The Select Committee on Ethics told Dodd of Connecticut and Conrad of North Dakota in separate letters that it found "no substantial credible evidence" after a yearlong investigation that their mortgages from Countrywide Financial Corp. broke Senate gift rules. The two influential Democrats got their mortgages through a VIP program for friends of then-Countrywide CEO Angelo Mozilo.
But the committee found that the loans they received would have been available to a wide variety of borrowers with comparable financial profiles.
Both senators have said that at the time the mortgages were being written they didn't think they were getting special deals.
"I'm pleased and gratified that the Democrats and Republicans on the Ethics Committee have dismissed this complaint and found that the underlying accusations simply were not credible," Dodd said in a statement. But he added that, "I understand that my reaction to those false allegations only served to foster cynicism. And that was my fault."
Dodd planned an afternoon news conference in Hartford to answer questions about the matter.
Conrad said the Ethics panel's finding "confirms what I have said all along: I did not ask for or receive any preferential pricing on my loans. While I should have shown more vigilance in the appearance of these transactions, the committee has concluded I did nothing unethical, and that is the truth."
The panel of three Democrats and three Republicans said it heard testimony and pored through 18,000 pages of documents from Countrywide which has since been bought by Bank of America to reach its conclusions.
The investigation stemmed from a complaint by the watchdog group Citizens for Responsibility and Ethics in Washington that charged that the two senators' violated Senate rules against knowingly accepting gifts. The rule has an exception for loans that are provided on terms generally available to the public. The panel also said it looked into whether Dodd and Conrad violated another rule that bars senators from using their official positions for personal gain.
While it found no basis to believe Senate rules had been broken, the panel did take the unusual step of admonishing both Dodd and Conrad for not doing more to prevent the appearance that they were getting special treatment.
Dodd and Conrad "should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as a senator," the committee wrote to them.
Specifically, the panel told both senators that their eventual realization that their loans were being handled through a program known as "V.I.P." or "very important person" "should have raised red flags for you," and prompted them to learn more about the loans, and whether they might have been special deals.
Dodd has previously said that he knew he was in a so-called "VIP" program, but thought it involved only enhanced customer service not special deals. According to the letter the panel sent Conrad, he told the committee that when he learned of his VIP status, he too "assumed it was merely an employee and customer relations effort."
As part of its investigation, the ethics committee heard from Robert Feinberg, the Countrywide official who handled the two senators' mortgage deals.
Feinberg told GOP investigators for another congressional panel, the House Oversight and Government Reform Committee, that both Dodd and Conrad were told they were getting special treatment. A transcript of his testimony indicated that, while Feinberg had no direct knowledge of Dodd being told he was getting preferential terms, he said it was standard practice for all borrowers in the VIP program to be told they were.
Feinberg said he didn't recall all the details of his conversation with Dodd. Asked specifically if he shared with Dodd or his wife that they were getting special VIP treatment, Feinberg replied yes but then added, "I mean they'd already been there to begin with, so they knew. Once you're basically in the VIP program, you're in."
He said records showed that Dodd had been in Countrywide's VIP program in 2001.