June 18, 2008

I Like Getting The Hookup, Too

I’ve enjoyed reading columns on CNN from Roland Martin. He comes from a very different perspective than me (he’s a Protestant minister) and I don’t always agree with him. But his commentary is always lucid and thoughtful. And today, he’s dead-on right. A bunch of public officials, both incumbent and recently-retired, got favorable loan terms from Countrywide Home Loans on a “VIP program.” And any one of us would have taken those loans, too; we’re only mad about it because we’re not VIPs ourselves. Had Countrywide offered me a good interest rate and other favorable terms, would I have said, “No, no, give me the same high rates and penalties you make all those plebeians and shlubs pay because they can’t get any kind of loan otherwise.” No way! I’d say, “No points, interest rates fixed below the prime, and no prepayment penalty? That’s the loan for me!” And you would, too.

The problem, of course, is that these are influential people and so it looks like bribery – especially as Countrywide looks like it will be the recipient of a bunch of money in the coming expensive and likely ill-advised bailout of the home mortgage industry. The real issue is whether they got terms better than people who were really good credit risks but don’t have the same kind of beltway juice as, say, Christopher Dodd. Senator Dodd is a reasonably wealthy man. If his personal credit rating were anything other than stellar, I’d be quite surprised. So it seems likely that he could have qualified for very good terms for a loan from Countrywide or any other lender anyway. So I rather doubt he was really bribed by Countrywide. It just wouldn't be enough.

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