Tuesday, July 22, 2008

Dodd and the Moonlit Mackerel


He is a man of splendid abilities, but utterly corrupt. He shines and stinks like rotten mackerel by moonlight -- Senator John Randolph of Virginia, commenting on fellow lawmaker Edward Livingston.

In a follow-up to its explosive story on Countrywide, the nation’s now defunct largest mortgage lender whose president Angelo Mozilo had greased the palms of shakers and movers in Congress such as U.S. Sen. Chris Dodd, the chairman of the senate’s powerful banking committee, Portfolio, a Conte Nast publication, now gives us the honorable Richard Aldrich, a California state appeals court justice.

As was the case with Dodd, Aldrich also was favored by Mozilo’s chief agent, loan officer Robert Feinberg, who was put in charge of the now notorious “Friends of Angelo” VIP program.

Refinancing his 8,200-square-foot house adjacent to a Jack Nicklaus-designed golf course at the Sherwood Country Club in Westlake Village, Aldrich turned to fellow member Mozilo, who through Feinberg approved the $1 million loan and a $900,000 line of credit for the judge.

When advised by Feinberg that the credit line was “above what guidelines allow,” Mozilo instructed Fienberg, “Go ahead and approve the loan, and close it as soon as possible. Don’t worry about this deal, it’s golden.”

Disillusioned with the loan program, Feinberg bolted Countrywide in 2007 and agreed to spill the beans to Portfolio.

The author of the second Portfolio expose, Dan Golden, notes, “That wasn’t Aldrich’s only contact with Countrywide. At the time he refinanced, a class action lawsuit against Countrywide was pending before the appellate court, brought by borrowers contending that the company offered an inadequate payment to settle allegations that it charged excessive fees for credit reports. That August, Aldrich was part of a three-judge panel that unanimously rejected the borrowers’ appeal.”

The reporter reached the judge by phone, but Aldridge “denied receiving a below-market loan and hung up.”

Perhaps he had a golf date.

According to Portfolio, recipients of Mozilo’s favors, other than Dodd were: Sen. Kent Conrad, who previously turned over his ill gotten gains to charities, “… former cabinet members Alphonso Jackson and Donna Shalala, and former United Nations Ambassador Richard Holbrooke… James Johnson and Franklin Raines, both former C.E.O.’s of government-sponsored mortgage buyer Fannie Mae… former Countrywide director Henry Cisneros, who served as secretary of Housing and Urban Development in the Clinton administration; former White House staffer Paul Begala, now a commentator on CNN; and Postmaster General John Potter. Countrywide also offered special discounts to Congressional staffers involved in housing issues.”

The scandal has loosed multiple probes upon Washington D.C., some of which will be more effective than others. Dodd’s loans from Countrywide are due to be examined by the Senate Ethics Committee; the House Oversight and Government Reform Committee is being urged to investigate by two Republican members; Senators Barbara Boxer and John Cornyn have offered amendments that would require members of that august body to provide detailed information concerning their mortgages.

Dodd already has been scarred by the scandal. It did not help that Dodd came under scrutiny just as he was preparing a relief package for many of the frauds and slackers who, one hopes, soon may be on their way to jail. The FBI has yet to begin poking around in Dodd’s closet for skeletons, and Connecticut’s press, perhaps exhausted from the Governor John Rowland scandal, has shown itself to be ingloriously incurious.

“Fallout from the controversy has been swift and promises to spread,” Aldridge assured the readers of Portfolio. “As Dodd shepherded a sweeping housing-reform package through Congress, his credibility was damaged, with newspaper editorials questioning whether his personal ties to Countrywide colored provisions giving relief to lenders… As housing values drop and foreclosures multiply, the Countrywide V.I.P. program has emerged as the latest business scandal to fuel a sense that insiders benefited disproportionately from the housing frenzy—and everyday consumers are paying the price.”

Feinberg, the repentant aide to Mozilo now singing to reporters, already has batted down some of Dodd’s representations.

Along with several other recipients of Countrywide’s largess, Dodd claimed he did not realize he was receiving preferential treatment from Countrywide. But Feinberg disclosed to Portfolio that he told the V.I.P.’s their fees were waived and in addition assured them they were getting the Friends of Angelo discount. He also said that he or other employees almost always apprised borrowers that they would receive a free float down to a lower rate, surrendering the usual half a point charge.

The limited coverage the scandal has received in Connecticut suggests that Friends of Dodd may already have tucked the moonlit mackerel under their beds.
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