Dodd, Mortgage Bailout Bill Under Fire

The Senate is debating a huge mortgage bailout bill this week amid fresh allegations that certain high-powered senators and former cabinet officials received preferential treatment from mortgage giant Countrywide Financial on their personal loans. Sen. Christopher Dodd, Chairman of the Senate Banking Committee and chief sponsor of the mortgage compromise legislation, received two below market loans from Countrywide in 2003 under its "friends of Angelo" program. "Angelo" is Countrywide CEO Angelo Mozillo. After first denying it, Dodd has admitted that he knew he was receiving special treatment on his loans as a "V.I.P.," but continues to deny that he sought any deal that would benefit him financially.

But Dodd's troubles are growing, and may eventually wind up killing the mortgage bailout bill he co-authored with Alabama Republican Senator Richard Shelby. A new examination of Dodd's campaign contributions reveals that since Dodd became chairman of the Banking Committee in 2007, he has received over $70,000 in contributions from Bank of America and its high-level employees. Bank of America recently bought Countrywide Financial and all of its existing loans. Since Countrywide held the most sub-prime mortgages at risk of default, Bank of America is potentially exposed to huge losses, unless a government bailout moves those risky loans off Countrywide's balance sheet. Dodd has written such a bailout, and some are now questioning whether his low interest loans and Bank of America's campaign money influenced that legislation.

Dodd is not the only Senator to have received contributions from Bank of America. Democratic presumptive nominee for president, Sen. Barack Obama, and his former rival Sen. Hillary Clinton, both received more money than Dodd from Bank of America while Republican nominee, Sen. John McCain, received slightly less. All told, Bank of America's political action committee and employees contributed over $1.3 million to presidential and congressional candidates. But Dodd is in the best position to help Bank of America in the short term.

The White House has issued a surprise veto threat on the legislation, reversing its earlier positive comments on the compromise. The Administration now says that it objects to the funding source in the Senate bill. But the controversy surrounding Dodd's loans and cut-rate deals given to other prominent government officials may be playing a role in the Administration's reversal. A veto of the legislation could allow time for a more thorough examination of the relationships between Banking Committee members and the mortgage industry. More revelations may force the Senate Ethics Committee to initiate an investigation of Dodd and perhaps other Senators' mortgage deals. Sen. Kent Conrad (D-ND) has also been implicated in the growing scandal. President Bush is already adverse to a large-scale government bailout of mortgage speculators and irresponsible borrowers. He will certainly not hurry to sign a bill that primarily benefits a company that may have bought access to powerful members of Congress.