by Alex Giannaras

Congress has recently been rocked by a scandal involving the beleaguered mortgage giant, Countrywide. Several Senators including Connecticut senator Chris Dodd (D), chairman of the Senate Banking Committee have been implicated in the scandal for reportedly receiving special treatment as part of the company’s “Friends of Angelo” program, named after the chief executive Angelo Mozino.

Countrywide, the nation’s largest mortgage lender held 20% of all U.S. mortgages two years ago. It was the largest holder of “sub-prime” mortgages before the company’s finances were rocked by the housing crisis. With its stock currently tumbling, the company is being acquired by Bank of America.

North Dakota Senator Kent Conrad (D) is a chairman of the Budget Committee and a senior member of the Finance Committee. Both groups have roles in negotiating housing legislation. He has also been implicated in receiving special treatment from Countrywide. At question is whether or not Conrad and Dodd received preferential rates on mortgages and other privileges including waived fees that other consumers are forced to pay to obtain lower interest rates.

Although both Dodd and Conrad admitted to receiving “VIP” treatment on loans arranged by countrywide, both deny any wrongdoing. They knew “there was a VIP section that we were in” but thought it was given to him because he had been with Countrywide since 1999 and had two mortgages, Dodd said.“We literally just assumed it was a courtesy. There was no red flag to me that we were getting anything special,” Dodd said. Conrad said he “did not ask for or know that I was receiving a discount” on several loans from Countrywide. In an apparent attempt to deflect criticism over this scandal, Conrad sent a check last week to a housing charity, Habitat for Humanity, in the amount of $10,500. He also paid back the final $32,000 on one of his mortgages.

This amount represents his estimate of the value he received in one of the mortgage deals on a million dollar super-jumbo mortgage for a beach house in Delaware. Some critics said the benefits were higher, including an underwriting exception made by Countrywide on an eight-unit apartment building Conrad owns in Bismarck, North Dakota.

Furthermore, this eight-unit mortgage is an apparent contradiction of the company’s rules prohibiting mortgages for any dwelling with more than four units, according to Conrad’s staff. Mozino ordered subordinates to approve the apartment-building loan, according to an internal e-mail obtained by Condé Nast Portfolio magazine, because “the borrower is a senator.”

Condé Nast magazine also reports that Dodd and Conrad were not the only government officials to receive special mortgage deals under Countrywide’s program. Included are former U.N. Ambassador Richard C. Holbrooke, housing secretary Alphonso Jackson, and former Health and Human Services secretary Donna E. Shalala.

The “Friends of Angelo” scandal has even touched the current presidential campaigns. James Johnson, head of the Barak Obama campaign committee vetting possible vice presidential running mates, stepped down recently amid accusations of having received preferential rates on several home loans. Coincidentally, he is a former chief executive of Fannie Mae, which is Countrywide’s top loan investor.

A complaint has been filed with the Senate ethics committee by Citizens for Responsibility and Ethics in Washington (CREW). The liberal watchdog group is requesting an investigation of the loans. A preliminary inquiry into the loans mentioned by CREW has begun in the ethics committee. According to California senator Barbara Boxer (D), “A complaint has been filed and we are, as we always do, looking at that,” she said.

Under the leadership of Senator Dodd, the senate has begun floor debate on a massive foreclosure relief package that critics claim amounts to a bailout of large lenders who specialized in negative amortization and sub-prime loans, including Countrywide. Dodd vehemently denies any connection between his VIP status with Countrywide and his legislative activities. Senate republicans have asked Dodd to delay any floor consideration of the bill until the potential conflicts of interest have been fully investigated.