Ethics panel examines lawmakers' Countrywide loans

WASHINGTON Thu Jun 19, 2008 5:34pm EDT

Senators Kent Conrad (D-ND) (L) and Christopher Dodd (D-CT) are seen in a combination photo. REUTERS/Larry Downing (L)/Steve Marcus (R)

Senators Kent Conrad (D-ND) (L) and Christopher Dodd (D-CT) are seen in a combination photo.

Credit: Reuters/Larry Downing (L)/Steve Marcus (R)

WASHINGTON (Reuters) - A Congressional ethics panel is examining allegations that two Senate Democrats, including the sponsor of a major housing bill, received preferential loans by troubled mortgage lender Countrywide Financial Corp, a member of Congress said on Thursday.

"My view is that these allegations should be considered by the appropriate bodies, and I understand that the Senate Ethics Committee has already begun to look into the matter," Rep. Barney Frank, a Massachusetts Democrat, said in a statement.

Frank is chairman of the House of Representatives Financial Services Committee.

Sen. Christopher Dodd of Connecticut and Sen. Kent Conrad of North Dakota have acknowledged that they refinanced properties as members of Countrywide's VIP program.

Dodd, chairman of the powerful Senate Banking Committee, is leading an effort this week to win Senate approval of a $300 billion housing rescue bill to help thousands of American homeowners facing foreclosure on their home loans.

Frank has been working with Dodd to push a housing rescue bill through Congress and send it to President George W. Bush by July 4 to be signed into law.

But the White House on Thursday threatened to veto the Senate bill, which some Republican senators questioned if it could benefit Countrywide.

House Republican leader, John Boehner of Ohio, on Thursday said that the House Financial Services Committee was the "most logical" entity to examine the loans.

"Given the questions around Countrywide, preferential loans need to be investigated," Boehner told reporters. "I just want to know ... what kind of preferential loans were made, who they were made to and are members culpable."

Boehner said the issue could also slow final adoption of a housing rescue bill.

"These are serious allegations and to think that we're going to move a housing bill with these questions looming I think is irresponsible," he said.

Frank, however, rejected Boehner's suggestion, saying his committee is keeping a practice of focusing on policy matters and not on individual accusations of abuse.

A nonpartisan political fund-raising watchdog group said Countrywide gave $15,000, or more than 10 percent of its political donations, to Dodd in 2008. The company's political action committee has donated a total of $25,000 to Dodd during his career, according to the Center for Responsive Politics.

Dodd was second to Rep. Ed Royce, a California Republican who has received $37,500 in total contributions from Countrywide, the group said. Rep. Jeb Hensarling, a Texas Republican who sits on the House Financial Services Committee and has called for an investigation, has received $9,000 from Countrywide during his career, it said.

BILL ON TRACK?

Industry executives, who asked to not be identified, said they did not think the distraction involving Dodd would derail the Senate bill.

"The housing bill is widely supported by both parties in both the House and Senate," one executive said. "No single person at this point will greatly affect the outcome as legislation moves forward."

"I don't think this Countrywide thing is going to kill Senate bill," another executive said.

On Wednesday, nine Republican senators unsuccessfully sought to delay Senate debate on the bill, which began on Thursday. The Democratic-led Senate was expected to approve it. Negotiators from both chambers must then reconcile differences between the House-passed bill and the Senate one, and both chambers must approve the final version.

Dodd told reporters earlier this week he did not think he was getting any special deal when told in 2003 that he had been placed in a VIP program while refinancing two home mortgages with Countrywide.

Conrad also has denied any wrongdoing and said he would welcome an investigation by a congressional ethics panel to clear the air.

Countrywide, which is in the process of being acquired by Bank of America, is one of several mortgage companies under federal investigation. The California-based lender has been criticized by consumer advocates, politicians and regulators who say its risky loans to people with poor credit histories helped fuel the U.S. housing market crisis.

Frank, who works closely with Dodd on financial services-related legislation, expressed support for him.

"At no point in any of our joint efforts has Sen. Dodd shown even the slightest indication that he was in any way influenced by considerations other than what was best for the economy and the American people," Frank said.

(Additional reporting by Richard Cowan, Kevin Drawbaugh and Karey Wutkowski; editing by Gary Crosse)

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