Today’s Must ReadIf the special-rate Countrywide loan that led to Jim Johnson’s resignation from Barack Obama’s VP screening team was shady, then there’s a few other Washington insiders who may have some explaining to do.
A new article from Portfolio rattles off a list of top Washington officials, current and former, who also received discounted loans because they were personally approved by Countywide Financial’s top exec Angelo Mozilo.
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.
The loans translate into money saved. For example, in Dodd’s case, Portfolio calculates that “the lower rates save the senator about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home.”
In the case of Conrad, he saved about $10,700 on a loan he took out for his $1.07 million home in Bethany Beach, Del. He also took out a loan on an investment property when he refinanced an eight-unit building he owns with his brothers in Bismarck, ND. That violated Countrywide’s normal rules about only providing those loans for buildings of four units or fewer. However, “in an April 23, 2004, email, Mozilo encouraged an employee to ‘make an exception due to the fact that the borrower is a senator.'”
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.
In the case of Shalala, one Countrywide executive wrote an email about helping her buy a timeshare in Florida. “Angelo asked me to ensure that we ‘knock her socks off’ with our great service,” the email said.
Jackson, who resigned from HUD in March amid allegations of cronyism, got two special-rate loans, one to refinance his townhouse in Alexandria, VA, and another to buy a vacation home on a golf course in Hilton Head, SC.
Meanwhile, Countrywide has it’s own set of problems, as some experts partly blame it for the subprime mortgage crisis that is roiling the financial markets.
Countrywide is reportedly under F.B.I. investigation for alleged securities fraud, and Mozilo has drawn criticism for unloading $474 million in Countrywide shares between 2004 and 2007 as the housing crisis neared. He’s defended the sales as part of his retirement planning.
Late Update: Some readers are contesting the numbers used in the Portfolio story, suggesting that in Dodd’s case, the actual benefit received may not be as much as stated.
Reader GB writes: “I think there’s a lot more smoke than fire here, at least on the Dodd loans. He probably did get the points waived, which is a benefit. But of about $3,000, not $60,000.”
