It should go without saying that housing and mortgages are going to be front and center in this election; after all, for all of President Bush's foibles abroad and the unpopularity of the Iraq war, nothing hits Americans closer to home than a faltering national economy and a housing market that has largely fallen flat onto its face.
Which means that the economy and the depths of housing's woes will be front and center, right? In any other year, absolutely. But this isn't any other year, and mortgages course much deeper through this nation's veins than most had thought. Financially, yes; but also politically, as we're now just finding out.
That's what makes the emerging "Friends of Angelo" story so interesting. For weeks now, key major media outlets have been frothing at the mouth over alleged sweetheart deals given to various politicos and other key public figures by Countrywide Financial Corp. (CFC)
CEO Angelo Mozilo. The frenzy began with a Wall Street Journal story on June 7
that suggested now-former adviser to Sen. Barack Obama's presidential campaign James Johnson had received a sweetheart loan from Mozilo directly; it didn't take but a week for Obama to jettison the Democratic party powerhouse from his staff after the allegations came to light.
It seemed that might be the end of the issue, but as with most things on Capitol Hill, if someone keeps pulling a thread, it eventually becomes clear just how much sweater was really knit. Doing the thread-pulling in this case was Portfolio.com, which unloaded a doozy last week
, claiming that Senators Christopher Dodd (D-CT), chairman of the Senate Committee on Banking, Housing and Urban Affairs, as well as Kent Conrad (D-ND), chairman of the Senate Budget Committee and a member of the Finance Committee, were both beneficiaries of the same hush-hush VIP lending program.
It's enough to make you wonder if Senator Charles Schumer (D-NY), who has publicly blasted Countrywide's executives
and even helped purge at least one senior executive from Bank of America's post-merger management plans, had at one time used the red phone to dial up a deal on his own mortgage.
While Dodd has issued a public denial to the claims he received preferential treatment, Conrad got nervous enough that he admitted receiving preferential treatment
over this past weekend and said he will refinance his mortgages, giving $10,500 to charity as well in a clear attempt to make this issue go away.
When an issue is able to make Senators uneasy enough that they begin nervously defensive maneuvers, experience suggests that there is yet more pulling of the proverbial thread to be done.
The Journal, in an opinion piece published Monday morning, suggested that key members of the Senate are headed into an "ostrich" defense over this issue, and wondered aloud
: What did Countrywide CEO Angelo Mozilo receive -- or think he would receive -- in return for the friendly loans to politicians?
It's a question at this point that seems very much worth asking; whether Congress will have the gumption needed to investigate its own practices with the same zeal used to pursue Countrywide and other lenders should be a telling litmus test.
It's also likely to be a reason that at least some Democrats have yet to push the economy -- and in particular, housing -- as a key election issue. After all, the current administration's stance on the housing mess is one that would seem almost too easily assailable from a populist standpoint, long a tactic that has appealed to Democratic strategists. Yet Obama's staff has rarely let their candidate focus on the one issue that would appear to be a home run in any other election year.
That a series of powerful Democrats would now be tied to the sweetheart deals offered by Countrywide -- the nation's largest lender, and one oft-vilified by consumer advocacy groups -- clearly comes at a critical juncture. And as the thread unravels further in the months ahead, where it eventually leads may yet influence those voters that sit undecided between the two presidential hopefuls.
Disclosure: The author was long CFC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.