He was talking about the bill whose Senate version has been brought to the floor this week by Sen. Chris Dodd, D-CN, and Sen. Richard Shelby, R-AL. Dodd-Shelby would let mortgage lenders off the hook for bad loans, shifting the burden ultimately to taxpayers. Dodd has received approximately $70,000 in campaign contributions from Bank of America in the last year-and-a-half.
Dodd-Shelby hit the Senate floor this week amid controversy over sweetheart loan deals Dodd and other powerful politicians received from Countrywide Financial, the lender with the most exposure to subprime mortgages at risk of default.
Some journalists and Republican lawmakers are asking if Countrywide bought abailout bill with its VIP loans to Dodd, who is chairman of the Senate Banking Committee. But when asking cui bono? about Dodd's bill, we need to look to Bank of America.
Bank of America agreed in January to buy Countrywide, and the deal is near completion. House and Senate staffers opposing the measure say Bank of America operatives wrote that chamber's version of the bailout.
One Senate staffer was told by a lobbyist, "the bailout section is exactly what Bank of America and Countrywide wanted." The Senate staffer added "its obvious they got what they asked for."
Countrywide Financial is the poster-child of the subprime mortgage crisis. The lender's immense exposure to potential defaults is why the company's stock fell from $45 in early 2007 to just above $5 a year later.
That's also why Bank of America was able to buy Countrywide for around $7 per share. Countrywide's exposure to default is why Bank of America would benefit so acutely from a subprime mortgage bailout like Dodd-Shelby.
Countrywide's VIP loan to Dodd, which saves the Banking Committee chairman $75,000 over 30 years, smells like a potential quid-pro-quo now that Dodd has pushed a bill that will save the company from itself, but what about Bank of America's behavior?
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. So, while Dodd's sweetheart loan from Countrywide saves him personally $200 per month, his chairmanship earns him politically more than $1,000 per week.
These aren't bank tellers funding Dodd, either, as contributors include Bank of America's director of government affairs John Collingwood and Barbara Desoer, who oversees the merger with Countrywide and will "run the combined companies' mortgage operations," according to The Los Angeles Times.
Only Barack Obama and Hillary Clinton have received more Bank of America money than Dodd during the current election cycle. Republican nominee John McCain slightly trails Dodd, with $64,000 in reported Bank of America contributions.
Between the PAC and individual employees, Bank of America has showered $1.3 million on presidential and congressional candidates, according to the Center for Responsive Politics.
Interestingly, Shelby, who ran the banking committee under Republican rule, received only $7,000 from Bank of America employees during his four-year chairmanship. Shelby's PAC received a $10,000 gift from Bank of America's PAC this year.
Bank of America's superior treatment of Dodd might not be personal—the bank just didn't need friends in Washington as badly before the mortgage meltdown, which coincided with the Democratic takeover.
But Bank of America has ramped up its lobbying efforts, too, spending more since January 1, 2007 than it did in 2004, 2005, and 2006, combined. When times are bad, invest in lobbyists.
Bank of America stands to profit most from a bailout. It will take on Countrywide's bad loans, and under Dodd-Shelby, it could shift the worst ones onto the shoulders of taxpayers, via the Federal Housing Authority. Basically, Uncle Sam will buy Countrywide's stinky loans off of Bank of America.
Bank of America is kind of like an investor trying to "flip" a house: they buy a run-down property (Countrywide) for a discount, shell out some campaign contributions and earn some "sweat-equity" through lobbying. If Dodd gets his way, it will be a good investment for Bank of America.
Examiner columnist Timothy P. Carney is senior reporter for the Evans-Novak Political Report. His Examiner column appears on Fridays.