Politics

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Lauren Victoria Burke/AP
Sen. Christopher Dodd, D-Conn.

Questions Surround Sen. Dodd’s Past Financial Dealings

February 26, 2009 01:29 PM
by Lindsey Chapman
Sen. Chris Dodd, D-Conn., is under scrutiny for “sweetheart loans” he received from troubled mortgage lender Countrywide Financial in 2003 and for an Irish cottage he purchased years ago.

Sen. Dodd’s Irish Cottage

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With another election year coming, Sen. Chris Dodd, D-Conn. has found himself being questioned over some of his past financial dealings.

In 2003, Sen. Dodd received two “sweetheart loans” from troubled mortgage lender Countrywide Financial, “one of the major actors in triggering the current financial crisis,” according to Toby Harnden of The Daily Telegraph.

But his purchase of a $160,000 Irish cottage and 10 acres of land in 1994, has also raised eyebrows.

Kevin Rennie reported that Dodd bought the cottage with William Kessinger, whom he knew through Edward R. Downe Jr. In 1993, Downe had admitted to violating tax and securities laws, and ultimately agreed to pay $11 million to the Securities and Exchange Commission.

Downe, who witnessed Kessinger’s signing of the transfer document on the cottage, described himself as a private investor at the time, even though he was banned from the securities business.

The property was purchased with a two-year mortgage from the seller, according to Rennie; Dodd’s Senate financial disclosures indicated that amount was between $100,001 and $250,000.

Shortly after agreeing to pay the SEC in 1994, Downe contributed $2,000 to Dodd, listing himself as a private investor again. In 2001, Dodd “circumvented the normal Department of Justice vetting process and got Downe a full pardon from President Bill Clinton on his last day in office. Dodd initiated the pardon request and included in his two-page letter to Clinton the tidbit that he speaks to Downe nearly every day,” Rennie explained.

Then Dodd bought Kessinger’s share of the cottage for $127,000. Irish property records show the sum as $122,351, which was “slightly more than its value eight eventful years before, but much less than what might have been expected given the explosion of Irish real estate prices,” according to Rennie.

Dodd has listed the value of the property as between “$100,001 and $250,000” ever since.
 
“Given the Irish property boom, a conservative estimate would be that the house would be worth approaching $1 million, and very possibly much more than that,” wrote Harnden.

Regardless of the reports against Dodd, Conn. Attorney General Richard Blumenthal said the senator hasn’t committed any wrongdoing, according to LegalNewsline.com.

“I did what a lot of people do,” Dodd said in a WFSB.com article. “I invested in a piece of property. That was publicly on the records for years. It’s sheer politics, there’s nothing to the story.”

Blumenthal said he expects Dodd will be reelected in 2010. Rennie and Harnden, however, say Senate ethics investigators should look at Dodd further to assess “possible financial advantages gained in Ireland.”

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Key Player: Countrywide Financial

In 2007, The New York Times reported that former employees from Countrywide Financial, the nation’s largest mortgage lender, have described lending practices that showed little concern about whether borrowers would be able to keep up payments. Among the questionable aspects of Countrywide’s business was a computer system in the sub-prime unit that took no account of cash reserves when calculating what mortgage to recommend borrowers. This meant that borrowers were steered toward sub-prime loans when they should have qualified for better interest rates.

That same year, Countrywide announced plans to refinance or modify up to 82,000 of the adjustable-rate mortgages (ARMs) on its books. 

The bank described the move as an effort to assist borrowers whose interest rates would rise by the end of 2008.

But necessity may have played a part in the bank’s decision. One week in October saw 13,000 properties for sale on the Countrywide Web site, in contrast to the 5,000 that were advertised at the start of 2007.

Related Topic: Ireland in recession

In September 2008, data from Ireland’s Central Statistics Office confirmed the country was officially in a recession, after indications last summer that the once-thriving economy was softening. Numbers showed a 0.8 percent year-on-year contraction in gross domestic product during second-quarter 2008, compared to the second three months of 2007. The two leading factors weighing on Ireland’s economy were decreases in real estate investment and consumer spending, respectively.
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