Dodd,Conrad, and the Friends of Angelo: Burying a Scandal

When I read last week about the hearings regarding Senator Conrad, Senator Dodd, and the friend of Angelo, I immediately recognized a serious scandal. Some of that has to do with my background in mortgages, and some simply has to do with common sense.

Last fall, it was first reported that Senator Dodd and Senator Conrad were among dozens of powerful people, including the former HUD Secretary Alphonso Jackson, who received sweetheart deals from Countrywide by using their relationship with their the CEO, Angelo Mozillo. When this story first came out, both Dodd and Conrad denied knowing they were receiving any special treatment. This was a bit of a stretch. The two were receiving favorable treatment. They were also both powerful people and in a position to help Countrywide. It's very unlikely that Countrywide would do all this without informing them because Countrywide would likely want something in return. It was made all the more unbelievable because Countrywide, and Mozillo personally, have been implicated in corruption that had reverberations throughout the financial crisis.

Then, last week a loan officer with Countrywide, Robert Feinberg, testified that he personally informed both Conrad and Dodd that they were receiving special treatment. This is of vital importance. Both Dodd and Conrad are major players on several committees that affect Countrywide and banking in general. Both are major players in health care reform. If they are in fact using their positions, which this story clearly shows they are, to fatten their own pockets, they are totally compromised. How can we move forward with health care reform when we know that two major players are totally compromised?

We learned even more as a result of the hearings. We learned that the deal that Senator Conrad received was not merely a small favor but a total dismissal of all basic mortgage rules. Senator Conrad was able to refinance an 8 unit building as a residential property even though residential properties are four units and less. An eight unit building is a commercial building. It requires a totally different loan, with totally different underwriting guidelines, and a totally different appraisal. It's more difficult, takes much more time, and has a much worse rate and mortgage terms. To put this in perspective, this is sort of like a health insurance company giving a Senator that's been a lifetime smoker the rates a non smoker would get. Only in this case, it's much worse. Yet, not only did Senator Conrad receive this deal, but here's how he explained it.

Conrad's spokesman, Chris Gaddie, said Monday that the senator "never asked for, expected or was aware of loans on any preferential terms" and has "worked overtime to set the record straight."

"He went with Countrywide simply because they already had his financial information," Gaddie said. He added that a Countrywide official had told Conrad that "it is not unusual for them to make exceptions for good customers if they could sell the loan in the secondary market. We now know that they did sell the apartment building loan in the secondary market."

How would Conrad even know about the "secondary market"? Even better, how would he know his loan was sold in the secondary market? The borrower is not informed of such backroom information. Those loans are part of a sophisticated investment product that is done behind the scenes. Borrowers aren't informed that their loan was sold in the secondary market. That's not how things work. More than that, much more, if a commercial property was sold as a residential loan that's FRAUD. In fact, it's an obscene form of fraud that was likely very prevalent and lead to in part at least to the crisis we are in now.

Since all of this is public information, why isn't the media all over this story? In fact, outside of the Associated Press, you are going to find scant little coverage of this story. You'll find nothing on the networks, nothing on the New York Times, nothing on the Washington Post, nothing in the Boston Globe, and only minor coverage in the Chicago Tribune.

This is a story that requires enough detail so that the reader understands just how obscene the corruption was and so, in effect, how important it is that Feinberg says that they knew this happened. These Senators have a lot to answer for but they won't have to face any tough questions if the media ignores the story and does scant reporting on it. A Republican Senate aide told me that their Senator knows the seriousness of the charges but that without media scrutiny this will lead nowhere.

With Democrats in charge, they are not likely to investigate one of their own without serious media scrutiny. In fact, they're now blocking subpoena efforts of the Republicans. That's not what's happening here. Instead, this story is receiving back page coverage. It's being lost in the shuffle. That's exactly how people get away with corruption. No one notices because there isn't enough media scrutiny. Here we have a Senator receiving a residential loan on a commerical property and justifying it with an absurd explanation that, if true, only means that more fraud was committed.

This story requires much more investigation, and yet, all that's happened is nothing short of a media blackout. As a result, Senator Conrad will not only get away with receiving a mortgage deal no one in his position should ever receive, but then coming up with a story that is not only absurd but would indicate even more corruption if true. If in fact this loan was sold in the secondary market, that would mean it was done fraudulently. That's how Conrad characterized the transaction. In effect, he opened the door on more corruption and said nothing else. Given all this, the media has moved on. There is nothing to see here anymore. A Senator received a sweetheart deal that means he can no longer be trusted to act on behalf of his constituents, he justified it with a story that simply doesn't pass the sniff test, and the media swallowed this whole and simply moved on.

The reason that corruption goes on is because not enough sunlight is shined on it as it happens, and here is just one example of that lack of sunlight.

Deconstructing the Corruption Between Senator Conrad and Countrywide

In mortgages, anything can make a difference. The same person could qualify for a loan if the property is a single family unit and get denied if that becomes a townhome or Planned Unit Development. A loan could hinge on whether or not a condominium has four stories or less or five stories or more. While standards became quite loose over the previous five years, it's important to understand that tens of thousands of rules exist in the mortgage world. Everything I just described concerns rules for RESIDENTIAL properties. Commercial properties are a totally different world.



The two types of properties are explained by their names. Residential properties are done on properties in which people live. Commercial properties are properties are bought and sold mostly for commerce. When it comes to multi units, the break point is clear and it's defined. Four units and less are residential properties. Five units and more are commercial properties.



When it comes to commercial properties, the loan done is a totally different animal from a residential loan. Not only are rates two and three points higher, but the terms are almost always a variable rate, with a pre payment penalty, and often a balloon payment at the end. None of those things are common on a residential loan. Terms are only one difference in the two types of loans. In a commercial loan, a borrower is usually asked for at least three years of their full tax returns. In residential loans, a w2 borrower can usually get away with their last two w2's. Furthermore, a rent roll is required on a commercial property along with leases. A residential loan only requires the leases. Commercial loans also require significantly more detailed appraisals which can start at $1000 (and run to $5000 and even more at times) whereas the residential appraisal will usually cost $300-$400. Finally, commercial loans require much greater down payments and much lower loan to values on refinances than residential properties.



Yesterday, it was reported that both Senator Conrad and Senator Dodd were aware of their sweetheart loans with Countrywide. What was mentioned in passing were the details of one of the transactions by Senator Conrad. On one occasion, Countrywide treated an 8 unit property as a residential loan. Senator Conrad downplayed the favoritism.

Conrad's spokesman, Chris Gaddie, said Monday that the senator "never asked for, expected or was aware of loans on any preferential terms" and has "worked overtime to set the record straight."

"He went with Countrywide simply because they already had his financial information," Gaddie said. He added that a Countrywide official had told Conrad that "it is not unusual for them to make exceptions for good customers if they could sell the loan in the secondary market. We now know that they did sell the apartment building loan in the secondary market."

This statement is not only peculiar but a total falsehood. The only question is whether Conrad is perpetrating a lie on the voters, Countrywide is perpetrating a fraud on another bank, or Countrywide lied to Conrad. First, it's very peculiar to have a borrower speak about the secondary market. I don't know too many borrowers that know their loans are sold in the secondary market. Those that do don't care. So, why did Senator Conrad care enough to have his spokesperson point it out in downplaying the favoritism?



That's not answerable yet because Conrad hasn't elaborated on this and no one has asked him directly. That said, an eight unit property would NEVER be included in a portfolio of residential loans to be sold in the secondary market if everything was done legitimately. I don't believe that this loan was sold, but if it was, then either the buyer of the package that included this loan was incompetent or they were defrauded. In fact, I wrote a piece about just such a fraud involving a package of small business loans. Presumably, Countrywide gave the Senator favoritism because they wanted something. Whoever bought this loan, among a package of loans, wouldn't be expecting the same sort of quid pro quo. If they did, then we're dealing with all sorts of corruption. Either way, if this loan really was sold, as Conrad's spokersperson suggests, then that sale must be investigated by both the SEC and Justice immediately for fraud. That's because a commercial property was done as a residential loan. If a bank did this loan this loan this way, that's their business. If they sold it, they better have disclosed that or it is fraud.

Most media is reporting that it was Countrywide's rules that limited residential loans to four units or less. That's misleading. That's a mortgage rule. As such, this commercial property would be included with residential properties in a package that is only supposed to be residential loans and properties. That would be fraud and it would serious and significant fraud. If Conrad's spokesperson's statement is accurate, they have accidentally informed the public of massive fraud.

Another possibility is that Countrywide lied to Conrad in trying to explain why they were giving him such a bargain. Finally, Conrad may just be lying to the public. Either way, there's no way this loan was sold in the secondary market if that transaction was done legitimately.

The loan was only $96000 and so the monthly savings were likely only $300-$400 per month. The savings are not the issue. This was a refinance and so Conrad was probably familiar with the process of financing a commercial loan. He had already financed this property at least once, and so it's hard to believe that he didn't know just how good a deal he was getting. Doing a commercial property as a residential loan is not some small giveaway. This breaks a clear, straigthforward, and standard rule that all mortgages are supposed to follow. Never, during the most obscene times of the mortgage industry did banks ever allow for eight units to be financed as residential properties. That Conrad's loan was given such special treatment is something that must be investigated fully. A bank doesn't violate such an important rule without expecting something tangible in return. So, the question remains what did they expect and what did Conrad give them.

Some Thoughts on Conrad, Dodd, and the Friends of Angelo

Some folks are calling yesterday's Ethics Committee hearing as a breaking news. At this hearing, Robert Feinberg, a loan officer at Countrywide, testified that not only did both Dodd and Conrad receive favorable terms on their mortgages under a program known as Friends of Angelo, but they both knew that they were receiving favorable terms not available to the general public. This really isn't news. It was never in doubt that Dodd and Conrad both received favorable terms under this program. The two Senators acknowledged this. They just both claimed that they didn't know they were getting favorable terms.

This is of course absurd. A bank isn't going to give a powerful person favorable terms on their mortgage without telling them. The whole point is a I'll scratch your back and you'll scratch mine transaction. There's no point to giving a powerful person better deals if they don't know they're getting the better deal. Obviously, the bank wants the powerful person to know they are taking care of them. That can't happen if the powerful person doesn't know they are being treated well. So, the two Senator's assertions that they didn't know was always absurd. Mr. Feinberg merely confirmed what everyone should have already known.

What's really shocking is what was buried in the story. The first revelation Feinberg says was not accurate. Apparently, it is being reported that Senator Dodd listed both his home in Connecticut and in Washington D.C. as primary residences. Of course, you can't have two primary residences. You can only, according to mortgage rules, primarily live in one home. This property, be it a home, condo, etc., would receive the best rates. All other properties would have slightly worse rates. That's because if things go bad you would stop paying on all secondary properties first. You'd never want to stop paying on your primary residence because if that is foreclosed on you'd have no place to live. If Dodd did in fact list both homes as primary residences that's fraud. More than that, this sort of fraud is known as "occupancy fraud" and it was the second biggest fraud problem in mortgages behind fraud on income and assets. It's important to note that Feinberg, the loan officer, disputes that this occurred.

Conrad's revelation is far more serious. Conrad was attempting to finance an eight unit building. That is a commercial property. The financing on such a building is much more difficult and has significantly worse rates. He was given an exception and was allowed to finance this building as a residential property. If that's the case, that is fraud on a grand scale.

The favoritism shown to Dodd likely saved him a quarter to a half a percent. The favoritism shown to Conrad likely saved him two to three percentage points if it's accurate that he was allowed to finance his commercial property as a residential property. Conrad's people explained it this way.

Conrad's spokesman, Chris Gaddie, said Monday that the senator "never asked for, expected or was aware of loans on any preferential terms" and has "worked overtime to set the record straight."

"He went with Countrywide simply because they already had his financial information," Gaddie said. He added that a Countrywide official had told Conrad that "it is not unusual for them to make exceptions for good customers if they could sell the loan in the secondary market. We now know that they did sell the apartment building loan in the secondary market."

That's just non sense. There's no way a secondary market would buy a residential loan on a commercial property. The rules are very clear and cut and dry. Residential properties are four units and less. His property was eight units. So, if he got a residential loan on this property, there's no way it was sold on the secondary market. Secondary market players often buy in bulk. As such, this loan would have either been packaged with other residential loans. In that case, a commercial property would have been included in a portfolio of residential properties. Or, it would have been packaged with other commercial loans. In that case, this particular loan would have had much more favorable terms than the rest of the portfolio. In either case, if what Conrad's people are saying is true, and this was sold in the secondary market, it was done fraudulently.

Chris Dodd's Unique, Brazen, and Dangerous Corruption

Chris Dodd is likely not the most corrupt politician to ever grace our landscape, though he will give a lot of folks a good run for their corrupt practices money. What is truly stunning about Dodd's corruption is the combination of its brazen nature, his proximity to power and influence in the one industry most in need, and that no one seems to much care besides the voters of Connecticut hopefully in November of 2010.

I was first introduced to Dodd's corruption when it was revealed that he got multiple sweetheart loans from Countrywide. He repaid Countrywide with a bill known as Dodd/Frank. This bill would have allowed for hundreds of billions worth of "toxic loans" to be removed from the books of the newly formed Bank of America (which bought Countrywide at reduced prices because of these loans) and move them onto the books of the tax payer through FHA. Fortunately, this bill was very poorly written and so only a few hundred loans were done under the bill.

Yet, Dodd's revelations of corruption were only just beginning. We later found out that over the last twenty years it was Chris Dodd that is the single biggest beneficiary of campaign funds from both Fannie/Freddie. More than one eyebrow was raised when last July Dodd pronounced both to be "viable". It certainly appears to me as though that confidence was bought and paid for with twenty years of campaign contributions.

In the 1990's, Chris Dodd was tied to a questionable land deal in Europe with convicted insider trader Edward Downe of Bear Stearns. The latest revelation involves a massive amount of money coming from AIG into the campaign coffers of Dodd. Furthermore, yesterday it was revealed that upper management practiced pseudo extortion in "encouraging" lower level folks to contribute to Dodd's campaign.

What's truly amazing is how brazenly Dodd has moved from one corrupt deal to another. Even more amazing is that he continues to be head of the Senate Banking Committee. As such, Dodd is in a position to influence each and every player that he has been linked to corruption with.

As we endure a massive economic contraction centered in banking, we have the head of the Senate's Banking Committee linked to an endless stream of corruption involving the very banks he will be overseeing. Does anyone trust that his decisions won't be influenced by all of the corruption he is tied to?

Are we really to believe that a person this corrupt, in a position of this much power, will do what's right? Are we really to believe that such an explosive combination won't have explosive consequences? Dodd is now in a position to influence everything from future regulations, bailouts, TARP dollars, and the toxic asset buy out. Yet, it is undeniable that his decisions have been compromised. Yet, he not only continues to sit as head of the Banking Committee but there isn't one person in a position of power demanding that he be removed. Every entity from Bear Stearns to AIG has been tied to his corruption and they will all be deeply in bed with the government for the indefinite future. Yet, no one seems to think that Dodd's place as head of the Banking Committee will cause any problems whatsoever. I am here to tell everyone that a deeply corrupt person in a position of power is the worst combination and that's exactly the situation with Senator Chris Dodd.

Senator Dodd to the Autos: Pot this is Kettle You're Black

Chris Dodd made this stunning announcement yesterday.

General Motors Corp should replace its chief executive if it receives emergency
government loans to avert likely collapse, a U.S. senator drafting bailout
legislation said on Sunday.

Another senior Democrat involved in the matter said negotiators expected a final deal by Monday, but he was less sure whether there was enough support in Congress to help GM, Ford Motor Co and Chrysler LLC.

"Obviously, that's a much more complicated question as to whether the votes
are there," Sen. Carl Levin of Michigan told "Fox News Sunday."

Senate Banking Committee Chairman Christopher Dodd of Connecticut said on
CBS's "Face the Nation" that GM and Chrysler, also facing a likely near-term bankruptcy without help, should probably merge.

Now, this annoucement isn't stunning because it isn't accurate, I think it is very accurate. It's stunning however for it unbelievable chutzpah. Personally, I think that any company that asks for a bailout has inherently shown total failure of its upper level management inherently. The mere act of asking for a bailout means that the CEO has failed in their duties and needs to go. You have proven incompetence when your "leadership" means your company is begging the government for money.

That said, for Senator Chris Dodd to complain that someone else needs to be removed from their position of power is the ultimate pot calling the kettle black. This is the same Chris Dodd that as head of the Banking Committee received not one but two sweetheart loans from Countrywide while investigations of Countrywide were ongoing. Talk about a leader with conflict and one that has been compromised, that leader is Chris Dodd.

Beyond this, I have written often of the corrupt bill that his name on it passed this summer. This bill which had the fingerprints of both Countrywide and Bank of America (which wrote major parts of the bill after providing Dodd with thousands in campaign contributions) would have had the FHA take over $350 billion worth of troubled loans from troubled borrowers. So far, thankfully, this bill has been an abject failure. While about $350 billion has been allocated, so far only about 100 loans have closed on this bill. While that is better than the alternative which is to unleash the fury of this corrupt bill, its abject failure speaks to the lack of effectiveness of its author, Chris Dodd.

Finally, as head of the Banking committee since 2007, he has overseen the meltdown in the industry. While he has overseen it, he has done nothing to warn, stem the tide, or in any way shape or form contribute to making the situation any better. Instead, he has gotten into bed with most of the corrupt players that made it happen.

While I agree that the CEO of GM, and every CEO that asks for a bailout, must go, so to must Chris Dodd. I hope to see him out the door of the Banking Committee right behind the CEO of GM.

Monday Bloody Monday

That's the only way to describe the economic hurricane to hit Wall Street this morning. Lehman Brothers is filing for Chapter 11. Merrill Lynch is being bought out by Bank of America for half what it was worth a year ago. Finally, AIG is on the bring of destruction and looking for financing.

First, this latest hurricane of bad news on Wall Street should indict the current Federal Reserve policy. I was weary of the Fed's aggressive action in saving Bear Stearns from financial disaster. At the time, the Fed not only acted as the Federal Reserve and opened up its coffers to back the deal. The Fed also acted as an investment banker and a rainmaker. It brought Bear Stearns and JP Morgan together. It negotiated the deal, and it even extended a line to make sure the deal went through. Most troubling of all, the Fed forced this deal on both sides over a weekend when it would normally take many months to negotiate something like this. This was all done under the assumption that 1) Bear Stearns' failure would be too much of a shock to the markets to allow and 2) this would not become something the Fed would do regularly.

These assumptions only worked if Bear Stearns was a unique situation. Clearly that was a faulty assumption. Here is how my colleague Francis Cianfrocca at Redstate described it.

As I described here, this is the weekend that the Treasury and the Federal Reserve decided to stop bailing everyone out. Secretary Paulson has been hinting for weeks now that we have to let capitalism work the way God intended it to. Which means: if you screw up, you die.

This is what we free-market conservatives have been saying we wanted all along, folks. We'll be getting a chance to eat our own dog food. On balance, I have to say it's a good thing... I hope.We are now going to see the unwinding of the 158-year-old broker-dealer Lehman Brothers.

The regulators are going to try this another way, and they decided to let Lehman die without the benefit of an overt and specific public bailout, as had been the case with Bear Stearns and Fannie Mae/Freddie Mac.

Unfortunately, responding to financial crisis is not the sort of thing we can try through trial and error. I am not privvy to private correspondence but I'd be willing to bet the powers that be at Lehman saw what the Feds did for Bear Stearns and expected the same for them. Now then, the time for serious criticism is later. More important for now is what the immediate future holds. Francis picks that up.

The Federal Reserve did announce last night that its various emergency-liquidity facilities would be significantly broadened and expanded in scope. If you're so inclined (and I am), you can consider this another kind of bailout. But the Treasury and the Fed both refused to give Wall Street what the latter were looking for, which is an explicit public guarantee of Lehman's distressed assets. It's a completely new chapter in the Panic of 2007. (And 2008. And 200...)

Whether Lehman's assets and trading positions are liquidated in an orderly or disorderly fashion will determine the tone of the next few weeks in financial markets.

The only bright side here might be that Bank of America is acting like the vulture we need in order to facillitate a recovery. After sweeping in to buy out Countrywide, they are now eating up the remains of Merrill Lynch, though of course, that was a terribly corrupt deal. (the Countrywide buyout that is) While all of this is going on, some so called experts are adding fuel to the fire (H/T to Hot Air)

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets. Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen's firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.

"If we don't get ahead of this, we are going to face a run on the retail banks by election day," he said.

AP Business Writers Madlen Read, Tim Paradis and Stephen Bernard in New York, Martin Crutsinger in Washington, Ieva Augstums in Charlotte and Michael Liedtke in San Francisco contributed to this report.

Now, before anyone runs out and withdraws all their cash, just keep in mind most accounts are insured up to 100k. This sort of nebulous and cryptic fear mongering is the worst kind of thing at a time like this. Without offering anything concrete, this analyst says that "some customers are getting nervous" and if we don't get out "front there will be a run on banks". That is the sort of irresponsible statement that sets off a panic where there wasn't one.

I, for one, think this may wind up being a good thing in the end. Think about what is happening now as some sort of cleansing. It's like the financial equivalent of one of those teas you can buy at GNC that cleanses the body of all of its toxins. The financial market has lots of toxins in the form of bad loans. Now, all the banks and other financial institutions that hold onto these need to be removed and only leave those that didn't get too weighted in said loans. That's what is happening today. Keep in mind that these teas make you need to go to the washroom over and over when you take one, but you wind up feeling better days and weeks later. The same thing can happen now if we all let the market do what it does, and no one panics.

No Veto For Dodd/Frank

According to Politico, the White House has pulled its veto threat for the Dodd/Frank Housing bill.

A landmark housing bill heads to the House floor after winning President Bush’s support Wednesday despite Republican complaints over billions added by Democrats to assist low-income families and communities facing large foreclosures.

Here is the key portion of the bill.

The underlying housing bill authorizes up to $300 billion in new loan guarantees for the Federal Housing Administration to help at-risk homeowners refinance and avoid foreclosure. On top of this, the Congressional Budget Office estimated Tuesday that Paulson’s Freddie-Fannie rescue plan could cost as much as $25 billion over the next two years. And the addition now of an $800 billion debt ceiling increase is a reminder of Washington’s own troubled mortgage, already hovering near $9.5 trillion.

Now, what this article doesn't say is that this bill will also provide $300 billion in guarantees so that banks can sell off their most troubled loans. As much as this is a bailout for troubled borrowers, it is just as much a bailout for the banks holding the loans of these troubled borrowers. Now, the Federal government will guarantee the mortgages of borrowers who frankly have no business holding a mortgage to begin with.

I have already pointed out that in my estimation that this bill is nothing more than a sophisticated corrupt quid pro quo between Chris Dodd, Bank of America and Countrywide. We already know that earlier this year Bank of America bought out Countrywide. We know that Bank of America bought them for a depressed price because Countrywide was holding onto billions of dollars worth of bad mortgages. Many of these mortgages will now be eligible to be moved onto the books of FHA. We also know that Chris Dodd received multiple "sweetheart loans" from Countrywide. Less reported is that Bank of America has been funneling campaign cash to the average of about $1000 per week for about a year and a half to Chris Dodd. What has been reported only in the D.C. Examiner is that proprietory documents suggest that Bank of America wrote significant portions of this bill. As such, there is rather strong evidence that the sweetheart loan and campaign cash were used so that Bank of America could have Chris Dodd create a bill that would be favorable to their buyout.

Yet, no one is reporting on this. This quid pro quo is now in its final stages. To add insult to injury, this bill will also bailout Fannie Mae and Freddie Mac. As I pointed out earlier, not bailing them out is NOT an option. They are both far too vital to the entire real estate market to fail. If they are not financially viable they must be infused with cash. That said, they are structurally flawed as socialistic monopolies. By giving them a bailout without a significant restructure, all the government is really doing is the equivalent of feeding a crack addict with more crack.

This bill is an unmitigated disaster and not only is no one opposing it, but it is being supported overwhelmingly. When a bill this corrupt gets overwhelming support, it speaks volumes about the systemic corruption on both sides of the aisle.

Corrupt Dodd/Frank Passes the Senate...The Media Yawns

What if a I told you a story about a corrupt politician that was bought off by multiple corrupt banks in order to procure a quid pro quo that was presented as a life saver to struggling homeowners but was in fact a payback in order to turn a merger into a financial boon. Furthermore, what if I told you that this corrupt politician was selling out his country's tax payers to the tune of $300 billion. I bet you would say that this would be shocking and every media would be looking to uncover the next detail of the scandal. I bet you would say this politician's colleagues would be outraged and looking for blood. I bet you would say this was the beginnings of a political thriller and everyone in the country would be engaged.

Of course, you would be wrong. Last night the Senate OVERWHELMINGLY passed the Dodd/Frank mortgage bailout plan. This bill is not merely corrupt. The corruption is obscene not only in its brazenness but in its scope. Furthermore, what is really troublesome is that the culture of corruption in D.C. is so engrained that politicians on both sides either didn't know it is corrupt or simply didn't care. This bill passed overwhelmingly 63-5. What's more is that the obscene levels of corruption are a matter of public record. All one needs to do to know this bill is corrupt is be adept at Google or their favorite search engine.

Chris Dodd is head of the Senate Banking Committee. Recently, we found out that multiple times he received special rates from trouble mortgage lender Countrywide. Then, we found out that Dodd has been receiving campaign contributions averaging $1000 weekly from Bank of America.. Then, we all found out the clincher. Bank of America was responsible for drafting portions of the corrupt Dodd/Frank bill.

So, what is Bank of America's interest in the bill? Bank of America bought out Countrywide in January of this year. Countrywide's stock price had been terribly depressed because they were heavily weighted in non performing sub prime and option arm loans. This deal was extremely risky for Bank of America because they were also accepting this non performing paper. That's where the Dodd/Frank bill comes in. This bill provides $300 billion so that the federal government buys all this non performing paper from banks like Countrywide. This bill turns a risky transaction into a hundred billion dollar financial boondoggle for Bank of America.

In other words, for providing a reduced rate on couple hundred thousand dollar loans and just under $200,000 in campaign contributions, Bank of America received a corrupt bill that would remove somewhere in the neighborhood of $100 billion dollars of bad loans from their portfolios. That's a stunning return on corrupt investment.

What's really stunning is that every major media is presenting this bill as merely a bailout for struggling borrowers. You won't find anyone in the MSM point out each of these crucial details in discussing the passage of this bill through the Senate yesterday.

Why not? Is a corrupt $300 billion bill not big enough? Is there no story when two corrupt banks buy off a corrupt politician so that their merger becomes a financial boon? The media was certainly scintilated when the Jack Abramoff story broke? Did any of his malfeasance ever reach this level? Duke Cunningham was a major story and yet his corruption was peanuts compared this $300 BILLION CORRUPTION. What exactly will it take for the media to notice that tax payers are footing the bill in order to turn a risky merger into a financial boondoggle? After all it only took me four google searches to confirm everything I just said. Does the media not know how to use Google? How much longer will they continue to refer to this bill as a bailout for struggling borrowers?

This is no bailout for struggling borrowers. That's just what the corruptors have presented in order to make this bill presentable. This is the last piece of an elaborate quid pro quo that began nearly two years ago. All of these troubled loans that no one wants are now going to be owned by the public, through FHA. That means borrowers with no hope of ever being responsible enough to pay them back will now have the federal government as their creditor. Chris Dodd got a a couple of good loans and $1000 a week in campaign contributions for about a year and a half. Meanwhile Bank of America removes billions worth of bad loans from their books, solves their liquidity crisis, and thus gets flush with cash, government cash. No one seems to care.

For an updated summary including the backstory and context of how we got here with this corrupt bill please go to this link.

The Surreal Life: Starring the Legislature

According to dictionary.com the meaning of the word surreal is

Having an oddly dreamlike quality.

The way I understand the word surreal is when you are witnessing something and it is so unbelievable that it just doesn't seem real. As I have witnessed this Congress for the last seven years, it all seems surreal. Whether they bury good sensible bills on committee or rush out to pass corrupt bills, it as though they are trying to make things worse and the whole thing is surreal.

I first started following the SAVE Act back last fall. At the time, it appeared to be a bill on the fast track to being law. After all, it was sponsored by Heath Shuler, a Democrat, supported by an eclectic and bi partisan group of politicians, activists and special interest groups. The SAVE Act is an enforcement only anti illegal immigration bill. It was an enforcement only bill and its focus was a verification system that all employers would eventually be able to use to verify the legal status of their employees. As we all saw last summer, the folks overwhelmingly want to enforce the border and this bill would go a long way toward that. Yet, after some fanfare and all sorts of political support, the bill is languishing in committee. The Speaker refuses to vote on the bill because Ms. Pelosi insists on adding some sort of amnesty to the bill. Of course, an amnesty provision would ruin a bill meant strictly to enforce the borders. The bill continues to need about thirty more signatures on something known as a discharge petition to force it to the floor. I suppose the bill made so much sense that it made too much sense to simply pass through our Legislature. (even though it would be supported by the overwhelming majority of the public)

The Broadcast Freedom Act would banish the Fairness Doctrine once and for all. The Fairness Doctrine would mandate that on any "controversial" topic there would be a mandated equal time for both sides of the issue. The Fairness Doctrine was abolished during the Reagan administration and not surprisingly Rush Limbaugh started a revolution on talk radio that has made that media a force it never was before. While Rush Limbaugh has lead an army of Conservative voices on radio, liberals have mostly failed on that medium like a lead zeppelin, as exemplified by Air America (short of Alan Colmes). The Fairness Doctrine is nothing more than an end run around the 1st amendment. By forcing radio stations so called "equal time" they will in reality simply be removing most voices from the media. The banishment of the Fairness Doctrine is an example of what happens when the free market is allowed to flourish and government stays out of the way. Had Reagan not been such an effective President his decision to remove the Fairness Doctrine would have been a bigger part of his legacy. The Broadcast Freedom Act is also languishing in committee. Its sponsor, Mike Pence, is also attempting to generate a discharge petition and is still twenty signatures short.

Meanwhile, the signature piece of legislation of this Congress in both 2007 and 2008 was their so called landmark Energy Bill. This bill was so full of mandates and subsidies for ethanol that farmers haven't been planting much of anything but corn to use for fuel. Never mind that most experts said that best case scenario ethanol would only fuel 15-20% of our vehicles, our legislators wanted to make sure that ethanol was given its due. I'm sure it is only coincidental that corn is found in plethora in the state of Iowa, the first to vote in the primaries. Whatever the reason, the only effect of this so called Energy Bill was its contribution to the explosion in food prices. Since farmers grew nothing but corn to go into cars, there wasn't anything left over for other crops. Then, supply and demand took over and food prices shot up.

Just so no one thinks this is some partisan hit job, let's remember that the incompetent Democratic lead Congress is only in power because the Republican lead Congress was equally as corrupt and incompetent. They came to power under the principle of fiscal discipline and yet each and every bill was so full of pork that their spending gave drunken sailors a bad name. Their excessive spending was epitomized by the Farm Bill and the so called bridge to nowhere, an earmark sponsored by Ted Stevens to build a bridge in Alaska. We learned only recently that among the many earmarks and pet projects in the farm bill was a special project for Speaker Hastert's district that wound up making the former Speaker quite the pretty penny. The Republicans were thrown out largely because they represented folks that valued fiscal responsibility. Yet, it appears no lessons were learned because these same Republicans mostly went along with another Farm Bill passed just last month full of nearly as much pork.

Of course, nothing has been as surreal as watching the Congress, on both sides, trying to fall over themselves to pass legislation in response the mortgage crisis. It all started with H.R. 3915. This was a punitive bill and its only effect would have been killing the mortgage broker industry. While that failed to get passed, what happened next was proposal after proposal that for larger and larger bailouts of troubled borrowers. The proposals started at one billion, then ten billion, thirty billion, and now the Dodd/Frank bill which is a mega $300 billion bailout. While this bill was sold as a bailout for struggling borrowers, the nefarious nature of the bill is that it will also bail out struggling banks holding onto mortgages for these so called struggling borrowers. The two main recepients of this bill will be Countrywide and Bank of America.

Nothing has been as surreal as watching the progression of the corrupt Dodd/Frank bill come to the edge of being law. In the last two weeks we have found out that Chris Dodd, its main sponsor, has received favorable treatment from Countrywide, received about $1000 a week for the last 18 months from Bank of America, and of course Bank of America was allowed to write major parts of the bill. The last piece of information was never meant for the public as it came from "proprietary" documents from the Congress. Now, given the obscene corruption going on behind this bill, one would think that legislators would be jumping over themselves to be the first to bring the corruption to light. Not these legislators. In fact, the bill overcame a filibuster attempt 83-9 with a majority of Republicans voting with EVERY SINGLE Democrat to move this bill toward a final vote. Even though we know that its chief sponsor has been totally and completely corrupted, the bill will likely not only pass but overwhelmingly.

According to the Hill, the bill's passage has earned a reprieve for now.

The Senate hit impasses over legislation aimed at helping struggling homeowners and a rewrite of spying laws, forcing Democratic leaders to push back consideration of those measures until next month.

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On the housing legislation, Senate Majority Leader Harry Reid (D-Nev.) said an amendment squabble pressed by Republicans this week was too difficult to overcome in the time lawmakers have left before the break.

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Reid suggested Wednesday night that the housing bill could be delayed, but finally slammed the door on the possibility Thursday morning. Reid also said that when the Senate returns, he still will not allow Republican amendments that did not pertain to housing issues.

"There will be no amendments other than housing-related amendments," he said.

Neither Reid himself, nor the story, mentioned that this bill has been corrupted. It is as though it never happened, and the only problems with it are procedural. So while perfectly reasonable bills like the SAVE Act and the Broadcast Freedom Act languish in committee, the corrupt monstrocity known as Dodd/Frank is on the brink of being law. Its a pattern over the last eight years at least, and it is like the Congress is trying to pass bad bills and force good bills to languish. Like I said, the whole thing is surreal.

Corrupt Bill Moves Through the Senate Overwhelming

The corrupt bill that is being sponsored by Chris Dodd has actually not only passed the Senate but passed 83-9.

Ethics, schmethics. Despite the cloud over Countrywide pals Chris Dodd and Kent Conrad, the latest mortgage bailout boondoggle has cleared another congressional hurdle. The Senate voted 83-9 to move forward on Dodd’s housing aid bill. Final vote is scheduled for later today. We’ll see if the White House upholds its veto threat.

Here is a summary of events so far. Chris Dodd has sponsored a bill that would not only be a huge bailout for borrowers but many banks as well. At the same time, we have learned that not only did Dodd get a VIP loan from Countrywide Bank. This would be the same Countrywide Bank that was at the center of many of the bad loans that epitomized the mortgage boon that lead to the disaster.

On top of this, we also know that Bank of America has been funding Dodd's campaign to the tune of about $1000 a week for the last eighteen months. Bank of America is scheduled to buy out Countrywide. This bill is scheduled to remove most of the bad loans from the books of the newly minted company because the federal government will buy them all.

Furthermore, we have found out that Bank of America actually helped write much of the bill. We know all of this and so do the Senators that just voted. Yet, overwhelmingly they actually support this corrupt bill. What this means is that a corrupt bill is being forced upon the public even though we all know it is corrupt. Yet, no one much cares about what is now happening.

The whole thing is surreal. Everything about this bill is the height of corruption and rather than rejecting it unanimously, the Senate has approved it by a margin that is overwhelmingly veto proof. How exactly does it happen that our government would support such a corrupt bill? The only is answer I come up with is that they are all incredibly corrupt from each of the two parties.

For a detailed summary, with context and backstory, please go to this link.

An Updated Summary of the Corruption at Countrywide, Bank of America, and Beyond

The roots of this scandal are buried within the mortgage crisis itself. In August of last year, after several years of excess, fraud, and irresponsibility, the market finally turned on so called Mortgage Backed Securities and the sub prime crisis began to start in earnest. The crisis spread from simply sub prime to just about every loan type. As the market assessed the plethora of bad loans, the crisis popped the bubble on the speculative real estate market.

The crisis has two entirely separate issues. The first has plenty of political capital. Currently, there are million of borrowers that are struggling to pay their mortgages. There were politicians every were jumping over each to look to try and help struggling borrowers. Banks were also struggling but it would have been political suicide for any politician to look as though they were trying to help banks (for obvious reasons). By holding onto a bunch of bad loans, banks faced a liquidity crisis. They needed to sell these loans and the secondary market was no longer buying them. This offered a complicated dynamic. Both entities needed help. Neither, in my opinion, deserved or should have received it. While borrowers were sympathetic banks were powerful. Furthermore, while saving borrowers made sense politically, resolving the bank's liquidity crisis was the only way to resolve the actual crisis.

The first major piece of legislation was H.R. 3915. This was, in my opinion, an atrocious piece of legislation and it caused quite a stir within the mortgage industry. That's because it attempted to outlaw Yield Spread Premium, a tool for mortgage brokers to make money. This bill was introduced in the banking committee in the House of Representatives by Barney Frank. While this bill caused great outrage within the mortgage community, it was all overblown because the bill was dead on arrival once it arrived in the Banking Committee in the Senate headed by Chris Dodd.

Meanwhile as the mortgage crisis deepened, the liquidity crisis that it caused began to purge banks and mortgage companies without discrimination. It started with small and mid size mortgage companies like First Magnus and moved onto more powerful mortgage companies backed by banks like New Century and Greenpoint. The situation took on a new dimension when rumors spread that Countrywide was in trouble and also on the brink of shutting its doors. Countrywide even began selling CD's at above market rates in an apparent desperate attempt to raise cash.

The situation took on an even grimmer turn when giant Bear Stearns nearly shut its doors in March of this year. The situation was quite complicated and thus the average person didn't understand the details. In effect, Bear Stearns would have closed down had the Fed not stepped in and procured its sale to J.P, Morgan. Many politicians, especially among the Democratic party, characterized the Fed's action as a bailout. The details are complicated and ultimately in many ways politically irrelevant, because the Fed's action in saving Bear Stearns re invigorated calls for borrower's bailout. Thus, the Fed action in saving Bear Stears in effect gave new political capital to the upcoming bill at the center of this scandal.

In January, Countrywide was saved from closing when it was announced that Bank of America was stepping in to buy it out. The deal represented a boon for Bank of America as not only was Countrywide depressed already but the price was less even then its current price.

The transaction represents a 7.5 percent discount to where Countrywide shares ended Thursday after they soared on news that a rescue plan was in the works. It also effectively leaves Bank of America with a big loss on its $2 billion August investment in Countrywide Financial Corp. during the height of the summer’s global credit crisis.

Now, while the deal was a boon there was one significant hitch. Bank of America was also taking on all of Countrywide's bad loans. If Bank of America could successfully rid itself of these loans this transaction would be a financial success of dramatic proportions. As you will all see later the manner in which it will rid itself of these loans is at the center of this scandal.

This set the stage for the next piece of mortgage legislation, H.R. 5831 or Dodd/Frank. This bill was unprecedented in size and scope. While prior bailout proposals ranged between one billion and ten billion dollars, this one was in the neighborhood of $300 billion. Furthermore, it allowed borrowers to not only receive rates the market wouldn't approve them for, but it would even artificially reduce their loan amounts. The other thing the bill did, the thing politicians conveniently didn't publicize much, was it bought up billions of bad loans that banks couldn't find buyers for. The bill would do what the market for loans wouldn't, take bad loans off the hands of banks desperate for cash.

On June 4th, Barack Obama clinched the Democratic nomination for President and became the first African American to lead the ticket of a major party. Within days, he made his first decision as the newly minted candidate. He created his Vice President vetting committee, consisting of Jim Johnson, Eric Holder and Caroline Kennedy. Within days, Johnson's appointment turned into a scandal for Obama. Johnson, a former CEO for mortgage giant Fannie Mae, had received millions in "VIP" loans from Countrywide. Countrywide was not only at the center of the mortgage crisis, but it was a frequent target of Obama himself. Within days, Johnson resigned, but the scandal surrounding Countrywide was just starting.

It turned out several prominent politicians received favorable treatment from Countrywide. The most significant was Chris Dodd. That's because as head of the Banking committee not only was he working on an important piece of legislation regarding Countrywide but in a position to investigate wrongdoing on their part. Dodd, for his part, gave a dubious explanation. He claimed that while he knew that the loans he was receiving were VIP, he didn't ask what that meant. Then, the Washington Examiner reported on two very important and troubling developments. First, it turns out that the VIP loan was not the extent of financial support from mortgage giants affected by his legislation.

Countrywide's VIP loan to Dodd, which saves the Banking Committee chairman $75,000 over 30 years, smells like a potential quid-pro-quo now that Dodd has pushed a bill that will save the company from itself, but what about Bank of America's behavior?

Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the banking panel 17 months ago. From January 2007 to March 2008, Bank of America employees have donated at least $50,400 to Dodd's campaigns, according to the Center for Responsive Politics. So, while Dodd's sweetheart loan from Countrywide saves him personally $200 per month, his chairmanship earns him politically more than $1,000 per week.

These aren't bank tellers funding Dodd, either, as contributors include Bank of America's director of government affairs John Collingwood and Barbara Desoer, who oversees the merger with Countrywide and will "run the combined companies' mortgage operations," according to The Los Angeles Times.

In other words, not only was Dodd receiving favorable loan terms from troubled lender Countrywide, but for the last year and a half he was receiving about $1000 a week from their suitor, Bank of America. At this point there was the strong appearance of a quid pro quo but it was still only an appearance.

Then, the next important development changed all that. A proprietary, internal Congressional document was discovered by Jay Carney of the Washington Examiner. It indicates that in fact Bank of America wasn't merely going to be helped by this by having a bunch of bad Countrywide loans get bought by the federal government. In fact, according to this document, Bank of America was leading the way in drafting this bill. In other words, we have two banks that are going to be critically affected by this legislation. One bank offered the central player, Dodd, a very favorable mortgage. The other contributed to multiple campaigns to the tune of roughly a $1000 a week for about a year and a half, and then the bank literally wrote major parts of the bill. You do the math on what all of that means.

Keep in mind that this bill wouldn't merely save borrowers but the banks currently holding onto their mortgages. Banks are desperate to rid themselves of these bad mortgages. The secondary market refuses to buy them. Of course they won't, who would buy bundles of mortgages full of borrowers that are unwilling or unable to pay on time. What this bill will do is rid their portfolios of all these bad loans. Keep in mind, again, that the only thing keeping Bank of America from making out like a bandit in buying out Countrywide were all of the bad loans they were taking on. This bill solves that problem rather nicely and neatly.

Then, this past week Jeb Hensarling demanded an immediate investigation of Countrywide, Bank of America and Dodd himself. The Senate leadership lead by Harry Reid, rather than immediately ordering an investigation, is now trying to ram this legislation through before the media attention gets too problematic. This is among the most brazen and despicable flaunts of power I have ever witnessed. Instead of investigating serious allegations of corruption, the Senate is attempting to ram through the very bill at the center of the corruption. So far, they are planning on continuing to have a vote next week. Any politician that votes for this legislation has a hand in the very corruption surrounding it.

The scandal doesn't end there unfortunately. This scandal extends to the media. Outside of Fox News, Conservative blogs, and financial media like the Wall Street Journal, you will find scant attention to this scandal. The Conservative Revolution has compiled a list of major media that is following this scandal. Outside of the ones I mentioned there are a handful of newspapers that are reporting on it. Why is that? Can a scandal get any bigger or more important? What we have is a powerful politician getting very special favors and then allowing a bank to craft legislation that benefits the bank and at the same time presents this legislation as a compassionate bailout for struggling borrowers. It frankly doesn't get anymore corrupt than that and every media should be jumping all over themselves to report new details. Yet, what we have is a major media blackout of the story. You won't find much coverage on the networks, CNN, MSNBC, or any papers like the New York Times and Washington Post. The reasons for this are not clear though of course I can give some logical hypothesis.

I do however know that Jack Abramoff was a major scandal. I know that the coverage of the likes of Duke Cunningham, Bob Ney and Mark Foley became front page and intense. Now that a Democrat is in the middle of a major scandal much of the media is strangely silent. Of course, corruption has no ideology and furthermore it is like a cancer. It spreads and affects everything around it. Corruption is allowed to flourish only when the media looks the other way as its happening and that's exactly what is happening here.

Dodd/Frank, Barack Obama, and Judgement

Last month, Barack Obama made another in a series of speeches in Las Vegas on the mortgage crisis. Buried within the speech was a line that was of little importance at the time however should become quite relevant in the campaign given what we have recently found out.

To stabilize our housing market and to bring this crisis to an end, I’m a strong supporter of Chris Dodd and Barney Frank’s proposal to create a new FHA Housing Security Program. This will provide meaningful incentives for lenders to buy or refinance existing mortgages, and to convert them into stable 30-year fixed mortgages. This is not a windfall for borrowers – as they have to share any capital gain. It’s not a bailout for lenders or investors who gambled recklessly – as they will take losses. It asks both sides to sacrifice. It offers a responsible and fair way to help Americans who are facing foreclosure to keep their homes at rates they can afford.

Now,what he is talking about is the Dodd/Frank bill that has recently run into controversy because of corruption uncovered between Dodd, Countrywide and Bank of America. Now, more prominent in Obama's speech was this line.

Here, in Nevada, we see how so many people are fighting for their American Dream. Because in so many ways, Felicitas and Francisco have lived the American Dream. Their story is not one of great wealth or privilege. Instead, it embodies the steady pursuit of simple dreams that has built this country from the bottom up....

Yet a predatory loan has turned this source of stability into an anchor of insecurity. Because a lender went for the easy buck, they are left struggling with ballooning interest rates and monthly mortgage payments. Because Washington has failed working people in this country, they are facing foreclosure, and the American Dream they sought for decades risks slipping away.

Dodd/Frank is a boondoggle and bailout for irresponsible and well connected banks masquerading as a compassionate piece of legislation supposed to help the most vulnerable and unfortunate among us. It is also the centerpiece of Barack Obama's plan to reinvigorate the mortgage market. Lost among the shocking details of what we have learned about the cozy relationship between Chris Dodd, Countrywide and Bank of America is the fact that Barack Obama gave this bill his seal of approval.

In his defense of the bill, Barack Obama makes two misleading statements. First, he proclaims that this isn't a bailout of borrowers because they would now share in "any capital gain". While this is true, it is also beside the point. Right now, most of these borrowers have no capital gain. They currently owe more than their properties are worth. This bill would artificially lower their mortgage below the value of the property. In my opinion half of say $25k is better than zero. Furthermore, the banks would in fact take losses but far smaller than they would without the bailout. These banks need to sell these loans and they need cash. That's exactly what this bill provides. Furthermore, the only other option for these banks vis a vis these loans is foreclosure. In that case, not only would they get less than they would with this bill but only after months of legal haggling and headaches. Of course, this bill is a bailout for all involved, and it is obvious to anyone that analyzed the bill from the beginning.

Dodd/Frank would provide roughly $300 billion in funds to bail out troubled borrowers. Many times this would include not only giving these borrowers rates they would never qualify for on the open market, but it would include artificially lowering their loan amounts as well. For banks, the federal government, through FHA, would buy up many of their most troubled mortgages. Banks are facing a "liquidity crisis" because they are holding onto mortgages they intended on selling to other parties. Since the open market is unwilling to buy them, it is quite a boon to get the government to do what the open market wouldn't. Furthermore, Bank of America received quite a great deal in buying Countrywide. The only caveat was that Countrywide was holding onto an enormous amount of these bad mortgages. As such, this bill would turn this buyout into quite the boondoggle for Bank of America. That is the nefarious undercurrent behind this bill that is now coming to the surface. That said, nothing in the bill was hidden from the public. Anyone who analyzed the bill from the beginning, like myself, would have come to the conclusion that the bill was a nightmare waiting to happen.

The Washington Examiner story found one other interesting piece of information.

Only Barack Obama and Hillary Clinton have received more Bank of America money than Dodd during the current election cycle. Republican nominee John McCain slightly trails Dodd, with $64,000 in reported Bank of America contributions.

From the beginning this bill was nothing more than packaging. It was billed as help for struggling homeowners. Of course, it turns out it is much more than that. This bill is really a bailout to irresponsible and greedy lenders. What it really is is a bill to make the buyout of Countrywide by Bank of America a financial boon. Of course, this is the bill that Barack Obama vouched for.

There is of course nothing more than rumor and innuendo that Obama was directly involved in any corruption. That is frankly besides the point. What he did was vouch for a corrupt bill. If someone vouched for Ishtar their movie recommendations would no longer be trusted. The same would be true if someone recommended an incompetent or corrupt lawyer, doctor, or mechanic. So, what do we make of a politician that vouches for a bill that later turns out to be corrupt? In fact, they probably didn't realize that the bill was corrupt, however all corrupt bills are bad bills. If a politician recommends a corrupt bill, no matter the reason, their judgement must come into question.

That's what this bill always was. That's how I described it from the beginning. I don't see that it was corrupt, however I did know right away that it was a bad bill. Why didn't Barack Obama make the same judgement? If he didn't what are we to make of his famous judgement? He has made judgement the centerpiece of his election theme. Yet, he vouched for a bill that has now been exposed as corrupt in the worst sort of a way. That is the message that I would be hammering if I am John McCain. If Barack Obama is going to make judgement an issue, then he needs to account for his support for this corrupt bill.

For an updated summary of this entire fiasco including backstory, context and a detailed history of events please go to this link.

Countrywide Scandal Expands

According to the Washington Examiner, there is some very troubling new information regarding the widening scandal at Coutrywide and their VIP loans to powerful legislators like Chris Dodd.

One Senate staffer was told by a lobbyist, "the bailout section is exactly what Bank of America and Countrywide wanted." The Senate staffer added "its obvious they got what they asked for."

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Countrywide's VIP loan to Dodd, which saves the Banking Committee chairman $75,000 over 30 years, smells like a potential quid-pro-quo now that Dodd has pushed a bill that will save the company from itself, but what about Bank of America's behavior?

Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the banking panel 17 months ago. From January 2007 to March 2008, Bank of America employees have donated at least $50,400 to Dodd's campaigns, according to the Center for Responsive Politics. So, while Dodd's sweetheart loan from Countrywide saves him personally $200 per month, his chairmanship earns him politically more than $1,000 per week.

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Bank of America stands to profit most from a bailout. It will take on Countrywide's bad loans, and under Dodd-Shelby, it could shift the worst ones onto the shoulders of taxpayers, via the Federal Housing Authority. Basically, Uncle Sam will buy Countrywide's stinky loans off of Bank of America.

The jist of the article is this. Besides the sweetheart loan from Countrywide, Senator Chris Dodd is also the recepient of a great deal of PAC money from Bank of America. Bank of America recently agreed to buy out Countrywide in what may wind up being a very lucrative deal for B of A. Furthermore, ANONYMOUS lobbyists claim that the bill serves the interest of B of A so much that it is almost as though the bank wrote the bill.



Here is basically what we have. We have a bill presented to the public as a helping hand for struggling borrowers. In reality, it is also a bailout of irresponsible banks. It allows banks to remove bad loans from their portfolio and be injected with government cash. Furthermore, the key legislator on the bill, Chris Dodd, not only received a sweetheart deal from the most significant troubled lender, Countrywide, but he received a significant amount of money from another lender, Bank of America, that is simultaneously buying out Countrywide.



Bank of America stands to potentially receive a boondoggle from its merger with Countrywide. They bought it at a depressed share price because they agreed to also take on its troubled debt. Now, not even six months later, the government is stepping in to buy up nearly all that troubled debt. As such, Bank of America stands to make like bandits in this merger.

My colleagues at Red State are demanding action. Senator Jim DeMint and Senator Jim Bunning are each calling for an investigation into the behavior of Countrywide, Bank of America, and Chris Dodd. Furthermore, they are calling for a halt to the movement of Dodd/Frank until the investigation is over. Please call your Senator, 202-224-3121.