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Countrywide bribed legislators with sweetheart loans

July 9, 2012 12:45

Contributions from the financial sector account for roughly 30 percent of all money collected by the campaign committee and leadership PAC of Senate Banking Committee Chairman Chris Dodd. But that is just not enough. His wife, Ms. Jackie Clegg, has a $153,000 salary on the board of CME which just got access to Federal Reserve funds from the Dodd bill. How convenient.

We’ve covered Dodd’s corruption before:

From July 2010:

Hide the bribe by paying the wife

Contributions from the financial sector account for roughly 30 percent of all money collected by the campaign committee and leadership PAC of Senate Banking Committee Chairman Chris Dodd. But that is just not enough. His wife, Ms. Jackie Clegg, has a $153,000 salary on the board of CME which just got access to Federal Reserve funds from the Dodd bill. How convenient.

usACTIONnews.com Editorial

The Dodd financial fiasco bill not only did nothing to stop Wall Street bailouts but destroyed freedom and privacy for Americans and will damage the economy. Millions of dollars were spent by lobbyists to get just the right language into the bill to protect big banks and Wall Street firms. Chris Dodd, as Chairman of the banking committee and author of the bill was the highest paid of all the corruptocrats.

An article at OpenSecrets.org points out the influence of financial firms:

After Democrats crafted 2,300 pages of legislation to tackle financial regulatory issues in the aftermath of the economic collapse that brought behemoths like AIG and Lehman Brothers to their knees, they were met with resistance from one of their own.

Sen. Russ Feingold (D-Wis.) spoke out against the bill championed by President Barack Obama because he thought it wasn’t strong enough to prevent another economic meltdown. And on Thursday, Feingold became the lone Democrat to vote against it.

Feingold was in a position to stand up to Wall Street like few other senators.

Contributions from the finance, insurance and real estate sector account for just 3.75 percent of Feingold’s overall contributions over his career, according to research by the Center for Responsive Politics. Just two other senators elected to their seats have relied less on money from the financial sector: a wealthy self-funder and the Senate’s only self-identified socialist.

“Campaign contributions are very effective at slowing down reforms that need to be done from a public-interest perspective,” Lawrence Baxter, a law professor at Duke University, told OpenSecrets Blog as part of our “Crossing Wall Street” series last year.

Wall Street interests lobbied ferociously to limit the legislation’s effect on them, and they have invested in powerful members of both parties over the years. Long-standing relationships build rapport among these interests and legislators — legislators who may therefore be inclined to lend a sympathetic ear.

Contributions from the financial sector account for roughly 30 percent of all money collected by the campaign committee and leadership PAC of Senate Banking Committee Chairman Chris Dodd (D-Conn.), the bill’s chief sponsor in the Senate, the Center found — the most among all senators. Dodd’s home state of Connecticut is also home to many financial industry companies and workers.

On average, 12 percent of all campaign contributions and donations to leadership PACs since 1989 have come from the finance, insurance and real estate sector for senators who supported the Wall Street reform legislation, the Center found.

Now we discover through an article on NASDAQ.com explains that CME, the company that Dodd’s wife, Ms. Jackie Clegg, has a $153,000 salary from will benefit greatly from the Dodd bill:

A provision in the legislation allows clearinghouses that may pose risks to the broader marketplace to access some of the Federal Reserve’s loans, including the discount window. The measure would let clearinghouses overseen by federal market regulators, such as the Options Clearing Corp. and CME Group Inc.’s (CME) clearing venture, potentially tap discount window funds without registering as bank holding companies or being primarily regulated by the Fed. (emphasis added)

“This is the classic moral hazard dilemma,” said former Minneapolis Federal Reserve Bank President Gary Stern. “My preference would be not to cover them explicitly,” he added. “I think you’ll get better private sector preparation.”

Until now clearinghouses haven’t had direct access to the Fed’s discount window, which is used by banks to meet unexpected cash shortfalls. When member firms at OCC and CME didn’t have the cash on hand to meet margin calls during the 1987 stock market crash, the Federal Reserve didn’t provide the clearing members with direct assistance. Instead, Wall Street banks directly tapped the discount window and then in turn helped the clearing members meet their financial obligations to the clearinghouses.

Clearinghouses stand in between two parties to guarantee trades and protect against potential default. The financial bill will be a boon for their business by requiring swap dealers including Wall Street banks and major traders to submit their routine over-the-counter derivatives for clearing.

The discount window provision is a major win for U.S. clearinghouses, several of which fought for it out of concern that they may need an emergency backstop because the bill requires them to take on considerably more risks.

Ms. Jackie Clegg a was also an outside director of an AIG company. Dodd has successfully diverted attention away from his sweetheart deal on a mortgage with failed lender Countrywide. But there is more out there if someone wants to dig. Toby Harnden at the Telegraph reported last year about Dodd’s cozy Irish cottage deal:

An intriguing item here from the dogged Kevin Rennie of the Hartford Courant that highlights a classic example of why ordinary citizens become cynical about politicians and the way business in Washington is conducted.

Silver-haired Senator Christopher Dodd, chairman of the Senate Banking Committee, has already been getting a lot of heat for his two 2003 VIP mortgage loans from Countrywide, one of the major actors in triggering the current financial crisis.

Seeking Senate re-election in 2010, the 2008 presidential candidate (he dropped out on the first day of voting after finishing seventh in Iowa, where he had moved with his family as a way of courting voters) is now in a bit of a sticky spot with another accommodation- his “cottage” on the lovely Irish island of Inishnee.

Some digging from Rennie (a lawyer and former Connecticut state legislator) reveals that as well as there being a cloud over Dodd’s properties in Connecticut and Washington DC, considerable murkiness surrounds the financial arrangements for the purchase of his “cottage”.

As Rennie outlines, Dodd became part owner of the 10-acre Galway property in 1994 along with Missouri businessman William Kessinger, whom Dodd knew through investor Edward R. Downe Jnr, who had pleaded guilty the previous year to insider trading charges. The mortgage was listed as “between $100,001 and $250,000″. Downe was a witness to Kessinger’s purchase.

In 2001, Dodd circumvented the US Justice Department to help get his pal Downe a full pardon on President Bill Clinton’s last day in office. The following year, Dodd bought off Kessinger’s two-thirds share of the “cottage” for, Dodd said, $127,000. (emphasis added)

Ever since then, Dodd has continued to list the value of the property as “between $100,001 and $250,000″.

Check out the picture of Dodd’s “cottage” (provided to me by Rennie), where he spends summers and which is looked after during the rest of the year by a caretaker. It’s not exactly the humble tumbledown abode with a leaky thatched roof, a fireplace with peat thrown on it and donkey tethered outside that the Senator might like you to envisage.

Dodd has a long history of corruption and trading legislation for favors. No wonder he has decided to step down, cash in his chips and go home or to his Irish cottage. But Obama has stood by in support and in exchange we have the Dodd finacial fiasco bill which they try to tell us helps ordinary Americans.