Chris Dodd – Countrywide Scandal, Mortgage Fraud and AIG Bonus Scandal

Chris Dodd was elected to the United States Senate in the 1980 election and was reelected in the 1986, 1992, 1998, and 2004 elections. As the 2010 elections approach, there are rumblings that Dodd my be out, and lose to a Republican Rob Simmons. Chris Dodd is a perfect example of not only why term limits need to be set for senators and congressmen, but the corruption of the Democratic Party. Dodd has been involved in numerous scandals, most notably mortage fraud, and the AIG Bonus fiasco in March of 2009.


Chris Dodd’s AIG bailout and bonuses

(from Wikipedia)

From the fall of 2008 through early 2009, the United States government spent nearly $170 Billion to bailout the failing insurance giant, AIG. AIG then spent $165 million of this money to hand out executive “retention” bonuses to its top executives. Public outrage ensued over this apparent misuse of taxpayer dollars.

Senator Chris Dodd was responsible for the inclusion of a clause limiting excessive executive pay in the American Recovery and Reinvestment Act. On February 14, 2009, the Wall Street Journal published an article, Bankers Face Strict New Pay Cap, discussing a retroactive limit to bonus compensation inserted by Chris Dodd into the stimulus bill that passed in the Senate.[63]

The same article went on to mention that Treasury Secretary Timothy Geithner and Lawrence Summers “had called Sen. Dodd and asked him to reconsider”.

When the bill left conference, Dodd’s provision had been amended to include a provision preventing limits on bonuses previously negotiated and under contract. This provision was lobbied for by Geithner and Summers.

As Dodd explained in his March 18th interview on CNN,[64] at Geithner and the Obama Administration’s insistence he amended his provision’s original language to include Geithner and Summers’ request, which thus allowed AIG to give out bonuses under previously negotiated contracts. However, Dodd’s provision also includes language allowing the Treasury Secretary to examine bonuses doled out and, if they are found to be in violation of the public interest, recoup those funds.

Dodd retreated from his original statement that he did not know how the amendment was changed[65] Dodd was criticized by many in the Connecticut media for the apparent flip-flop.[66][67] In a March 20, 2009 editorial the New Haven Register called Dodd “a lying weasel”[68] The same day, Hartford Courant columnist Rick Green called on Dodd not to seek re-election in 2010.[69]

The Washington, DC press described Dodd as “reeling” from the controversy [70] and having “stepped in it” after changing his story as to the bonus amendment.[71]
At a press conference in Enfield, Connecticut, on Friday, March 20, Dodd responded to critics and explained that his original answer to a CNN answer was based on a misunderstanding of the question.[72] He also said he was disappointed that the Treasury officials who asked him to make the legislative changes had not identified themselves, refusing to confirm the actual identity of the individuals responsible for changing the amendment. The next day, voters in Ridgefield rallied against Dodd and the Obama economic agenda [74] [75] The Manchester Journal Inquirer suggested that “Chris Dodd’s explaining may have only begun” reports Dodd has received over $223,000 from AIG employees for his recent campaigns.


Chris Dodd’s Countrywide scandal

(from Wikipedia)
As Dodd in his role as chairman of the Senate Banking Committee proposed a housing bailout to the Senate floor in June 2008 that would assist troubled subprime mortgage lenders such as Countrywide Financial in the wake of the United States housing bubble’s collapse,[25] Condé Nast Portfolio reported that in 2003 Dodd had refinanced the mortgages on his homes in Washington, D.C. and Connecticut through Countrywide Financial and had received favorable terms due to being placed in a “Friends of Angelo” program. Dodd received mortgages from Countrywide at allegedly below-market rates on his Washington, D.C. and Connecticut homes.[25] Dodd has not disclosed the below-market mortgages in any of six financial disclosure statements he filed with the Senate or Office of Government Ethics since obtaining the mortgages in 2003.

Dodd’s press secretary said the “Dodds received a competitive rate on their loans”, and that they “did not seek or anticipate any special treatment, and they were not aware of any”, then declined further comment.[27] Republican State Chairman Chris Healy stated that “Dodd has crossed the ethics line by obtaining two generous mortgage deals with a company that is the corporate poster-child for the national subprime lending meltdown.”[28] The Hartford Courant reported Dodd had taken “a major credibility hit” from the scandal.[29] The Chairman of the Senate Budget Committee Kent Conrad and the head of Fannie Mae Jim Johnson received mortgages on favorable terms due to their association with Countrywide CEO Angelo Mozilo.[30] The Wall Street Journal, The Washington Post, and two Connecticut papers have demanded further disclosure from Dodd regarding the Mozilo loans.[31][32][33][34]

On June 17, 2008, Dodd met twice with reporters and gave accounts of his mortgages with Countrywide. He admitted to reporters in Washington, D.C. that he knew as of 2003 that he was in a VIP program, but claimed it was due to being a good customer, not due to his political position. He omitted this detail in a press availability to Connecticut media.[35]


Chris Dodd’s Fannie Mae/Freddie Mac controversies

(from Wikipedia)
Senator Dodd was involved in issues related to the federal takeover of Fannie Mae and Freddie Mac during the 2008 subprime mortgage crisis.

As part of Dodd’s overall mortgage bill the Housing and Economic Recovery Act of 2008 before Congress in the summer of 2008, Treasury Secretary Hank Paulson sought provisions enabling the Treasury to add additional capital and regulatory oversight over these government sponsored enterprises. These provisions were part of the bill signed by President George W. Bush. At the time, it was estimated that the federal government would need to spend $25 billion on a bailout of the firms. During this period, Dodd denied rumors these firms were in financial crisis. He called the firms “fundamentally strong”,[52] said they were in “sound situation” and “in good shape” and to “suggest they are in major trouble is not accurate”.[53]
In early September, after the firms continued to report huge losses,[54] Secretary Paulson announced a federal takeover of both Fannie Mae and Freddie Mac. Dodd expressed skepticism of the action, which the Treasury estimated could cost as much as $200 Billion. Dodd is the number one recipient in Congress of campaign funds from Fannie Mae and Freddie Mac.[55] Critics also charge that Dodd ignored repeated warnings that the two firms were in need of major reform.

Chris Dodd’s Irish Cottage Controversy

(From Wikipedia)

In February 2009 Kevin Rennie, a columnist at the Hartford Courant ran an op-ed concerning Dodd’s acquisition of his vacation home in Roundstone, Ireland. [56] The article alleged that Dodd’s former partner in buying the home had ties to disgraced Bear Stearns principal Edward Downe, Jr. who has since been convicted of insider trading by the Securities and Exchange Commission. [57] After paying an $11 million fine for his role in the scam, Downe later obtained a pardon in the waning days of the Bill Clinton administration. The controversial pardon was granted after Dodd lobbied Clinton on Downe’s behalf. [58] Dodd’s letter to the President said “Mr. President, Ed Downe is a good person, who is truly sorry for the hurt he caused others,”[59]. After Downes’ pardon, Dodd bought out the interests of his partner for a price allegedly based on a 2002 bank appraisal of the Roundstone home, which yielded little profit for Dodd’s partner.[60] [61] Rennie criticized Dodd for claiming the Roundstone home was worth less than $250,000 in Senate ethics filings; some observers estimated the likely value in excess of $1 million USD. [62]