Senators: Loan discounts were 'courtesy'

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By S.A. Miller

Two powerful Senate Democrats said Tuesday that they knew they got low mortgage-rate deals in a lender's VIP program but thought the special treatment was a "courtesy" or the same as "frequent flier" discounts.

Both vehemently denied any wrongdoing or ethical lapse in the mortgage deals, which came to light a year ago and triggered investigations by the Senate Select Committee on Ethics and the House Oversight and Government Reform Committee.

"I thought this was like a frequent-flier program," Sen. Kent Conrad, chairman of the Senate Budget Committee, said of the special benefits. "I thought nothing of it."

Sen. Christopher J. Dodd, chairman of the Banking, Housing and Urban Affairs Committee, said an account executive at Countrywide Financial Corp. told him that the VIP status was "nothing more than ... courtesy stuff."

A Countrywide official who handled the loans had said that both senators knew they got preferential treatment in the form of waived fees and points that likely saved them tens of thousands of dollars.

Robert Feinberg, who formerly worked in the mortgage giant's VIP section, said in testimony to congressional investigators last month that the senators were made aware of their status as VIPs or "Friends of Angelo," referring to Countrywide Chief Executive Officer Angelo Mozilo. The CEO played a central role in the subprime-mortgage meltdown, which included the downfall of Countrywide last year.

"It was always instilled in them to let them know their sense of importance of where they were. And that you ... were a friend of Angelo's. You were referred by Angelo. You were approved by Angelo," Mr. Feinberg told Republican investigators for the House oversight committee.

The Washington Times obtained a partial transcript of the deposition.

"I mean, they'd already been there to begin with, so they knew," Mr. Feinberg said. "You know, once you're basically in the VIP department you're in. You know, you're done. You don't even have to really talk to Angelo if you don't want to."

Mr. Mozilo, whose company lost billions of dollars on bad mortgages before it was bought by Bank of America Corp. in July 2008, has been charged with civil fraud and insider trading by the Securities and Exchange Commission. He denies any wrongdoing.