Heads may role; grand jury convened

We have all been watching this bailout fiasco in DC, and we've all been wondering if any heads will role. In today's Wall Street Journal(subscription required) it's reported that a grand jury has been convened, and they're very interested in the names of the players that caused this crisis; namely those who might have broken the law:

HT to Capt. Ed

Countrywide Financial Corp., the biggest U.S. mortgage lender, made large, previously undisclosed home loans to two additional executives of Fannie Mae, the government-chartered firm at the center of the U.S. credit crisis.

One of Countrywide’s previously undisclosed customers at Fannie was Jamie Gorelick, an influential Democratic Party figure whose $960,000 mortgage refinancing in 2003 was handled through a program reserved for influential figures and friends of Countrywide’s chief executive at the time, Angelo Mozilo. Ms. Gorelick was Fannie Mae’s vice chairman at the time.

Another Countrywide client was recently ousted Fannie Mae Chief Executive Daniel Mudd, though it isn’t clear whether he received special treatment on two $3 million mortgage refinancings he made when he was the company’s chief operating officer. …

Countrywide loans on preferential terms to influential figures are the subject of a federal grand jury investigation in Los Angeles, according to people involved in the inquiry. Prosecutors subpoenaed records of many of the so-called “Friends of Angelo” loans in August, lawyers and others familiar with the matter said. …

While Countrywide was developing a closer working relationship with Fannie Mae, the company also had created a special path to handle loan applications from influential figures. The “Friends of Angelo” program channeled loan applications from celebrities, public figures and sports stars — often singled out by Mr. Mozilo — to a department where the borrowers received special treatment, sometimes including lower interest rates and a reduction in fees.

Now Gorelick claims that she had no idea she was being given a "sweetheart" deal from Countrywide, and that excuse goes over about as well as a turd in a punchbowl. Why? She was the vice chair for Fannie Mae, and being there in that position one would have to have knowledge of the interest rates for home loans.

A couple other players in this little drama are Jim Johnson, who is still an advisor to the Obama campaign, and Chris Dodd, who is busy working on the bailout on Capitol Hill. Johnson should be answering some questions before that grand jury, and we really don't give a rip if it does embarrass Obama. Dodd should also be answering some questions, but even more importantly, we don't want him working on the bailout. It's a conflict of interest not only in the fact he received preferential treatment, but also that his committee, which did have it's share of oversight on this matter, dropped the ball.

Two days ago we were torn on this bailout. Our principled side said "no, the bailout is wrong. Let those firms go under, and let the market adjust." The problem is that these Wall Street firms need an injection of capital right now to keep them from going under. The market won't right itself quickly enough to save them, and us, from a financial meltdown. Listening to John Campbell yesterday on Hugh's show, he said that a bailout bill wasn't likely last night or even today, but it could come around on Friday. Regardless, Congress must understand that they can't dawdle on this. We need this now, more than ever, and it needs to focus on only the lending industry. No car loans. Not student loans. No credit card debt removal. This bailout isn't a free-for-all, grab-bag. We're trying to keep the financial system from collapsing around us.

And if the grand jury does find wrongdoing by these people, then the heads should roll. We're in complete agreement that, be they Republican or Democrat, if they broke the law and allowed this happen, they should face the music. If they're like Dodd, and are serving in Congress? Buh-bye. They're gone, too.

Publius II