Capitol Hill Mortgages No Big Deal
According to various reports the Senate Ethics Committee has spent several hours lately speaking with a former Countrywide official. The issue is cushy mortgages and discounted mortgage rates for Senators Chris Dodd (D-Conn.) and Kent Conrad (D-N.D.), but curiously not a mention of any Republicans.
This is news?
The senators, of course, argue that they had no idea, not a smidgen, that they were getting an extra-good deal. They wanted to be treated just like folks back home, that’s all.
In fact, the senators are right. There’s no scandal here. Why they’re right ought to be obvious.
When you ride most airplanes you surely know that passengers pay differing prices. Some pay more, some pay less for the same destination and the same lack of decent food and tolerable ambiance. The airlines try to sell tickets at the highest possible prices but if they set prices too high they then have empty seats and big losses on the flight. Thus there are all kinds of prices in an effort to max revenue from each flight.
Mortgages are the same. Lenders and mortgage officers try to squeeze as much as possible from every borrower. But sometimes there is less squeezing if a borrower may lead to additional business, or has other “relationships” with the lender such as a business or checking account, or has a bunch of loans, or great credit, or easy paperwork, etc.
Unless the alleged discounts received by Dodd and Conrad were huge, say more than one full percent off the interest rate, or in exchange for a favor, then there’s no story here. And if only Democrats are accusing of getting sweetheart deals, then something is terribly wrong given that Republicans held the House, the Senate and the White House for the first six years of this century. You’d think that savvy lenders would want to curry favor with the party in power….
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