Democrats Block Investigations
So, who were the other VIPs who gave the senators cover? One was Rep. Edolphus Towns, a Brooklyn Democrat who is retiring after 30 years in office with this one last kiss-off to his constituents.
In 2003, Countrywide gave Towns a $182,972 mortgage on a vacation home in Lutz, Fla., and a $194,540 mortgage on his home in Cypress Hills, Brooklyn. Though the report did not say how much Towns saved, it said that the Countrywide loans to VIPs — which Towns was — had an interest rate 0.5 percent lower than for that of the general public, and “junk fees” were waved. The report also noted that underwriters even questioned Towns’ credit score — whether he should have gotten the loan at all — but Countrywide waved such worries away.
Towns has blocked the investigation into Countrywide, issuing a subpoena to Bank of America — which bought the mortgage company — only after “several months of resistance,” the report said.
What’s particularly galling is that Towns benefitted while the voters in his district suffered. The highest foreclosure rate in the city is in East New York, the people he represented. In 2010, there were 1,139 foreclosure filings there, a rate of 16.8 percent.
How many of those homeowners would love to have gotten Towns’ low interest rate and lack of fees?
Towns and Dodd are walking away with less than a slap on the wrist, as loopholes about what constitutes “corruption” allows them to skate.
If we take the narrow definition that corruption is the “inducement to wrong by unlawful means,” this is no corruption, since the means were not technically unlawful. But if we extend to “improper” means, this certainly looks like corruption to me, or at least the intention to obtain undue influence. Why would have Countrywide made those loans otherwise?
This different nature of the corruption makes it much more difficult to address. It is easier to investigate payments of cash than preferential treatment.
“VIP status” cannot be stopped simply by toughening the rules on them. It is too easy for a receiver to deny any knowledge of the privileges granted, as the elective representatives involved, including Towns, did, and get away with it.
Not only is difficult to design a law that prevents this undue acquisition of influence, it is even more difficult to implement, since the rules are enforced by the very people that are benefitting from the privileges (as the Senate Ethics Committee ruling demonstrates).
This corruption can be stopped only by toughening the rules on business lobbying. Countrywide knew what it was getting out of this. Until the kinds of perks it offered are made illegal, businesses will continue to use them.
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