My colleague, Clint Korver blogged the other day on the pickle Senator Kent Conrad finds himself in due to the appearance of favorable treatment at the hands of Countrywide Mortgage . . .
The Washington Post today showed this morning how it worked. Sen. Kent Conrad, D-N.D. upon advice from an old friend, called up Countrywide CEO Angelo Mozilo to obtain a $1.07 million loan for his Bethany Beach, Del. vacation home. Apparently they hit it off and Mozilo took up the cause of getting Sen. Conrad a good deal.
I don’t see any ethical issues for Mozilo with the above activities — so long as Mozilo was not being deceptive about this practice. In fact, it sounds like he was quite open with his special favors. “It was something he handed out like party favors. He was fairly forthcoming with it,” said Guy Cecala, publisher of Inside Mortgage Finance Publications. “As long as I can remember, he was offering that.”Countrywide Gave Special Attention To Lawmakers – washingtonpost.com. Mozilo wasn’t being deceptive, he wasn’t stealing (company’s give discounts to customers for all kinds of reasons), and he wasn’t hurting anyone.
The ethics of the Sen. Conrad is potentially a different story. The Senate ethics committee has a gift rule that frowns on Senators getting benefits of this magnitude.
In today’s WSJ, Senator Conrad has this to say . . .
Regarding your June 16 editorial “Beltwaywide Financial,” I never once asked for or expected discounted mortgages or a so-called “sweetheart” deal from Countrywide Financial.
Here are the facts: In 2002 I was looking for a mortgage and went to several lending institutions. I also called a close friend of mine who knew a lot about mortgages for advice. My friend happened to be with the head of Countrywide Financial when I called and put him on the line. I spoke with a gentleman by the name of Angelo Mozilo for about 30 seconds, and he referred me to a junior loan officer.
Because I did not know if Countrywide would grant me a loan or what terms they would offer, I also consulted a mortgage broker in Washington, D.C. He offered me the identical rate as Countrywide. He is quoted in my hometown newspaper confirming that fact.
He goes on to detail other transactions and ends by saying . . .
In terms of questions about this matter, I immediately disclosed my personal financial records to the news media, answered every reporter’s question and sought out guidance from the Senate Ethics Committee.
There is nothing I value more in my public life than the trust I have earned from my constituents in North Dakota, and I will take every measure possible to ensure them that I sought no favor, expected no favor, and was not aware of any favor provided by Countrywide Financial.
Like I said, he’s in a pickle, how big remains to be seen.
The fact is, beyond his public position, Mr. Conrad is a homeowner and apparently the owner of at least one commercial property. The man needed a mortgage. Having spent a number of years consulting to financial institutions, I can assure you with 100% certainty, that regardless of what Mr. Conrad said or did, he got extra attention. There is simply no way that someone doing this piece of business wouldn’t note his day job and make a point of drawing it to the attention of anyone going near his loan. Screwing up a US Senators loan falls in the category of “bad”.
As Clint points out, the fact that the CEO of Countrywide let it be known that there was a special window for people of importance is a typical business practice. In fact, he didn’t make bones about it. Anyone in business reading this post or the articles referenced knows this. The fact that Senator Conrad compared the rate he was offered to what an independent loan broker could get him seems prudent on his part, though the idea that he was referred off to a “junior loan officer” is a huge stretch. I would bet serious money that part didn’t happen. Again, there’s no way the CEO of Countrywide was going to send this piece of business to a newbie. But not a hanging offense.
Clint doesn’t like words like “in comparison,” but in comparison to the excitement surrounding the dealings with Jack Abramoff, this one is a complete non-starter. Dollars to donuts says the Ethics Committee has nothing to say about this. I’m guessing this one doesn’t cost him much at the polls. That leaves his conscience. For public consumption, his story seems pretty sound. Like I said, it’s a pickle.