Catastrophe - Dick Morris [83]
But for once Dodd was prescient. Questions have indeed been raised about whether there was “somehow” an enrichment or taking advantage of the situation. It sure looks like it. But while questions have been raised, the answers have not been at all credible—even with the extra $50,000. Or especially with the extra $50,000.
But Dodd’s questionable housing practices didn’t end there.
COUNTRYWIDE FINANCIAL
In the summer of 2008, Portfolio.com reported that Countrywide Financial had given a “VIP” mortgage deal to Senator Chris Dodd and his wife, Jackie Clegg, on two 2003 mortgages totaling $528,000 for their Connecticut and Washington, D.C., homes. Countrywide apparently operated a program called “Friends of Angelo,” named after former Countrywide president Angelo Mozilo, which provided special benefits to celebrities who might be important to the bank in the future. Portfolio.com reported that the VIPs got a much better deal because Countrywide often reduced their points and gave them a better interest rate.311
Many people blame Countrywide for starting the current global meltdown with its extensive marketing of subprime and initial low interest loans that led to hundreds of thousands of defaults. Many of the loans were then sold to Fannie Mae and Freddie Mac, which were taken over by the U.S. government last fall because of the huge number of defaulted loans that caused the agencies to fail.
Dodd immediately insisted he knew nothing about any special treatment, but later claimed that although he did know that he and his wife were part of a VIP program, he thought it was just a “courtesy.” And, obviously, such “courtesies” were normal occurrences.
But a former Countrywide loan officer disputes Dodd’s account. According to the Wall Street Journal:
Former Countrywide Financial loan officer Robert Feinberg says Mr. Dodd knowingly saved thousands of dollars on his refinancing of two properties in 2003 as part of a special program the California mortgage company had for the influential. He also says he has internal company documents that prove Mr. Dodd knew he was getting preferential treatment as a friend of Angelo Mozilo, Countrywide’s then-CEO.
That a “Friends of Angelo” program existed is not in dispute. It was crucial to the boom that Countrywide enjoyed before its fortunes turned. While most of the company was aggressively lending to risky borrowers and off-loading those mortgages in bulk to Fannie Mae and Freddie Mac, Mr. Feinberg’s department was charged with making sure those who could influence Fannie and Freddie’s appetite for risk were sufficiently buttered up. As a Banking Committee bigshot, Mr. Dodd was perfectly placed to be buttered….
Mr. Feinberg, who oversaw “Friends of Angelo” from 2000 to 2004,…told us that as the loan officer in charge he was supposed to make sure that the “VIP” clients knew at every step of the process that they were getting a special deal because they were “Friends of Angelo.”
“People are referred into that department as ‘very important people.’ You’re told that your loan is priced from Angelo. As the ‘Friends of Angelo department,’ [the department] has to give them a sense of importance and explain the reduction of fees and the rate as a result of being a ‘Friend of Angelo,’” he says.
As to Mr. Dodd, Mr. Feinberg says he spoke to the Senator once or twice and mostly to his wife and that like other FOAs Mr. Dodd got ‘a float down,’ which means that even after he had a preferred rate, when the prevailing rate dropped just before the closing, his rate was reduced again. Regular borrowers would pay extra for a last-minute adjustment, but not FOAs. ‘They were aware of it because they were notified and when they went to the closing they would see