Bank of America May Have Influenced Dodd-Shelby Housing Bailout Package
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Tags: Senator Dodd,
Senate Banking Committee,
Richard Shelby,
Bank of America,
Angelo Mozilo,
Countrywide,
TILA,
subprime fallout,
Senate,
House,
Congress,
FHA,
Examiner A House staffer told Examiner.com, demanding anonymity, that the Dodd-Shelby Senate housing bill is beginning to be referred to as the "Bank of America bill on steroids." The Dodd-Shelby bill (Sen. Richard Shelby is a Republican from Alabama) continues to be scrutinized since revelations of Senator Chris Dodd's "VIP mortgage" showed that he was receiving more than a courtesy from Countrywide and Angelo Mozilo: he would be saving $75,000 over 30 years, or just over $200 a month. Dodd has also received approximately $70,000 in campaign contributions from Bank of America since he became chairman of the Senate Banking Committee.
The Dodd-Shelby housing bill came before the Senate last week amid controversy that Dodd received preferential treatment and a "special" interest rate on his mortgage, thanks to a "Friends of Angelo Mozilo" program at Countrywide Financial. However, it's not Countrywide that should be scrutinized along with Dodd's motives, but the company that just bought Countrywide at $7 a share: Bank of America.
It is being alleged by House and Senate staffers that Bank of America, who agreed in principal to buy Countrywide back in January, wrote the Senate's version of the bailout, the same housing relief package sponsored by Senator Dodd (who received the VIP loan from Countrywide; see the connection).
Another Senate staffer, remaining anonymous, was told by a lobbyist that, "the bailout is exactly what Bank of America and Countrywide wanted [. . .] it's obvious they got what they asked for," (Examiner.com, 6/19/08).
Looking deeper into the obvious conflict of interest, Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the Senate Banking panel. And from January, 2007 to March, 2008, Bank of America employees have donated at least $50,400 to Dodd's campaign, according to the Center for Responsive Politics. His chairmanship earns him politically more than $1,000 per week, on top of the $200 a month he's saving on his mortgage.
The only counterargument to Dodd receiving this kind of treatment from Countrywide and Bank of America is: that it might not be as personal as we think. I don't believe Bank of America is courting Dodd because he is the senior Senator from Connecticut. Rather, anybody who was to head the Senate Banking Committee would likely have been strongly courted from a variety of major lenders who helped usher in the subprime fallout; and in times of a credit crisis, it's important for the struggling banks to have themselves firmly inserted into the pockets of powerful politicians, in order for the politician (i.e. Senator Dodd) to see the situation from the bank's perspective. However, that does not excuse Dodd from being bought into seeing Countrywide's and Bank of America's "logic."
Bank of America stands to profit most from a bailout, after reexamining the bill, and not Countrywide. Countrywide is more like the pawn in a bigger game of economic chess (even though just over a year ago Countrywide was yet to feel any financial tumult from the pending subprime fallout). Bank of America is about to take on Countrywide's bad loans, and under Dodd-Shelby, it could shift the worst loans onto the shoulders of taxpayers, via the FHA; the FHA will buy the worst loans off of Bank of America, therefore, Mozilo, Countrywide, and B of A are off the hook for some of the worst loans originated by Mozilo (via crooked TILA forms, among other shady lending practices).
How ironic is it that Bank of America has bought Countrywide, and is "flipping" its bad loans onto the government, which has yet to prove anything other than complete ineptness throughout this whole foreclosure crisis, as if Bank of America was like an investor trying to "flip" a house: in buying a run-down property (Countrywide) for a discount, shelling out some campaign cash (Dodd) and earning some "equity" through lobbying. If the Dodd-Shelby bill continues through with out any further revisions, you can bank on Dodd never having to worry about finding friends in the lending industry, they'll always make sure he feels like a VIP.