Kent Conrad Never Should Have Been Let Off The Hook For VIP Loans

Back in 2008 it was revealed that Senators Kent Conrad and Chris Dodd had received “VIP Loans” (loans with extra-special terms not available to the public) from Countrywide Financial. Countrywide was the nation’s largest originator of subprime mortgages, and contemporaneous to these VIP loans was seeking from Congress what amounted to bailouts for those loans worth billions. Senator Dodd crafted that legislation in the Senate Banking Committee, and Senator Conrad helped protect it from procedural challenges in his role as the chairman of the Senate Budget Committee.

Despite this evidence to suggest a quid pro quo relationship, both Conrad and Dodd were exonerated in 2009 by the Senate Ethics Committee. But that committee didn’t consider any exculpatory evidence to clear Conrad or Dodd. In fact, recordings of Senator Conrad’s conversations with Countrywide about his VIP loan were never requested by the Ethics Committee, and have subsequently been destroyed by Bank of America (which bought out Countrywide).

House Ethics Committee Chairman Darrell Issa has never let the VIP loans scandal go. In 2010, Rep. Issa said that the Senate Ethics Committee had “whitewashed” Conrad and Dodd’s VIP loans. Now Rep. Issa’s investigation is proving that the scandal goes much further than just Conrad and Dodd to include both Republican and Democrat members of the House, as well as employees of government-back lenders Fannie Mae and Freddie Mac who apparently took millions in VIP loans even as they approved backing for Countrywide’s subprime loans.

Given that the collapse in the financial sector has been central to the nation’s political debate since the subprime mortgage meltdown in 2008, it’s a little shocking that this VIP loan scandal hasn’t gotten more attention outside of wonkish political circles. But Senator Dodd (who never ran for re-election) and Senator Conrad (who also isn’t running for re-election) got lucky both in that this story, bizarrely, hasn’t made more waves and in that they got a clean bill of health from their fellow Senators on the ethics committee.

But given these more recent revelations, given that we know Conrad and Dodd’s involvement in the scandal was never thoroughly investigated, this VIP scandal should be a black mark on Conrad’s record.

He’s not running for re-election, but he there will be a lot of talk about his “legacy” here in North Dakota as he retires. This scandal, which is probably (more than anything else) the reason why he’s not running for re-election in 2012, shouldn’t be swept under the carpet.