Did Kent Conrad’s VIP Loan Violate Senate Ethics Rules?
The Washington Post asks the question:
SEEKING TO refinance his Delaware beach house in 2004, Sen. Kent Conrad (D-N.D.) did what any ordinary property owner in his position would have done. On the advice of his friend James A. Johnson, who also happened to be the former chief executive officer of mortgage giant Fannie Mae, he called Angelo Mozilo, the CEO of Countrywide Financial. Soon Mr. Conrad had a $1.07 million loan—at a discount, personally ordered for him by Mr. Mozilo, of $10,500 in fees. A few weeks later, Mr. Conrad was back in touch with Countrywide, this time to refinance his eight-unit apartment building in Bismarck, N.D. Countrywide normally does not lend on properties with more than four units, but, on Mr. Mozilo’s orders, Mr. Conrad got $96,000. Clearly, it’s good to be a senator, and it’s good to be a “Friend of Angelo”—as favored VIP borrowers were known at Countrywide.
Of course, it’s even better to be a Friend of Angelo if the public doesn’t know about it. Now that Mr. Conrad’s status is known, along with that of other FOAs—including Mr. Johnson, Mr. Conrad’s Senate colleague Christopher J. Dodd (D-Conn.), former Clinton administration Cabinet officials Donna E. Shalala and Richard C. Holbrooke, former Bush housing secretary Alphonso Jackson, and ex-Fannie Mae CEO Franklin D. Raines—it’s worth figuring out exactly what is, and is not, wrong with this kind of help. . . .
The Senate’s ethics rules quite wisely forbid members from soliciting gifts or knowingly accepting gifts worth more than $100 from entities, such as Countrywide, that employ lobbyists. One question is whether the FOA treatment counts as a gift or fits into an exception for loans at terms generally available to the public. In this case, does “the public” mean everyone, all Countrywide customers or just all FOAs (of whom there were apparently hundreds)? And how should the senators’ economic circumstances (credit scores, net worth, etc.) figure in?
It’s pretty clear to me that if you’re a Senator and you call up the CEO of a lending company and ask for a loan and that CEO responds by giving you an extra-special low rate and waiving costly fees that constitutes a gift.
Because the average American doesn’t get to just phone up the CEO and ask for a loan, and CEO’s aren’t inclined to give loans with special considerations to average Americans.
Senators shouldn’t get special treatment.
