Angelo’s Angel
The Bear on Jun 23 2008 at 8:13 am | Filed under: Culture of Corruption
Give Senator Christopher Dodd credit for nerve. On Tuesday, the very day he finally admitted knowing that Countrywide Financial regarded him as a “special” customer, the Connecticut Democrat also announced that he was bringing to the Senate floor a housing bailout sure to help lenders like Countrywide.
How much will Countrywide benefit from Mr. Dodd’s rescue? The Senator’s plan allows mortgage lenders to dump up to $300 billion of their worst loans on to taxpayers via a new Federal Housing Administration refinancing program, provided the lenders are willing to accept 87% of current market value. The program will be most attractive to lenders and investors holding subprime and slightly-less-risky Alt-A loans made during the height of the housing bubble in 2006 and 2007.
As the market leader during that period, Countrywide originated $167 billion of such loans, more than 11% of the nationwide total, according to Inside Mortgage Finance. Analyst Fred Cannon of Keefe, Bruyette and Woods estimates that the company is still holding more than $30 billion in subprime and Alt-A loans on its books, based on the company’s most recent quarterly financials.
Read more from Wall Street Journal
Related
Bank of America Donations Behind Dodd’s Countrywide Loan
And, it all comes together, thanks to Examiner columnist Tim Carney:
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“We call it the ‘Bank of America bill on steroids.’” A House staffer told me that, demanding anonymity, but speaking on behalf of aides to GOP members of the House Financial Services Committee.
He was talking about the bill whose Senate version has been brought to the floor this week by Sen. Chris Dodd, D-CN, and Sen. Richard Shelby, R-AL. Dodd-Shelby would let mortgage lenders off the hook for bad loans, shifting the burden ultimately to taxpayers. Dodd has received approximately $70,000 in campaign contributions from Bank of America in the last year-and-a-half.
All the talk has been about whether or not Countrywide bought special treatment with its special loan rates for Dodd and others, but Bank of America PAC and Bank of America employees have been shelling out donations to Dodd in big doses, which wouldn’t be so interesting if it weren’t for the fact that Bank of America bought out Countrywide while it was in the throes of financial ruin.
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