently making its way through the Senate (for more, see David C. John’s analysis).  The bill’s being sold as aid to struggling homeowners, but it’s also a huge boon to lenders holding a lot of risky debt.  That’s because it allows these banks to cherry-pick their riskiest loans and slough them off onto the publicly backed FHA; in other words, the bill moves the risk from the bank’s portfolio to the taxpayers’.  One of those lenders is Countrywide Financial, and surprise surprise, it looks as if Senator Dodd benefited — possibly improperly — from a VIP loan program for personal friends of Countrywide’s president.  Portfolio’s got the report:

[VIP borrowers] were typically assured that they were receiving the “Friends of Angelo” discount, and that Mozilo had personally priced their loans.

The V.I.P. loans to public officials in a position to advance Countrywide’s interests raise legal and ethical questions. Countrywide’s ethics code bars directors, officers and employees from “improperly influencing the decisions of government employees or contractors by offering or promising to give money, gifts, loans, rewards, favors, or anything else of value.” Federal employees are prohibited from receiving gifts offered because of their official position, including loans on terms not generally available to the public. Senate rules prohibit members from knowingly receiving gifts worth $100 or more in a calendar year from private entities that, like Countrywide, employ a registered lobbyist.

More at HuffPo.