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Conrad, Dodd Reject Mortgage Charges

Sen. Kent Conrad (D-N.D.) said Friday that he would welcome a Senate Ethics Committee investigation into allegations that both he and Sen. Chris Dodd (D-Conn.) received special treatment from Countrywide Financial resulting in cut-rate mortgages.

Both lawmakers vigorously denied any wrongdoing after a report by late last week saying that Countrywide officials had conspired to provide special mortgages — including waiving fees and shaving thousands of dollars from loans for multiple properties — for a select group of “VIPs” including both Senators. No other lawmakers were named in the article.

“Sen. Conrad would be happy to have a Senate Ethics investigation into Countrywide,” spokesman Sean Neary said Friday. “Sen. Conrad did nothing wrong.”

“As a United States Senator, I would never ask or expect to be treated differently than anyone else refinancing their home. This suggestion is outrageous and contrary to my entire career in public service,” Dodd said in a statement.

“When my wife and I refinanced our loans in 2003, we did not seek or expect any favorable treatment. Just like millions of other Americans, we shopped around and received competitive rates,” the statement said.

A spokeswoman for the Senate Ethics Committee declined to discuss whether the panel would consider an investigation into the allegations, and Conrad’s aide could not say whether the Senator would personally request the investigation. A Dodd spokesman declined further comment.

According to, which relied in part on company e-mails, Dodd refinanced two loans in 2003 through Countrywide: one worth $506,000 for his Washington, D.C., townhouse and a second worth $275,042 for his East Haddam, Conn., home.

The lender waived about $2,700 in costs for both loans, while also allowing the Banking, Housing and Urban Affairs Committee chairman to procure lower interest rates than initially available without charging additional fees for the service. The lower rates reduced the overall costs of the loans by about $58,000 and $17,000, respectively.

Similarly, the Web site reported that when Conrad refinanced his Bethany Beach, Del., vacation home in 2004 with a $1.07 million loan, Countrywide officials reduced fees by nearly $11,000. The lender also refinanced an eight-unit apartment building Conrad owns with his brothers in Bismarck, N.D., despite company rules that limit such loans to buildings of four units or fewer.

But Conrad criticized the report, asserting that he did not receive a special rate but instead maintained an excellent credit rating and put a 20 percent down payment on the mortgages.

“From what we have been able to determine, it appears that we were given competitive rates. In fact, I was offered financing on basically the same terms from another lender,” Conrad, who chairs the Senate Budget panel, said in a statement. “Contrary to the article, I also paid thousands of dollars in mortgage fees.”

According to statistics released by Conrad’s office, the Senator received a 4.875 percent loan over 15 years, on par with the then-prevailing interest rate of 4.83 percent.

“If you look at the numbers, you’ll see that Sen. Conrad did not get any sort of break on his mortgage,” Neary said. Asked whether Conrad would consider repaying the alleged discount, he added: “He should be asking Countrywide for a refund.”

One ethics watchdog organization called for both the Senate and House ethics panels to initiate investigations into the claims and also proposed that the chambers issue new rules to prevent similar scenarios in the future.

“The committee should also consider putting into place a system to review loans applied for by Senators, or developing guidelines for loans to Senators to ensure that any future loans are made on terms that meet the requirements of the gift rule,” wrote Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington.

Under current ethics rules, House lawmakers and their staffs are effectively banned from accepting gifts from any company that employs or contracts with lobbyists, while Senators and their aides are subject to an annual gift limit of $100.

Ethics manuals in both chambers also encourage Members and aides to be wary about the intent of a gift, as the Senate Ethics Manual notes: “One should always be wary of accepting any gift, favor, or benefit that may not have been offered ‘but for’ one’s position in the Senate.”

But ethics experts split Friday over whether the alleged Countrywide discounts would qualify as a “gift” under the rules.

“Since [Dodd] had no knowledge of any potential gift, even if it were a gift, there would not have been a knowing acceptance of such a gift,” said Jan Baran, a compliance expert with Wiley Rein. “There’s a good argument to be made he would not have violated the rules of the Senate.”

Nonetheless, Baran added: “Having this information now does place a burden on the Senator to verify whether it is a gift under the Senate rules. If it is, he certainly will have to renegotiate this mortgage.”

But Stefan Passantino, an ethics law expert at McKenna Long & Aldridge who served as counsel to former Speakers Dennis Hastert (R-Ill.) and Newt Gingrich (R-Ga.), suggested the mortgages could still qualify as gifts regardless of whether the Senators knew they were receiving them.

“There’s no question that if these allegations are true that they would be gifts,” Passantino said. “The fact that the Member says they don’t know about the receipt or whether it was a gift … doesn’t change the primary analysis about whether a benefit was conferred that was not available to the general public.”

Whether the Senators could keep the loan, would be required to refinance the loan or any other resolution would be a matter left to the ethics panel, Passantino said.

“Ethics 101 is that the Members and the staff need to ask the question about whether the terms of the loan are commercially reasonable before entering into it,” he said. “Whether you know can be relevant to what the ultimate resolution is, but it doesn’t change the analysis of whether it’s a gift.”

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