Just a couple of days ago, Mitt Romney, Rick Santorum, and Ron Paul took the first three spots in the Iowa caucus. I am lightly involved in politics to the point that I carefully monitor what our elected officials are doing and how it impacts the industries I work it, but I was not glued to the TV Tuesday night to find out who the winner was in the Iowa caucus. I will not be glued to the TV next Tuesday for the New Hampshire caucus either.
Without revealing my political leanings (money doesn’t care about your political affiliation), I want to talk about a practice that has spread around our government for way to long. I am talking about political favors that are outside of the law. I think you are extremely naive if you think that this type of back scratching does not go on between government and the organizations and individuals who need its help. Unfortunately, Rick Santorum stands accused of taking improper benefit from a bank who gave him a mortgage.
Our government agents, elected or not, should not get improper benefits that are not available to everyone else. These ethics violations will get your thrown out of office. There are plenty of examples out there — just Google “legislator ethics inquiry” and you will see what I mean. There are lots of ways that legislators have been enriched by their offices. Senator Ted Stevens from Alaska ended up not running for reelection and then was prosecuted for home improvement work that was done in his home but not invoiced. But then there are those legislators who may get into a grey area that is still wrong to me.
Let’s take the case of Senator Rick Santorum. A watchdog group is reporting that in 2006 The Philadelphia Trust Company, a bank that only lent to owners, gave Senator Santorum a below market rate for a $500,000 mortgage on a property that the Senator and his wife owned in Virginia. Officers at the bank also contributed $24,000 to Senator Santorum’s reelection campaign. Members of Congress are prohibited from taking loans at below market rates or rates that are not available to the public. The Senate Ethics Committee did not look into the propriety of the loan because once the Senator lost his reelection bid, they did not have jurisdiction over the matter.
But the possible ethics violations do not end there. Remember Senator Chris Dodd, who co-sponsored the Dodd-Frank financial reform legislation? He and Senator Kent Conrad of North Dakota both participated in Countrywide’s VIP loan program that was tailored to help promote Countrywide’s business position by targeting elected officials. Using the same program, four members of the House of Representatives have been identified by Rep. Darrell Issa also received preferential loans. Both senators have been cleared of any wrong-doing because they both have stated they didn’t know they were getting preferential treatment. I would love the see the Settlement Statement on those loans to see what they were charged. The Countrywide VIP program was used to extend loans to 173 employees of the GSA’s Fannie Mae and Freddie Mac.
Across the board the candidates for the Republican Party presidential nomination are calling for the end of the GSA giants Fannie Mae and Freddie Mac. With some of the most influential legislators with what seems to be dirty hands in the mortgage industry, how can we trust any of them to write the rules and guidelines to regulate the behavior of the industry? Most people in the mortgage industry think Dodd-Frank went too far in meaningless areas and not far enough in regulating the true issues at play. While I congratulate Senator Santorum on his strong showing, I do think it is time he came clean about his Virginia Countrywide loan and let us decide for ourselves if he received and preferential treatment. While the Senate Ethics Committee is powerless to conduct an investigation, the American public is not.
The challenge here is that the people who were supposed to be regulating the industry — elected officials, Federal employees, and employees and management at Fannie and Freddie — received a benefit because Countrywide and The Philadelphia Trust Company were trying to get influence on decisions that were being made at the time. The bottom line: The amount of the benefit is irrelevant. Government officials do not deserve preferential treatment. The Countrywide VIP Program was bribery. Thanks for letting me vent guys — I know this has nothing to do with Utah mortgage companies or getting a mortgage in Utah, but it needed to be said.
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