Chris Dodd's effort to commandeer the health care system so as to provide a trillion dollar memorial to his BFF Teddy Kennedy hit a little speed bump this afternoon.

Remember Robert Feinberg, Angelo Mozilo's go to guy at Countrywide Mortgage about greasing VIP's

Well, his testimony before the Senate Ethics Committee and a House Committee  got leaked to the AP. And it's not pretty.

Countrywide VIPs, Feinberg told the committees, received discounts on rates, fees and points. Dodd received a break when Countrywide counted both his Connecticut and Washington homes as primary owner-occupied residences -- a fiction, according to Feinberg. Conrad received a type of commercial loan that he was told Countrywide didn't offer.

Hmm, Dodd got the owner-occupied mortgage rates on BOTH the Connecticut house and the DC house even though obviously only one could be a "principal residence".  And who said they didn;t get a "sweetheart deal"? 

Maybe that was the "enhanced customer service" Dodd talks about.  And maybe it's time Dodd post the actual loan documents and loan applications on the Internet. But then again, if both applications said they were for a "principal residence" they the good Senator better hope he didn't mail or fax them.

Dodd spent a million dollars to firm up his party base support and lose ground in the ballot tests in recent weeks. And that was with Countrywide and the Irish Cottage being pretty much in remission.  Now , once again "it's all further proof that Sen. Dodd's candidacy remains toxic."

I haven't seen Rob Simmons's reaction , but Sam Caligiuri was all over this

  Connecticut cannot afford to once again endure the scandals of a leader who has been corrupted by the trappings of power.  If this testimony is true, Senator Dodd's resignation is in order, because he not only did wrong, he covered it up.   

The Republican State Chairman is all over thist too, pointing out this little gem.

Asked by a House investigator if Conrad, the North Dakota senator, "was aware that he was getting preferential treatment?" Feinberg answered: "Yes, he was aware." Referring to Dodd, the investigator asked: "And do you know if during the course of your communications" with the senator or his wife "that you ever had an opportunity to share with them if they were getting special VIP treatment?" "Yes, yes," Feinberg replied.

 Grab the popcorn! One blogger tonight suggested "Nutmeg State Democrats are likely to get even more nervous about Mr. Dodd’s chances in November 2010"

There's an old story about some Yankee farmer along the CT shoreline who hunkered down for the 1938 hurricane and thought he had been through it. The skies cleared and the air calmed, and he pushed open the basement door to inspect the devastation. A half hour later the storm returned and he was never seen again.

We are in that storm in the subprime crisis, both economically and politically.  Right in the eye and the less prudent will think it has passed only to be swept away.   Thise people who did high fives about the wonderful bailout bill last week http://www.washingtonpost.com/wp-dyn/content/article/2008/07/30/AR2008073002950.html?referrer=emailarticle    will soon eat a whole nest worth of crow.

On the economic front, the New York Times speculated earlier this week that the second shoe in mortgage lending is about to drop. http://finance.yahoo.com:80/loans/article/105504/Housing-Lenders-Fear-Bigger-Wave-of-Loan-Defaults . Evidently the borrowers with better credit are starting to default at a higher rate. This is particularly true for the "Alt-A" borrowers  who did not submit W-2 documentation for their loans. Called "liar's loans" by many, let's say the stated income was usually what was necessary to close the loan whether the borrower really earned it or not. Many Alt-A's wre "exotic" loans which were "interest only" , and and some point the lender wants to see some principal come back.  Add to that the honest Alt-A's were heavily self-employed and often in the RE business themselves---and the loan balances are now more than the collateral--  and we have a real perfect storm out there. JPChase's James Dimon, one of the more effective financiers of this era, was dead on as saying the impact was "terrible"

Now remember that Mortgage Bailout Bill we just passed? Because FannieMae  and Freddie Mac are holding over $1 trillion in subprime exposure, it was estimated that the Feds would have to advance $25 Billion to prop them up.

I don't think that included the yet unknown exposure to failing Alt-A mortgages's we're going to see over the next 24 months   Today, Freddie Mac announced an unexpected $800 million loss as the first of the Alt-A defaults started to show up. http://news.yahoo.com/s/ap/20080806/ap_on_bi_ge/earns_freddie_mac_14, Needless to say, Freddie's shares plunged.

So we're in for something on the real estate front akin to this    

Now for the political angle

In CT, we are now in Day 55 of the Chris Dodd Stonewall, as the Chairman of the Senate Banking Committee refuses to come clean on how he became a "Friend of Angelo"---i.e. Countrywide Financial's infamous robber baron Angelo Mozilo http://www.everydayrepublican.com/2008/08/06/dodd-watch-day-55-dick-sues-countrywide/

Evidently Dodd's early efforts to explain away being linked to an influence peddling scheme went awry    http://thenextright.com/ironman/now-that-chris-dodds-bridge-sale-has-failed. His last public statement was he would release the relevant loan documents after the Countrywide Bailout Bill passed   http://www.courant.com/news/nationworld/hc-ctdoddmortgage0725.artjul25,0,1419140.story?track=rss. Well Bush signed the miserable excuse of a bill, but we aren't even entitled to a miserable excuse from Dodd as to where his loan documents went? I presume he thought the media circus would move on and forget about this debacle

Well, there's a new sheriff in town.   Maybe.  

Today, CT's Democratic Attorney General, Richard Blumenthal, relented under pressure from CT Republicans and filed suit against Countrywide http://www.ct.gov/ag/cwp/view.asp?Q=420722&A=2795 http://www.courant.com/business/nationworld/ats-ap-countrywide-lawsuitaug06,0,6712837.story

At least for today, one Democrat sounds angry at what one of Chris Dodd's biggest contributors did

Blumenthal said, "Countrywide conned customers into loans that were clearly unaffordable and unsustainable, turning the American Dream of homeownership into a nightmare. When consumers defaulted, the company bullied them into workouts doomed to fail. Countrywide crammed unconscionable legal fees into renegotiated loans, digging consumers deeper into debt. The company broke promises that homeowners could refinance, condemning them to hopelessly unaffordable loans

Remember, these were the same people who offered Dodd "enhanced customer service" http://www.thenextright.com/ironman/chris-dodd-oh-what-a-tangled-web-we-weave

Perhaps Blumenthal--who is well known in CT for legal vendettas against such firms as Microsoft--will subpoena the documents Dodd refuses to produce voluntarily.

http://www.ct.gov/ag/lib/ag/consumers/countrywidelawsuit.pdf 

But it gets worse...we are reminded...

A federal grand jury has been investigating Countrywide, New Century Financial Corp. and IndyMac Bancorp Inc. — a sign that prosecutors are looking into whether fraud and other crimes might have contributed to the mortgage crisis that led to the demise of all three California-based lenders.

we might find out if Dodd under oath is more truthful than what he said about the nation's financial institutions

A Friend in Need

Angelo Mozilo's loans to the well-connected raise some questions. They should be answered

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/16/AR2008061602207.html

I remember well Phil Rizzuto's scream Need Money?..Call the Money Store! as a TV staple.

There's a new Money Store now, and it offers below-market rates to a handful of Democratic DC senators

http://www.portfolio.com/news-markets/top-5/2008/06/12/Countrywide-Loan-Scandal

Countrywide's Many 'Friends'

 

by Daniel Golden Jun 12 2008

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Senators Dodd and Conrad are among the government officials who scored V.I.P. loans from C.E.O. Angelo Mozilo. An exclusive Portfolio investigation.

Most of the officials belonged to a group of V.I.P. loan recipients known in company documents and emails as “F.O.A.'s”—Friends of Angelo, a reference to Countrywide chief executive Angelo Mozilo. While the V.I.P. program also serviced friends and contacts of other Countrywide executives, the F.O.A.’s made up the biggest subset.