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If ever there was a need for a special prosecutor...

RightIsWrong

Diamond Member
Apr 29, 2005
5,650
0
0
It's an OP-ED but the gist is still the same....big donors get bigger breaks and return on their money no matter what letter is after the name.

WSJ Source

Countrywide Financial Corp.'s "friends of Angelo" program provided sweetheart loans to key banking players in Washington, D.C. They included former Fannie Mae chief executive Jim Johnson, Senate Budget Committee Chairman Kent Conrad (D., N.D.) and Senate Banking Committee Chairman Christopher Dodd (D., Conn.).

The growing scandal surrounding the "friends of Angelo" loans (so-called by company employees, referring to Countrywide CEO Angelo Mozilo) should serve as a political wake-up call. Yet the Senate appears intent on pushing forward legislation, co-authored by Sen. Dodd, that would bail out the worst actors in the subprime mortgage banking industry.

Campaigning in Lancaster, Pa., on March 31, Sen. Barack Obama blamed Countrywide's CEO for "infecting the economy and helping to create a home foreclosure crisis." Yet Rep. Barney Frank (D., Mass.) and Mr. Dodd have crafted a bill to provide $300 billion in new taxpayer loan guarantees to Countrywide and others. The bill will allow troubled financial institutions to foist the riskiest mortgages in their portfolios onto the Federal Housing Administration (FHA) -- ultimately putting the American taxpayer on the hook for their bad bets.

Right now, nearly a third of Countrywide's mortgage portfolio is composed of an especially chancy loan called a "payment-option ARM." Also known as negative-amortization loans, payment-option ARMs allow borrowers to pay less than the interest owed each month, with the shortfall added to the principal balance. At set intervals the loans are recalculated, or recast, to be fully amortizing. The new payments -- based on current interest rates and a higher balance -- rise dramatically.

Hundreds of thousands of payment-option ARMs are scheduled to recast next spring, which everyone expects to cause a wave of delinquencies. The Dodd-Frank plan would allow Countrywide and others to cherry-pick their worst loans and roll them over to the FHA. The bill has been advanced in the name of homeowners, but it's all too clear who is being rescued.

The FHA cannot handle a Dodd-Frank wave of $300 billion "in-distress" loans. The loan volume alone will nearly double the size of the FHA. Yet last week the agency, floundering under its existing portfolio, announced $4.6 billion in new losses. These losses destroy 22% of the FHA's entire capital reserves and raise doubts about the agency's solvency.

On June 9, FHA Commissioner Brian Montgomery told reporters that he opposes the Dodd-Frank approach, saying that the FHA "is not designed to become the federal lender of last resort, a mega-agency to subsidize bad loans." Last week the Congressional Budget Office (CBO) projected that banks will use the program to offload their "highest-risk loans" to the taxpayer, and that a stunning 35% of all of the loans refinanced through Dodd-Frank will eventually default on the FHA.

Unsurprisingly, Countrywide executives have testified in support of expanded FHA refinancing. The company itself is a longtime and significant contributor to Messrs. Dodd and Frank. According to data from the Center for Responsive Politics' opensecrets.org, Mr. Dodd raised more than $6.3 million this election cycle -- 76% of his total war chest -- from banks, finance and real estate companies.

As for Republicans, most members of the Senate Banking Committee voted for the Dodd-Frank bill in exchange for reforms of Fannie Mae and Freddie Mac. The reforms, part of a deal brokered by Sen. Richard Shelby (R., Ala.), create a new regulator to establish tougher standards for the portfolio holdings of Freddie and Fannie.

While both of these agencies are in dire need of reform, this deal is still a mistake. By foisting this compromise on their Republican colleagues, Democrats are holding the reform of Fannie and Freddie hostage in order to increase bipartisan support for a bailout of reckless mortgage lenders.

Moreover, the bill creates a new tax that will create a permanent "affordable housing trust fund" -- a $500 million per-year slush fund designed to funnel money to left-wing activist groups like Acorn. Freddie and Fannie must pay into this fund even if they are not profitable, compromising their already overextended capital base.

In a free market, businesses take risks and reap either profits or losses. But markets only work when businesses are held accountable for their bad decisions. The message this proposed legislation sends to the market is clear: Big lenders like Countrywide who make bad bets can count on generous bailouts -- and responsible renters, homeowners and taxpayers who pay their bills on time can count on getting stuck with the tab.
More article...less opinion

Two U.S. senators, two former Cabinet members, and a former ambassador to the United Nations received loans from Countrywide Financial through a little-known program that waived points, lender fees, and company borrowing rules for prominent people.

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.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,917
173
106
Wow.

Sounds like some very bad stuff.

I'm less concerend about *sweetheart loans*, and more concerned about the bailout by dumping $300B of bad loans into the FHA.

I do think the loans should be looked into. Sounds like possibly influence peddling (aka, bribes), but these guys may be wealthy and qualify for some kind of sweetheart deal. But if it's below fair market value, I smell a problem.

Fern

 

waggy

No Lifer
Dec 14, 2000
68,155
9
81
while bad there is worse stuff going on. i would like to see "pork" be done with.
 

RightIsWrong

Diamond Member
Apr 29, 2005
5,650
0
0
Originally posted by: waggy
while bad there is worse stuff going on. i would like to see "pork" be done with.
I'll gladly trade Obama's $50B healthcare bill for the omission of $300B subprime bailout.
 

Queasy

Moderator<br>Console Gaming
Aug 24, 2001
31,796
2
0
You won't see anything. Why? Because all the other Ds and Rs won't want an investigation that might turn up their names in this as well.
 

Craig234

Lifer
May 1, 2006
38,584
345
126
As a democrat, I'd like this investigated. The good news is, I thought I'd heard it's already in the ethics committee. The bad news is, I'm not sure the gutting of the ethics committee by Republicans has been fixed yet. Money as a corrupting influence is a threat to both parties and all of us. We don't want a party's only choices to be to take the money or lose elections, as is increasingly the case.

The difference now is that with the democrats, there's a gray area whether she married for love or money. The progressives versus the corporatized DLC is an ongoing battle.

With Republicans, the rates are posted on the door and there's a big neon light blinking.
 

Thump553

Lifer
Jun 2, 2000
11,881
1,213
126
I agree that the special prosecutor law should have never been repealed, but I'm not sure this is the situation for it. In particular, regarding Senator Dodd (I don't know the facts on the other guy) it certainly appears to me that he has been trapped in a situation of his own making and despite his best efforts. The complaint against Dodd is that he refinanced his home and his Washington property at 4.25% and 4.5% (approx), points waived and voluntary bringdown of interest rates by Countrywide between the application and the closing. Dodd's stated defense:

1) He was a longtime Countrywide customer before these refinances with sterling credit and payment records. He never heard of this special program and thought it was something offered to regular good customers like himself. As a similar Countrywide customer myself, I can affirm that I get similar "special" offers from Countrywide on probably a weekly basis, for years.

2) He only dealt with regular loan officers, didn't know the CEO and never had any contact with him.

3) From my professional experience, the rates Dodd got were market rates at the time.

4) Dodd was planning a presidential run at the time, which he later did. He's a savy pol, he new enough to avoid even the appearance of scandal. Plus his father destroyed a long and brillant career by being censured by the Senate-Dodd has to be particularly sensitive to avoiding a corruption tag.

5) Dodd's behavior as a Senator has been to rip into Countrywide repeatedly for their subprime transgressions-he has been one of the leaders in pushing this. If the "program" was designed to buy his silence, it failed miserably.

6) the current adminstrator certainly has not shown any reluctance to go after Dems. The rational for a special prosecutor is to cover situations where political considerations mean ordinary investigation and prosecution may not occur for political reasons.

There certainly is a need for the special prosecutor law again as shown by multiple scandals by this adminstration. But I don't see this situation as one presenting a irresistable need for a special prosecutor by any stretch. Yes, it should be investigated and prosecutions commenced if the facts warrant.
 

Genx87

Lifer
Apr 8, 2002
41,088
494
126
Originally posted by: Craig234
As a democrat, I'd like this investigated. The good news is, I thought I'd heard it's already in the ethics committee. The bad news is, I'm not sure the gutting of the ethics committee by Republicans has been fixed yet. Money as a corrupting influence is a threat to both parties and all of us. We don't want a party's only choices to be to take the money or lose elections, as is increasingly the case.

The difference now is that with the democrats, there's a gray area whether she married for love or money. The progressives versus the corporatized DLC is an ongoing battle.

With Republicans, the rates are posted on the door and there's a big neon light blinking.
Is this supposed to be a joke? 2 years and the democrats cant form an ethics committee? Your partisan hackery knows no bounds.

As for the OP. I said this when Hillary and congress started pushing for a bail out. They were doing in the name of the homeowner when it was clear the people who benefitted from this were the mortgage companies.
 

StageLeft

No Lifer
Sep 29, 2000
70,214
2
0
Dodd may be dirty but IIRC, when this bailout of bear sterns happened he was on the frontline asking for an investigation into it, and it's all in the same boat as the real-estate bailouts. Whole thing is a scam.
 

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