WASHINGTON — The Senate ethics panel cleared Sens. Chris Dodd and Kent Conrad Friday of breaking rules by getting mortgages through a VIP program, but it scolded them for not being more careful to avoid the appearance of sweetheart deals.
The Select Committee on Ethics told Dodd of Connecticut and Conrad of North Dakota in separate letters that it found "no substantial credible evidence" after a yearlong investigation that their mortgages from Countrywide Financial Corp. broke Senate gift rules. The two influential Democrats got their mortgages through a VIP program for those designated as "friends" of then-Countrywide CEO Angelo Mozilo.
The committee said participants in the program "were often offered quicker, more efficient loan processing and some discounts," but it also found that those borrowers didn't necessarily get the best financial deal available. And in both Dodd's and Conrad's cases, the panel said the loans they received would have been available to a wide variety of borrowers with comparable financial profiles.
Both senators have said that at the time the mortgages were being written, they didn't know they were in the so-called "Friends of Angelo" program, and didn't think they were getting special deals.
At an afternoon news conference at his Hartford office, Dodd said he was "pleased and grateful" with the committee's conclusions, adding, "There was no sweetheart or special deal. The allegations have always been false."
But the fifth-term Democrat, whose 2010 re-election bid has been badly damaged by the mortgage scandal, also acknowledged having mishandled the allegations, waiting for months to address them in detail or release documents on his loans.
"I think (that) contributed to people's cynicism and distrust, that maybe I wasn't telling the truth. And so I blame myself for that. That was a huge mistake I made and I paid a price for it," Dodd said.
A Republican challenger to Dodd criticized the committee findings.
"Now that the World's Most Exclusive Club has — surprise, surprise — given a pass to one of its own, we still await the day when Senator Dodd will live up to his pledge of full transparency and make his mortgage documents public," said former Rep. Rob Simmons.
Dodd in February did allow reporters to view loan documents but did not permit them to be copied.
Conrad said the ethics panel's finding "confirms what I have said all along: I did not ask for or receive any preferential pricing on my loans. 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."
Both senators are playing pivotal roles in shepherding key elements of President Barack Obama's agenda through Congress. Dodd heads the Banking Committee, and is also playing a leading role in the health care overhaul taking shape on Capitol Hill. Conrad, the Budget Committee chairman, is also a major player in the health care debate, as well as in shaping legislation to curb global warming.
The investigation stemmed from a complaint by the watchdog group Citizens for Responsibility and Ethics in Washington (CREW) that charged that the two senators violated Senate rules against knowingly accepting gifts. The rule has an exception for loans that are provided on terms generally available to the public. The panel also said it looked into whether Dodd and Conrad violated another rule that bars senators from using their official positions for personal gain.
While it found no basis to believe Senate rules had been broken, the panel didn't excuse the two senators' behavior entirely. Dodd and Conrad "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 to them.
Dodd has previously said that he knew he was in a so-called "VIP" program, but thought it involved only enhanced customer service — not special deals. Conrad spoke by telephone with Mozilo when he was seeking one of his loans, but according to the letter the panel sent Conrad, he told the committee that when he learned of his VIP status, he too "assumed it was merely an employee and customer relations effort."
The panel told both senators that their eventual realization that their loans were being handled through a VIP program — and Conrad's call with Mozilo — "should have raised red flags for you" and prompted them to learn more about the loans and whether they might have been special deals.
The committee acknowledged it hasn't given specific guidance on mortgages, and should do so in the future. Sen. Barbara Boxer, D-Calif., the ethics chairman, and Sen. Johnny Isakson of Georgia, the senior Republican, announced they've introduced legislation to require lawmakers to make "full and complete" public disclosures about their mortgages.
Melanie Sloan, CREW's executive director, all but called their panel's findings a whitewash.
"As is its practice, the Senate Ethics Committee has cleared the senators of any wrongdoing despite the fact that the senators participated in a program the committee found 'offered quicker, more efficient loan processing and some discounts,' " she said in a statement.
The panel of three Democrats and three Republicans said it heard testimony and pored through 18,000 pages of documents from Countrywide — which has since been bought by Bank of America — to reach its conclusions.
As part of its investigation, the ethics committee heard from Robert Feinberg, the Countrywide official who handled the two senators' mortgage deals.
Feinberg told GOP investigators for another congressional panel, the House Oversight and Government Reform Committee, that both Dodd and Conrad were aware they were getting special treatment. He said it was standard practice for all borrowers in the VIP program to be told they were.
A transcript shows Feinberg initially replying yes when asked if he had told Dodd that he was getting special treatment. But when asked the same question again, he said, "I don't remember..., but, you know, it was conveyed in some way, shape or form."
Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.