Saturday, June 21, 2008

Did Bank of America write the Dodd bailout bill?

(Los Angeles Times) Those following the progress of the Dodd-Shelby mortgage rescue plan in the Senate might want to check out two solid pieces of enterprising reporting on the bill this weekend.

First, The Examiner's Tim Carney reports the bailout section of the Dodd-Shelby bill is, in the words a lobbyist, "exactly what Bank of America and Countrywide wanted."

Is there a connection between Bank of America and U.S. Sen. Christopher Dodd (D-Conn.)? There is. Carney: "Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the banking panel 17 months ago. From January 2007 to March 2008, Bank of America employees have donated at least $50,400 to Dodd's campaigns, according to the Center for Responsive Politics."

National Review's The Corner follows up, citing an internal Bank of America document that "would appear to support the contention that BofA essentially wrote the bailout section of the bill."

The Corner: "National Review Online (see below) has obtained an internal Bank of America "discussion document" (pdf here) on the subject of the FHA Housing Stabilization and Homeownership Retention Act of 2008, a.k.a. the Dodd-Shelby mortgage-lender bailout bill ... This discussion document (dated March 11, 2008) would appear to support the contention that BofA essentially wrote the bailout section of the bill.

Faithful readers of the blog will remember that Bank of America has been pushing hard for a big federal intervention for months. This was from a New York Times story on BofA's lobbying efforts back in February: "Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates. 'We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,' the financial institution noted. In practice, taxpayers would almost certainly view such a move as a bailout."

BofA-Scripted Bank Bailout Looks Awfully Similar to Dodd-Drafted Housing Bill

National Review Online has obtained an internal Bank of America "discussion document" (pdf here) on the subject of the FHA Housing Stabilization and Homeownership Retention Act of 2008, a.k.a. the Dodd-Shelby mortgage-lender bailout bill.

Yesterday, Tim Carney reported that the prevailing sentiment on Capitol Hill is that the Dodd-Shelby bill "is exactly what Bank of America and Countrywide wanted." BofA is in the process of acquiring Countrywide. Countrywide is currently embroiled in a scandal over its V.I.P. program, under which several powerful politicians, including Sen. Chris Dodd, got preferential loan rates.

This discussion document (dated March 11, 2008) would appear to support the contention that BofA essentially wrote the bailout section of the bill. Almost all of BofA's preferences are mirrored in the Dodd-Shelby legislation. The BofA document even offers PR tips, such as "We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bail-out of the bond market."

The president has threatened to veto Dodd-Shelby because it would "unfairly benefit lenders who made bad loans." The Senate will resume debating the bill on Monday.

The BofA doc is worth posting here for a couple of reasons: First, the similarities between BofA's ideal bill and the bill before the Senate are obvious even to the layperson — read the document, then read David C. John's analysis of the bailout and see for yourself.

Second, we'd invite our readers with some expertise in this area to look over the document for things we might have missed. Opponents of the bailout are lucky that a few tenacious Republicans (Kit Bond, DeMint et al) were able to hold up the bill and keep it from passing as quickly as expected. The fight resumes next week, so take a look at this document and keep digging.

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