The role that Senate Budget Committee Chairman Kent Conrad (D.-N.D.) played in greasing the skids for Sen. Chris Dodd’s multibillion mortgage bailout is being overlooked.
Both Democratic senators are being fiercely criticized after Portfolio magazine published a story stating they had received “VIP” discounts from Countrywide CEO Angelo Mozilo on their home loans-- which has not been refuted by either Dodd or Conrad. Although Dodd is bearing the brunt of those criticisms, both senators had major roles in crafting legislation to benefit Countrywide to the tune of billions of taxpayer dollars.
Despite the obvious conflict of interest, the legislation could come up for a Senate vote as early as today.
While benefiting from those discounted Countrywide loans, Dodd used his position as Chair of the Senate Banking Committee to craft a bill to require the government to purchase up to $300 billion in bad loans from mortgage lenders. This would certainly benefit Countrywide as it is the largest mortgage provider in the United States.
During the regular process of creating legislation,the chairman of the relevant committee is required to send a "Views and Estimates" letter to the Budget chairman outlining budget requirements for the bill. In this case, Banking Chairman Dodd needed to send a letter to Budget Chairman Conrad. Then, to advance the bill, Conrad must attach needed budget provisions to the bill make sure it can be funded later.
While signing off on this particular bill, Conrad added something called a “reserve fund” to Dodd’s bill which would prevent the bill from later being subjected to a “Budget Act point of order.”
The budget point of order is a deadly parliamentary tool often used by opposition to kill a bill. In the past, Republicans have used budget points of order to challenge legislation on merits it would cost more than the budget allocates. Nevada Sen. John Ensign successfully used it to prevent the creation of a high-profile budget-busting $140 billion “Asbestos Trust Fund” in February 2006.
By making a “reserve fund” Conrad essentially insulated the bill from this kind of attack.
A “reserve fund” was also used to bypass budget points of order questions about the controversial 2004 “Medicare Modernization and Prescription Drug” bill, according to a April 2008 Congressional Research Service report. “The purpose of the reserve fund was to allow the applicable budget levels to be increased by up to $7 billion for FY2004 and $400 billion for FY2004-FY2013 to accommodate legislation involving a Medicare prescription drug program and related matters,” the report said of the 2004 bill.
In essence, by creating the reserve fund for Dodd’s housing bill, Conrad created a way to increase funding for the bill without question.
Conrad has admitted he has a conflict of interest in Countrywide and the housing bill and made a $10,500 donation to the charity Habitat for Humanity over the weekend—the amount his “Countrywide discount” was worth.
Still, most of the media’s attention has remained focused on Dodd, who received an amount of $75,000 worth of discounts over the life of his two Countrywide mortgages on his Washington and Connecticut homes. He contends he did not receive any preferential treatment although Portfolio’s report suggests otherwise.
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