CNBC's Larry Kudlow and CNBC's Other Liars

Touting the Countrywide VIP Loan "Scandal"

(Why would anyone listen to this Vampire Krudlow? All his theories have failed. His GOD is dead, (gone to hell-Reagon). He has no expertise in economics! His rants are bullshit and his hosting obnoxious like maggots on dead flesh!)

David Fiderer




There was nothing subtle about Larry Kudlow's lies. No one at CNBC who paid attention to Kudlow's rant could doubt that he intended to deceive the network's viewers. But CNBC management seemed unconcerned. Kudlow's lies were artful, like magic tricks that fool an audience into believing it heard something different from what was actually said.

"Dodd claimed there was no discussions between himself and senior people at Countrywide. This whistleblower said that is exactly wrong," proclaimed Kudlow, referring to Robert Feinberg, a former low-level Countrywide loan processor who had appeared on Squawkbox earlier that morning. Feinberg had never said anything remotely like Kudlow's invented accusation. Kudlow repeated the same lie a few seconds later. "Countrywide was on the phone several times with him and his wife! All that contradicts Senator Dodd, doesn't it?" said Kudlow. The trick was to fool viewers into thinking that Dodd's phone conversation with a junior loan processor - Dodd said he had only spoken with "loan officers" - was the same thing as speaking with a senior executive at Countrywide. These are the tricks that liars like Kudlow use to defame their enemies.

Eight months later, Kudlow said Dodd "has yet to divulge fully his sweetheart mortgage deals with the former Countrywide." Once again, the accusation was a bald-faced lie, a fraud on CNBC's viewers. In fact, the terms of his loans had first been disclosed in Portfolio long ago. In addition, Dodd had disclosed all supporting data needed to discern whether the deals were arms'-length.

Kudlow's cohorts in print the media performed similar tricks, though they were careful to avoid any obvious lies. Still, they dissembled with great ferocity. The scandal about the Countrywide VIP loan program has almost nothing to do with Democratic politicians, and everything to do with the corruption of respectable media outlets by Republican shills.

The facts have always been hiding in plain sight, buried within the text of Portfolio's cover story on the Countrywide program. There never existed any evidence that Dodd got a sweetheart deal from Countrywide. Zero, nada, bupkis. The truth was obscured by Portfolio's deceitful claim, soon transformed into urban legend, that Dodd saved $75,000 on his Countrywide mortgages. When Dodd disclosed the facts, the Republican shills doubled down on their lies.

Here's why the evidence never existed.

There's only one standard for discerning whether Dodd got a "sweetheart deal" on a mortgage loan. It's the comparable transactions standard. Did the Dodd get better terms than he would have gotten from any number of different lenders on the open market? If he didn't, then there was no sweetheart deal. Period.

If Dodd got market-based terms, then it doesn't matter what a Countrywide loan processor said over the phone, or what terms were offered to other Countrywide customers, or what internal e-mails suggested about Dodd's file. So far as Dodd or any other customer is concerned, those issues are irrelevant, because all money is green. This is basic economics, something beyond the ken of Larry Kudlow. This is also a critical distinction that many in the press have worked mightily to obscure.

The comparable transactions standard was invoked by The Wall Street Journal in June, the first time the Countywide VIP story was used to impugn Democrats. But unlike Portfolio, the Journal reporters never received copies of loan documents, so their analysis was stillborn. The best they could come up with was a hypothetical comparison suggesting that the loans kind of maybe, kinda, might possibly be better than what was available on the open market. Deep within the story came the operative disclaimer:

"A comparison of the Fannie Mae officers' terms with interest rates prevailing when they got their loans raises the possibility Countrywide gave them preferential terms. But it's impossible to tell for sure from public documents. An array of other factors also can account for lower-than-average rates, including a borrower's income, total assets and credit score; how big the loan is compared with the home's value; and how many 'points' a borrower may have paid upfront in order to get a lower rate."

"Translation for those who lack any financial sophistication:" I wrote at the time, "They don't know jack." The Journal literally had nothing substantive to form the basis of a story. And yet some not-so-careful journalists were ready to jump onto the phony scandal narrative bandwagon. As I noted:

"So to recap, here's how the right wing media campaign works:

Step 1: Plant a story based on speculation rather than hard evidence._
Step 2: Rely on sloppy journalists to present the speculation as fact._
Step 3: Use the 'factual' premise to argue that Democrats are just as ethically compromised as Republicans."


After a week of touting the substance-free story, the Journal unearthed another little nugget. Countrywide CEO Angelo Mozilo took a personal interest the VIPs' loans. That's kind of weird but it doesn't, by itself, demonstrate that any of the borrowers had any reason to suspect that anything inappropriate or unethical was going on.

Portfolio took up where the Journal left off, though there were subtle shifts in the narrative. The VIP program that the Journal touted as available to "a few customers" turned out to be something available to thousands.

Robert Feinberg had presented Portfolio with stolen copies of confidential credit documents of various prominent Democrats. So Portfolio could do what the Journal could not. It could actually compare the terms of the VIPs' loans with those available in the open marketplace. But to do so that would have highlighted the fatal flaw in the narrative's premise.

The purported "deals" that Dodd and the others VIPs received were waivers of "junk" or "garbage" fees, and/or "free" float-downs. But as any real estate agent can tell you, a well-qualified borrower can get those benefits anywhere. Junk fees are paid by suckers. And the reason why lenders offer free float-downs is because when the market rate, at the time of closing, is lower than the locked-in rate, a borrower is free to walk away and take his business somewhere else.

Based on Feinberg's claims, Portfolio promoted a lie that soon became an urban legend - that Chris Dodd saved $75,000 on his mortgages with Countywide. [The actual words seem to be missing from the current online version of the Portfolio article, but, as NPR reported, "Portfolio calculated that lower rates and waived fees would save Dodd $75,000 over the life of the loans."] The lie was obvious and transparent, because Portfolio calculated Dodd's savings on his interest rate extended over 30 years, even though his interest rate was fixed for only five years on his Washington home and only ten years on his Connecticut home. This issue was covered in detail by me previously in HuffPost. It's possible that this mistake fell through the cracks in Portfolio's editing process, but at this point the magazine has no excuse for its failure to issue a public retraction and apology to Dodd.

Portfolio claimed that Dodd had received free float-downs on his mortgages, even though it had no documentation to back up the claim. It was based entirely on the recollection of Robert Feinberg, a source with major credibility problems.

Feinberg tended to amplify his allegations over time. Nowhere in the Portfolio article is there any suggestion that any of the VIPs got a discount on their interest rates, although the casual reader might confuse a float-down with a discount. Months later, Feinberg told NBC's Lisa Myers, "They got a discount on the interest rate."

"Did these VIPs know that they were getting special deals?" asked Myers. "Absolutely," said Feinberg. Of course, "special deal" is one of those phrases, like "natural ingredients," which can mean anything. As for Feinberg's assertions about what his customers actually "knew" or "believed," here was the critical exchange on with Michelle Caruso-Cabrera on CNBC:

CARUSO-CABRERA: Tell me about your conversations with Senator Dodd and exactly how this went down and how he got a cheaper loan than most people could get.

FEINBERG: My conversations with Senator Dodd were maybe once or twice. It wasn't long conversations because he is a very busy person, but basically he came through a receptionist for one of the managers and I was given what to do with him as for discounts. I mostly spoke with his wife. So most of the work was done with his wife via e-mail or phone calls.

CARUSO-CABRERA: Can you definitely say that they knew they were getting better terms than they would have gotten otherwise?

FEINBERG: Absolutely.

CARUSO-CABRERA: No doubt in your mind?

FEINBERG: No doubt in my mind. When anyone entered on a phone call into the V.I.P. unit it wasn't just your job to provide them with discounts. It was your job to get the loan so you did explain where they were and how they were being treated and also that there was a lot of taglines that we used that the pricing was specially priced by [CEO] Angelo [Mozilo] and you're getting a better rate than a regular customer would get.

Maybe Feinberg thinks his customers never spoke to a telemarketer. Or never heard a car salesman say, "I spoke with my manager and we'll make an exception and waive the dealer prep fees just for you." On the other end of the phone, Feinberg's tagline - "Because you're in the VIP unit, we'll be waiving the junk fees..." - sounds impressive if you were born yesterday. Most people would take it with a pound of salt. And how is it that sharing a few phone calls suddenly gave Feinberg absolute certainty as to what Dodd believed? Just because someone does business with you, doesn't mean he believes everything you say.

But Feinberg sounded like Paul Volcker compared to The Hartford Courant's Kevin Rennie when he appeared on the The Wall Street Journal Editorial Report on Fox News. Rennie has been the Republicans' local pit bull on the story since June. This guy is not only a liar, but a stupid liar.

Rennie was asked by Paul Gigot about the report offered by Dodd, which compared the terms of his mortgages with those available elsewhere on the open market:

RENNIE: It isn't very persuasive when you read it. In fact, it's very selective in the comparisons that it makes. It also assumes that every borrower, every good deal that was available would be condensed into a deal for each borrower. So only Christopher Dodd and his wife got that kind of deal. They got every advantage. Most borrowers would get one or two advantages, but not all of them. That's the difference.

GIGOT: Portfolio magazine estimated, when this first started, that he and his wife would have saved $70,000 on two mortgages over the life of the loan. When you look at the specific benefits he may have received, were they lower interest rates, points off that he wouldn't have had to pay or what?

RENNIE: A lower interest rate. Even the report really inadvertently shows that. No reduction in fees. And in addition, he got the float down, which is, from the time he locked in his mortgage to the time he had the mortgage closing, the interest rate was reduced for free.


In addition to the "lower interest rate" he got a float-down for free, says Rennie, who doubled down on his lies.

Guess what, The Hartford Courant revealed a document that removed all doubt that Feinberg and Rennie are liars.

Last July, Portfolio reported, "When [Dodd] applied, Countrywide waived three-eighths of a point, or about $2,000, on the first loan, and one-fourth of a point, or about $700, on the second." Yesterday, The Hartford Courant repackaged that sentence in 900 words, hoping to deceive its readers into thinking some big and important news suddenly came to light. Here's the histrionic lead:

"An executive at mortgage giant Countrywide Financial overrode the company's loan-writing policies to give a discount to Sen. Christopher Dodd, the powerful chairman of the Senate banking committee, according to an internal Countrywide document turned over to congressional investigators and obtained by The Courant."

The Courant dissembled to the point of fraud by using the phrase "overrode the company's loan-writing policies." A waiver of $2,700 in fees on two mortgages totaling $775,000 for properties appraised at $1.3 million is simply nickel and dime stuff, within the scope of what is regularly negotiated between customers and lenders. Any banker knows that exceptions to pricing guidelines are made every day of the week in the normal course of business, for legitimate business purposes. The Courant did back-flips to make something ordinary sound like something corrupt, and it did so by working hand in glove with Darrell Issa and other Republican shills who are working furiously to malign Dodd and other Democrats.

But the document touted by The Courant removed all doubt of Feinberg's deceitful intent. Remember, Feinberg's recollection of this free float-down was the basis for Dodd's fictional $75,000 savings. And Rennie said Dodd got a free float-down and a reduced interest rate.

The denouement requires a brief explanation of some mortgage products. When you apply for a mortgage you have the option of locking in the applicable interest rate at the date of closing. This is called a rate lock. You also have the option of obtaining an additional feature, which is to close with the lower of the locked-in rate or the current market rate at the time of closing. This is called a float-down. (Many banks offer this feature for free, or embedded in the locked-in rate.) You would never get a float-down unless you got a rate lock. The attached document shows that Dodd never got a rate lock, ergo Dodd never got a float-down. Market rates fell between April 2003, when Dodd applied for his loans, and June 2003, when he closed on them.

There never was any discount or any float-down. Feinberg invented the float-down so he could fabricate the $75,000 story. And Rennie, who lied about the contents of Dodd's report, piggybacked on top of Feinberg's lies and added a new lie - an interest discount - because of his general contempt for the truth.

Dodd's critics have asked why he did not hand over all of his loan documents to reporters last June, when Portfolio first made the phony accusation that he saved $75,000. The reason is pretty obvious. The press is not acting in good faith.

There is much more to be told about the Countrywide VIP smear campaign, most notably the fraudulent representations in documents issued by Darrel Issa, but for the moment here's an interim to-do list:

1. CNBC's viewers should insist that the network retract Kudlow's lies, specifically: "Dodd claimed there was no discussions between himself and senior people at Countrywide. This whistleblower said that is exactly wrong." and Dodd "has yet to divulge fully his sweetheart mortgage deals with the former Countrywide."

2. Portfolio's readers should insist that it retract its claim, apparently removed from its online versions of the article, that there was any legitimate basis for calculating a $75,000 savings on Dodd's mortgages.

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