HARTFORD COURANT EDITORIAL: VIP DEAL OR NOT? 07.31.2009

“No matter how badly Mr. Dodd mishandled this long-running issue from the get-go, especially by waiting too long to release his mortgage documents, the evidence supports him. The senator and his wife, Jackie Clegg Dodd, negotiated interest rates and terms widely available in the marketplace when they refinanced the two homes. That’s not special treatment.” --Hartford Courant Editorial, July 31, 2009

Please take a moment to read both the Hartford Courant Editorial today, entitled “VIP Deal or Not?” as well as William Cibes’ op-ed in the Courant entitled, “The Only Deal Dodd Got is a Raw One.”

VIP DEAL OR NOT?

Hartford Courant Editorial, July 31, 2009

Robert Feinberg, a loan officer with the now-defunct Countrywide Financial Corp., reportedly said in secret testimony before Congress in June that he told Sen. Christopher Dodd of Connecticut that he was getting special VIP treatment when he refinanced his East Haddam home and Washington residence with Countrywide in 2003. In an Associated Press story Tuesday, Mr. Dodd denied, as he has all along, that any special treatment was offered to him and said that if any had been, he would have walked away.

No matter how badly Mr. Dodd mishandled this long-running issue from the get-go, especially by waiting too long to release his mortgage documents, the evidence supports him. The senator and his wife, Jackie Clegg Dodd, negotiated interest rates and terms widely available in the marketplace when they refinanced the two homes. That’s not special treatment.

Mr. Feinberg’s testimony and Mr. Dodd’s denial is the latest installment in a story that has seriously wounded this state’s senior senator as he seeks a sixth term in next year’s election. The most recent Quinnipiac University poll shows him trailing former Republican U.S. Rep. Rob Simmons by 9 points in a head-to-head matchup. Worse, he continues to have a credibility problem, with more than half of those polled saying Mr. Dodd is not "honest and trustworthy."

This, despite public support from President Barack Obama and a television ad campaign touting his leading role on issues such as credit card reform and expanding health care.

The Senate Ethics Committee apparently is actively investigating Mr. Dodd’s — and North Dakota Democrat Sen. Kent Conrad’s — relationship with Countrywide. A finding by the committee, soon rather than later, will help clarify the issue for Mr. Dodd’s constituents.

THE ONLY DEAL DODD GOT WAS A RAW ONE

William Cibes, Hartford Courant Op-Ed, July 31, 2009

It sounded like a potential scandal in the making when news broke a few days ago that Gov. M. Jodi Rell and her husband had managed to secure a mortgage at a rate of 4.25 percent on the Florida home they had purchased in June 2004. They had secured this low rate from Countrywide Home Loans. And it was not their principal residence, but a second home — which, according to some, should have required a higher-than-normal rate.

As it turns out, however, "there is no indication the Rells received any special treatment," according to Andy Bromage of the Hartford Advocate, who reported the story in mid-July. "The interest rate they received — fixed at 4.25 percent for the first three years, and adjustable by not more than 2.5 percent for the remainder of the loan’s lifetime — is comparable to what was available in that area during that time, two banking sources say."

That journalist checked the facts to determine that there was no preferential treatment for the Rells. But various media outlets have not adhered to this fundamental principle of journalism while pumping up a phony scandal about Chris Dodd’s similar mortgages.

For more than a year, accusations have been flung at Dodd for supposedly getting a "sweetheart mortgage deal" when he refinanced his homes in 2003. To hear some people talk, the rates must have been real doozies — far below what an ordinary citizen would have been able to obtain in that market, and much lower than the rate on the Rell mortgage. One would think that no professional reporter could have failed to check the evidence before embroiling the senator in a sleazy intrigue.

So it must come as a real shock to learn that Rell’s interest rates were as low or lower than Dodd’s. The adjustable mortgage rate on Dodd’s Washington townhouse, closed on June 10, 2003, was 4.25 percent, fixed for five years. And the adjustable mortgage rate on his Connecticut home, closed on July 3, 2003, was 4.5 percent, fixed for 10 years.

Any reasonable investigator would have checked reported data to see if the rates departed from the norm when the transactions closed. A quick trip to the Hartford Public Library could have enabled anyone to find weekly historical mortgage rates for the periods in question in the microfilm archives of The Wall Street Journal.

The Dow Jones Real Estate Index for the week including June 10, 2003, published in The Wall Street Journal on June 13, 2003, noted that the average rate for a jumbo five-year adjustable rate mortgage that week was 4.08 percent (lower than the rate Dodd was charged for refinancing his Washington townhouse).

And although that index does not detail the rates for conforming three- or five- or 10-year adjustable mortgages for 2003 and 2004, it does report that the average rate for one-year adjustable mortgages for the week of July 3, 2003, when the Connecticut closing was held, was 3.49 percent. For the week of June 25, 2004, when Rell purchased her Florida home, the rate was 3.53 percent.

Recognizing that mortgage companies might justifiably charge a higher rate for adjustable mortgages that were fixed for longer terms than one year — say a premium of 0.75 or 1.0 percentage points — it appears that the interest rates on all three mortgages — Dodd’s as well as Rell’s — were well within the range that any qualified borrower, at those times, could expect.

Indeed, Dodd’s 10-year adjustable rate on the Connecticut house was slightly higher than the average rate for a 15-year conventional fixed rate mortgage (4.48 percent) for the week of July 3, 2003, according to The Wall Street Journal.

Moreover, the Rell parallel demonstrates that the mortgage rate for a second home does not necessarily have to be higher than for a principal residence.

Now that it’s clear that there are no meaningful differences between the rates the Rells and the Dodds secured on their respective mortgages, the partisan contrivance of a phony scandal melts away. The perpetrators of the "sweetheart deal" narrative owe Chris Dodd an apology. Fair is fair.

•William Cibes of Hartford is the former head of the state Office of Policy and Management.