Big Problems for Sens. Dodd and Conrad (Updated With Conrad Response)

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The endless and insufferable presidential candidate guilt-by-association game may have finally led to a big story. Appropriately enough, the story has little to do with either of the campaigns. The business magazine Portfolio is reporting today that Jim Johnson, the former VP vetter for Barack Obama, was not the only person of note who received favorable loans from Countrywide Financial. To wit:

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.

Now it’s one thing if the CEO of Countrywide wants to give out favorable loan terms to a group of “friends,” people like Johnson who work in the private sector and are allowed to take gifts. It’s a completely different thing if those “friends” are employed by the American people, and have responsibilities overseeing regulations that effect Countrywide. Portfolio reporter Daniel Golden explains:

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.

My question is this: What were Dodd and Conrad thinking? (UPDATE: SEE CONRAD STATEMENT BELOW. HE SAYS HE NEVER HAD ANY HINT OF SPECIAL TREATMENT FROM COUNTRYWIDE.) In the article, Conrad’s defense is pretty weak. “I have no way of knowing how they categorized my loan,” he said in a statement. “I never asked for, expected or was aware of any special treatment.” Raise your hand if you, as a taxpayer, are comforted by the fact that one of the senators overseeing our nation’s financial markets does not examine the terms of his own mortgage. According to the article, the loan terms saved both senators many thousands of dollars.

UPDATE: Conrad’s explanation after the jump.

Senator Kent Conrad made the following statement today after a Web site published an article questioning the lending practices of Countrywide Financial:

“I am very disappointed in this article. It badly misrepresents my experience in getting these loans. I never asked for, expected or was aware of any special treatment. And I certainly did not know — until this article — that I was placed in any program that gave preferential rates or waived fees. To leave the impression that I did is a complete lie.

“Like millions of Americans, I did get financing from Countrywide. However I have no way of knowing how Countrywide categorized my loans.

“But this is what I do know: When we applied for the loans with Countrywide we had spotless credit; we put 20 percent down; we were mortgage free, having paid off our residence in Washington, DC; and we had more than 60 percent equity in our Bismarck apartment building, which is also my home.

“From what we have been able to determine, it appears that we were given competitive rates. In fact, I was offered financing on basically the same terms from another lender. Contrary to the article, I also paid thousands of dollars in mortgage fees.

“I never met Angelo Mozilo. And in my role as a United States Senator, I have never done anything for Countrywide.

“This article seeks to leave the impression that I somehow have done something wrong with respect to these loans. That is totally and completely false. I have done nothing wrong with regards to these loans.

“I never expect to be treated better than anyone else because I am a U.S. senator. That is not in my nature. That is not who I am. But I do expect to be treated fairly. And this article certainly does not do that.”