They come to believe they’re entitled

Although powerful Democratic Sens. Christopher Dodd of Connecticut and Kent Conrad of North Dakota -- whose committees oversee the mortgage banking industry -- claimed they had no idea they were getting special mortgage deals from Countrywide Financial Corp., an official who handled their loans has told Congress in closed-door testimony the pair were indeed informed at the time they were getting special deals.

Robert Feinberg, who worked in the VIP section of Countrywide, testified about the loan terms before the Senate Ethics Committee, providing the same information in an interview with Republican investigators of the House Oversight and Government Reform Committee.

Countrywide lost billions of dollars on bad loans -- some of them loans that Countrywide and other lenders were pressured to make by regulators responding to the legislative meddling of Washington politicians including Sens. Dodd and Conrad.

Sen. Dodd, chairman of the Senate Banking Committee, still maintains he got no preferential treatment. Sen. Conrad, who heads the Senate Budget Committee, took that position initially, but later acknowledged he did get a special deal.

Sen. Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Both were treated as "primary residences," which helped the senator with his rates, though lenders typically refuse to treat more than one property as a "primary residence." Sen. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck, N.D. -- though the lender typically refused to finance apartment houses with more than four units.

The senators were VIP borrowers in the program known as "friends of Angelo." Angelo Mozilo was chief executive of Countrywide, which played a big part in the foreclosure crisis triggered by defaults on subprime loans. The Calif.-based company was bought last July by Bank of America Corp. for about $2.5 billion.

Sen. Conrad initially said in June 2008, "If they did me a favor, they did it without my knowledge and without my requesting it."

The next day, however, Sen. Conrad changed his story and said he was donating $10,500 to charity and refinancing the loan on the apartment building with another lender.

The notion that these men changed their votes or policies to favor Countrywide because they got "sweetheart deals" is far-fetched, even if the benefits to the men totaled more than $10,000 each.

Rather, what's on display here is a culture in which powerful politicians receive so many special favors and set-asides that they no longer even pay them much attention. They spend so many billions of other people's money on things never contemplated in the Constitution that "ten grand here or there," for them, come to resemble mere crumbs. They figure they're entitled.

That's not to say this doesn't have a long-term corrosive effect. We all remember President George H.W. Bush's amazement at seeing his first supermarket scanner. Men who needn't wait in line at the supermarket, who never struggle to find a parking place or pay a speeding fine or a utility bill, soon lose track of the real meaning of the "sacrifices" they blithely demand of their constituents.

The Ethics Committee will issue a report. Otherwise, not much is likely to come of this probe, in the end ... until hometown constituents come to consider these special privileges doled out to the same guys who purposely warped the free market, pressuring regulated bankers to make unsustainable loans, propping up the housing bubble, ignoring the warning sirens at Fannie Mae and Freddie Mac.

Home-state voters will decide the political fate of these men, who may indeed have lived in the cocoon of privilege far too long. But here's hoping if voters decide they have to go it's based primarily on their bad policy decisions, meddling with the free market in banking in ways that extended the bubble and thus exacerbated the housing meltdown.

As financial scandals go, the dollar amounts here are pretty small potatoes. What's not so minor is the culture of entitlement -- men who start out not having to wait in line at their favorite restaurant and soon reach the point where they can claim not to even notice the carpet of $10,000 "favors" on which they walk every day.