Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies (44 page)

On July 30, 2008, as part of the bailout-palooza frenzy championed by both parties, President George W. Bush signed into law the $300 billion mortgage bailout pushed by the senator from Countrywide. In September 2008, pushing for further government intervention, Dodd published a righteous press release lambasting “reckless, careless, and sometimes unscrupulous actors in the mortgage lending industry” with an “insatiable appetite for risk.”
¹³

In October 2008, Justice Department officials began a probe of the Countrywide VIP program. A former loan officer for the company, Robert Feinberg, told NBC News that he had been specifically tasked to offer VIP loans: “You spoke in a manner that was different than you spoke with a regular customer,” said Feinberg. “‘Your loan has been specially priced by Angelo.’ ‘You’re getting special discounts because you’re in the VIP loan department.’” The bennies included interest rate discounts, fee discounts, and other perks before closing.
¹⁴
One of the favors Dodd received was something called a “float down.” Feinberg explained to the
Wall Street Journal
:

As to Mr. Dodd, Mr. Feinberg says he spoke to the Senator once or twice and mostly to his wife and that like other FOAs Mr. Dodd got “a float down,” which means that even after he had a preferred rate, when the prevailing rate dropped just before the closing, his rate was reduced again. Regular borrowers would pay extra for a last-minute adjustment, but not FOAs. “They were aware of it because they were notified and when they went to the closing they would see it,” Mr. Feinberg says, adding that he “always let people in the program know that they were getting a very good deal because they were ‘Friends of Angelo.’” All of this matters because Mr. Dodd was one of those encouraging [government-sponsored mortgage enterprises Fannie Mae and Freddie Mac] to plunge into “affordable housing” loans made by companies like Countrywide .
¹⁵

Months passed. Senator Dodd continued to toil away on Capitol Hill on legislation affecting the financial services industry. In January 2009, he negotiated a deal with Citigroup Inc. to let bankruptcy judges modify home loans in an effort to prevent foreclosures and urged other lenders to do the same.
¹⁶
The supporting documentation he had promised on his Countrywide deals was still missing.

Finally, on February 2, 2009, Senator Dodd announced he would refinance his Countrywide home loans. A special report, Senator Dodd claimed, absolved him of wrongdoing. The sponsor of the “independent” report? Why, Senator Dodd, of course. In response to pressure that he disclose his financial records to the public, as he had promised to do eight months prior, Senator Dodd “released” about 100 pages of information to members of the press—who weren’t allowed to copy them and could only take notes for a short period before returning them. Other reporters who requested to view the documents were refused.
¹⁷
“I regret I did not do this sooner and I apologize to the people of Connecticut for the delay,” he said.
¹⁸
He stubbornly insisted that he had not benefited financially:

I am proud of my service as a United States Senator for these past 28 years. I understand there will always be people who disagree with my positions on certain issues, but I do not want anyone to ever believe that I would trade my office for personal financial gain. To believe that is to misunderstand everything that is important to me and everything that has motivated my work serving the people of Connecticut.
¹⁹

FOLLOW THE MONEY

Repeatedly throughout this book, you have read the words of Barack Obama lamenting the influence of Big Business and the Washington games. “I’m not in this race to continue the special interest-driven politics of the last eight years. I’m in this race to end it,” he preached .
²⁰
How, exactly, does crusading for Senator Dodd achieve that goal?

Senator Dodd has been in the middle of every major legislative battle in 2008-2009 expanding the Big Government-Big Business alliance. He championed the bailouts of Fannie Mae and Freddie Mac, supported the $700 billion TARP banking bailout, sponsored massive injections of taxpayer funding into the mortgage industry, and crusaded for Obama’s pork-filled stimulus package.

The number one recipient of campaign finance contributions from scandal-plagued financial behemoths Fannie Mae and Freddie Mac is five-term Senator Chris Dodd. Between 1998 and 2008, Dodd raked in $165,400 in donations from the federally sponsored mortgage enterprises, including $48,500 from political action committees and $116,900 from individuals, according to
OpenSecrets.org
.
²¹

The number five recipient of PAC money from Countrywide is Senator Chris Dodd, who received $20,000 from the company—$10,000 of which Countrywide’s PAC donated in the 2008 election cycle. Two slots ahead of Dodd? Barack Obama, with $22,900 in the bank from Countrywide’s PAC.

In the first three months of 2009, the Associated Press reported, more than $100,000 of the $1 million Dodd raised came from political action committees for the financial, insurance, and real estate industries, according to his latest fundraising report. Connecticut is home to a wide array of insurance companies and hedge funds (yes, those dreaded hedge funds again. Alert Michelle Obama). The finance, insurance, and real estate industries have given Dodd a grand total of $13.2 million from 1989 through 2008, according to the Center for Responsive Politics.

PAC money from American Insurance Association, Mortgage Bankers Association, Vanguard, Oppenheimer Funds, Charles Schwab, Real Estate Roundtable, and Ameriprise Financial poured in.
²²
From nearly 400 individual donors, Dodd took in $608,995. The deep-pocketed supporters included top executives from financial titans Fidelity, Citigroup, and Citizens Financial Group. The most extraordinary and damning piece of data from Dodd’s first quarter campaign disclosure forms:

A whopping five Connecticut residents gave a combined total of $4,250 to his campaign.
²³

Who else was lining Dodd’s pockets? Left-leaning
Mother Jones
magazine spotlighted the den of lobbyists dashing off checks:

After his industry backers, one of Dodd’s largest donor constituencies is Washington lobbyists. Ogilvy lobbyist (and one-time chief of staff to Sen. Kit Bond of Missouri) Julie Dammann, whose finance industry clients have included the private equity firm Blackstone Group, AIG, Visa, and Fannie Mae, contributed $1,000. So did lobbyists Thomas Quinn and Jeffrey Kurzweil, who are both on the payroll of Beacon Capital Partners. (In 2008, Quinn also lobbied for Bear Stearns, the National Association of Credit Unions, and State Street Corporation, among other finance sector clients.) Former Dick Gephardt aide Steve Elmendorf, whose firm has recently lobbied for Citigroup, Ernst & Young, the Managed Funds Association, and other financial clients, donated $2,400.

Dodd, who in 2007 blasted the “predatory, abusive, and irresponsible” practices of subprime lenders, also received campaign money from one of the subprime industry’s chief lobbyists, Wright Andrews ($1,000). Andrews has run several cleverly named industry-backed trade groups, including the Coalition for Fair and Affordable Lending and the Responsible Mortgage Lending Coalition. Along with his wife, Lisa, once a chief in-house lobbyist for Ameriquest Mortgage, which shut down in 2007, Andrews “coordinated” the subprime industry’s lobbying campaign to blunt state efforts to crack down on risky lending, according to the Wall Street Journal.
²⁴

Leading corporate moochers that sought and/or secured government bailout money had enough change to spare for Dodd, including Citigroup ($428,300), Morgan Stanley ($211,300), and Lehman Brothers ($154,300).
²⁵
Washington Examiner
columnist Tim Carney noted that Bank of America, which bought out Countrywide in 2008, also tossed in approximately $70,000 between 2006 and 2008, and stood to benefit from Dodd’s subprime mortgage bailout measures. The two candidates who brought in more Bank of America cash than Dodd? Hillary Clinton and Barack Obama.
²⁶

And then there’s American International Group, Inc.

THE SENATOR FROM AIG

In September 2008, the crony Republicans of the Bush administration announced what would be the first of four major taxpayer bailouts of international insurance corporation American International Group (AIG), stretched out over the last days of the lame duck GOP White House and the first months of Obama’s Reign of Hope and Change. An initial $60 billion loan would be followed by $50 billion to buy toxic assets, $40 billion to purchase preferred shares of stock, and $30 billion siphoned off from the TARP banking bailout bill.

That should have been enough to send the public onto the streets for mass protests, but it was the issue of executive compensation that finally stirred taxpayer rage. In mid-March 2009, Capitol Hill exploded over $165 million in retention bonuses mailed out to employees. Senator Dodd initially denied playing a role in protecting those perks, but was forced to admit that at the behest of the Treasury Department, he inserted protection measures in the stimulus bill to ensure that AIG’s bonuses would not be limited .
²⁷

Between 1993 and 2008, AIG contributed $8,526,940 to politicians, according to the Center for Responsive Politics. Senator Chris Dodd ranked second with $103,900 in donations from the insurance giant. The number one AIG recipient? Barack Obama, who collected $104,332.

A Dodd family member also benefitted from AIG-connected largesse. The senator’s wife, Jackie Clegg Dodd, served as an active “outside” director of something called “IPC Holdings, Ltd.” The Bermuda-based company was controlled by AIG, according to
Hartford Courant
columnist Kevin Rennie. AIG had a 20 percent stake in the company, which it sold in 2006. “Clegg was compensated for her duties to the company, which was managed by a subsidiary of AIG. In 2003, according to a proxy statement, Clegg received $12,000 per year and an additional $1,000 for each Directors’ and committee meeting she attended,” Rennie reported. “Clegg served on the Audit and Investment committees during her final year on the board. IPC paid millions each year to other AIG-related companies for administrative and other services.”

Somehow, it slipped Dodd’s mind to mention these potential conflicts of interest, too.

THE COZY IRISH COTTAGE

Throughout this book, we’ve seen crony Democrats, from Barack Obama to the Clintons to urban czar Adolfo Carrión to special envoy Richard Holbrooke and advisor Jim Johnson, benefit from real estate deals that ranged from shady to septic-tank foul. But Senator Dodd one-upped them all. On top of his Countrywide sweetheart loans, Dodd joined in on an astonishing real estate deal with a longtime pal whose criminal history stunk to high heaven. The
Hartford Courant
’s Kevin Rennie again blew the whistle:

In 1993, Dodd’s close friend, New York bon vivant Edward R. Downe Jr., got a heaping helping of justice when his insider trader scheme caused him to plead guilty to violating tax and securities laws. Downe, who lived at exclusive 25 Sutton Place on the Upper East Side with his then wife, heiress Charlotte Ford, was nabbed setting up foreign accounts to make illegal insider stock trades for himself and some socialite friends. Dodd attended Downe’s sentencing, where the schemer received three years’ probation and 3,000 hours of community service. Downe agreed a year later to pay $11 million to the SEC.

While Downe fought the SEC in 1994 about paying the penalty, Dodd and William Kessinger of Kansas City, Mo., whom Dodd knew through Downe, purchased a house and nearly 10 acres (4 hectares in local parlance) on the island of Inishnee in the affluent Roundtree section of Connemara, in County Galway, Ireland, for $160,000. Kessinger and Downe have a history as business partners in a Missouri real estate investment company.

Dodd, who says he contributed $12,000 to the purchase price, owned one-third of the house, Kessinger two-thirds. They purchased the property with a two-year mortgage from the seller of the property that was, according to Dodd’s Senate financial disclosures for both 1994 and 1995, between $100,001 and $250,000.

The Irish land registry isn’t open to the public in the manner of the American system. It probably appeared unlikely that anyone would discover the curious appearance of Downe’s nearly illegible signature as the witness to Kessinger’s signing the official transfer document. Downe, convicted, on probation and banned for life from the securities business, described himself as “private investor” on the document and included his New York address.

When Downe agreed to pay $11 million to the SEC in 1994, he claimed he was virtually bankrupt. Six months later, he made $2,000 in contributions to Dodd, again listing his occupation as “private investor.”
²⁸

It gets worse. In 2001, Senator Dodd helped Downe obtain one of the treasured Clinton pardons on Bill Clinton’s last day in office. A year after that, as Irish real estate prices went through the roof, Dodd purchased Kessinger’s share of the estate at a discount. Judicial Watch, the public interest watchdog group in Washington, D.C., filed a complaint with the U.S. Senate Select Committee on Ethics over the pay-for-play scheme. They also charged Dodd—who continues to rail against corporations for failures to disclose accurate financial information—with failing himself to properly disclose his Irish land deals on his Senate Financial Disclosure forms.

The penalty for filing false financial disclosure forms is $50,000 and up to one year in prison.