Conrad cleared, scolded

Aug 08, 2009 (The Bismarck Tribune - McClatchy-Tribune Information Services via COMTEX) -- CFC | Quote | Chart | News | PowerRating -- Sen. Kent Conrad, D-N.D., was cleared of breaking Senate ethics rules on Friday after a Senate panel concluded its yearlong investigation into the preferential loan treatment he received from Countrywide Financial Corp.

In separate, identical letters sent to Conrad and Sen. Chris Dodd, D-Conn., on Friday, the Select Committee on Ethics said they could find no "substantial credible evidence" to conclude the lawmakers violated Senate ethics rules. The committee also scolded the senators, both senior members of the Senate, to use more caution when obtaining loans.

"The Committee does believe that you should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as a Senator," the committee wrote in its letter to Conrad.

The ethics panel is chaired by Sen. Barbara Boxer, D-Calif., and is composed of three Democrats and three Republicans. The letter was signed by all six members.

Conrad said the committee's decision was "welcome news" in a Friday statement, adding the committee's "exhaustive inquiry confirms what I have said all along: I did not ask for or receive any preferential pricing on my loans."

He added, "While I should have shown more vigilance in the appearance of these transactions, the committee has concluded I did nothing unethical, and that is the truth."

Citizens for Responsibility and Ethics in Washington, a nonprofit group in Washington, D.C., filed the ethics complaint against Conrad in June 2008 in the wake of a Conde Nast Portfolio article detailing the preferential treatment former Countrywide CEO Angelo Mozilo had given to high-ranking government officials.

Countrywide has since been sold to Bank of America and Mozilo indicted by the Securities Exchange Commission on charges of civil fraud and insider trading.

Melanie Sloan, the executive director of CREW, said in a Friday statement the committee still found that the VIP program offered quicker and more efficient loan processing and some discounts, urging the committee to implement its advice to Conrad and other senators.

"Like a battered woman who explains she brought the beating on herself, the committee faulted itself for failing to 'provide more guidance to the Senate community about issues surrounding mortgage negotiations,'" Sloan said in the statement.

Robert Feinberg, a former loan officer for Countrywide who handled the so-called VIP program, told lawmakers under oath in June, including the ethics panel, that Conrad knew he was receiving preferential treatment because of his position as a senator.

The committee said it reviewed more than 18,000 pages of documents from Countrywide and its former employees, including documentation of the "Friends of Angelo" program from 2002 until the time of the complaint.

Conrad and his wife, Lucy Calautti, a lobbyist for Major League Baseball, refinanced their three-story, $1.6 million home in Bethany Beach, Del., through Countrywide in 2004.

The senator made a phone call to his friend James A. Johnson regarding advice on the loan. Johnson happened to be seated next to Mozilo and handed the phone to the CEO.

After the conversation, Mozilo later directed that Conrad get a 1 percent break on the mortgage, saving the senator $10,700.

The committee said Conrad's conversation with Mozilo, "should have raised red flags for you," as well as a comment the senator made to a loan officer to tell the former CEO "what great service Countrywide provided" and the eventual realization that the loan was being handled by the VIP program.

During the ethics investigation, Conrad told the committee that he became aware of the so-called VIP program "sometime in 2004" and "assumed it was merely an employee and customer relations effort."

Conrad took out another loan with Countrywide in 2004 for an eight-unit apartment in Bismarck for $96,000. While it was against company policy to issue loans for properties with more than four units, Feinberg asked Mozilo about the possibility.

Mozilo responded in an e-mail to Feinberg that the company "make an exception due to the fact that the borrower is a senator."

Conrad said he was told of the four-unit policy when applying for the loan, but said officials approved the eight-unit apartment because of its potential value on the secondary market.

The committee said the service Conrad received from Countrywide, "was available to thousands of other non-Senate customers at Countrywide and the loans you received appear to have been available industry-wide to borrowers with comparable loan profiles."

Republicans on the House Oversight and Government Reform Committee also are conducting an investigation into the Countrywide Financial VIP program, inviting sworn testimony from Feinberg in June.

Conrad sent a letter to Rep. Darrell Issa, R-Calif., the ranking Republican on the House committee, on Monday blasting the investigation "as one-sided and unfair." The panel's chairman, Rep. Edolphus Towns, D-N.Y., said he will not subpoena witnesses to testify before the full committee.

"It is unfortunate that you chose to damage my good name in your report without giving me the opportunity to provide my side of the story," Conrad wrote to Issa.

Boxer and Sen. Johnny Isakson, R-Ga., the ranking Republican on the Senate ethics panel, said Friday they were introducing legislation that would require members of Congress make "full and complete" disclosures of their residential mortgages.

Those disclosures would include the date the mortgage was entered, the range of the amount, the interest rate, the term and the address of the creditor.

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