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Dodd revelations may hamper housing bill

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Associated Press / June 18, 2008

WASHINGTON - Senate Banking Committee chairman Christopher J. Dodd acknowledged yesterday that he knew in 2003 that Countrywide Financial Corp. placed him in a "VIP section" when the firm reportedly gave him preferential rates on two mortgages.

But he denied he knew he was getting any special deal, and said he didn't plan to give up the loans.

"I'm not clairvoyant," said Dodd, a Connecticut Democrat. "There was no red flag to me that we were getting some special treatment."

Revelations that Dodd and Senator Kent Conrad, a North Dakota Democrat and the Budget Committee chairman, got cut-rate mortgages through a VIP program for friends of Countrywide chief executive Angelo Mozilo muddled Democrats' message as they push to complete a massive foreclosure rescue package before Congress breaks for a weeklong July Fourth recess.

The package, which also includes tighter regulation for government-sponsored mortgage giants Fannie Mae and Freddie Mac and an array of tax breaks, could come to a Senate vote this week and stands a good chance of drawing substantial bipartisan support.

But it faces an uncertain future in the House, where Democrats object to key details.

Representative Barney Frank, a Massachusetts Democrat and the Financial Services Committee chairman in the House, called the emerging package "a very good basis for some negotiations," but said there "are still a couple of important points" of disagreement.

"No one should expect that negotiations between two senators are going to make public policy for the whole country," Frank added, referring to talks between Dodd and Senator Richard C. Shelby of Alabama, the senior banking committee Republican, that produced the bill.

The controversy swirling around Dodd's and Conrad's VIP mortgages has cost Democrats crucial credibility as they compete with Republicans to portray their party as more sympathetic to the plight of struggling homeowners.

The Senate Ethics Committee is looking into charges by Citizens for Responsibility and Ethics in Washington, that the special loans violated Senate rules on gifts that forbid knowingly accepting loan terms more favorable than available to the general public.

An announcement by Dodd and Shelby that they had reached agreement on key elements of the housing package was eclipsed by Dodd's comments about his involvement in the VIP program.

Dodd said he couldn't rule out having met Mozilo at some point, but said he hadn't talked to him about his mortgages.

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