U.S. Senator Chris Dodd is having a lousy week.  The latest hiccup is the continuing AIG fiasco, in which Senator Dodd played a starring role.  The Waterbury Republican-American’s editorial page was highly critical of Dodd today:

Declaring AIG too big to fail, the government, with Sen. Dodd’s blessing, bailed out the company four times to the tune of $180 billion. Part of the money came from Sen. Dodd’s TARP, which gave all beneficiaries a blank check to use taxpayers’ (borrowed) money as they saw fit. Unfettered by law or conscience, AIG converted $165 million of Sen. Dodd’s TARP money into bonuses for its Financial Products unit. You know, Sen. Dodd’s sugar daddies…

The author of that amendment? Sen. Dodd, who’s always looking out for his well-heeled buddies so they’ll remember him next time he’s up for re-election. Tuesday, he characterized the amendment as a pro-taxpayer measure that was gutted without his knowledge by unspecified House-Senate conference committee members who added the Feb. 11 provision. Then, late Wednesday afternoon, he changed his story, admitting he not only knew about the changes but actually made them at the request of Obama administration officials.

It doesn’t get much worse than that.

Senator Thomas J. Dodd was an accomplished man by the time the late 1960s rolled around.  He’d been an FBI agent, an attorney in private practice, and a prosecutor of Nazis at Nuremburg.  Indeed, it was on this basis that his career became the stuff of legend in most Connecticut households.

Less so noted is Senator Dodd’s ignominious end - he became only the sixth U.S. Senator in history to be censured by his colleagues.  The crimes?  Misuse of campaign funds for personal use and a too cozy relationship with big corporate interests.  A ragged looking Dodd swore his innocence until the bitter end.

Fast forward to the current, when the latest iteration of Senator Dodd has come under fire in recent months for too cozy relationships with moniedcorporate interests and receiving personal benefits because of his office.  The Countrywide VIP mortgage scandal, the Irish cottage fiasco, the pardons for felonious friends, and the AIG brouhaha all sound strikingly familiar as a ragged looking Dodd continues to swear his innocence.

Yesterday, a number of conservative media outlets alleged that Sen. Dodd had played a central role in passing legislation that paved the way for AIG to hand out bonuses to executives, despite the fact that AIG has taken more than $160 billion in taxpayer bailout dollars.  Numerous liberal media outlets countered that Dodd wasn’t involved.

But today, Senator Dodd seemed to change his tune on the matter:

Sen. Tom Dodd’s ghost must surely be unimpressed by this turn of events. 

However, no one can claim that the old man isn’t close to the action.  He lays buried in St. Michael’s Cemetery in Pawcatuck - less than five miles from the doorstep of former U.S. Rep. Rob Simmons.

Today, U.S. Sen. Chris Dodd puts some steam back into his engine. It is clear to Sen. Dodd and his advisers that time is short and he needs to “get out there” among Connecticut voters with those dog and pony shows that most politicians in trouble use. Dodd has been making the rounds at soft targets, business groups, senior centers and at any location where friendly crowds won’t ask those pesky questions about his finances and poor judgment.

Sunday, in the Hartford Courant, which is now making the Dodd saga an official news story, allowed Dodd to explain further the matters surrounding the purchase of his Irish cottage. It was a one source story – all the sources coming from Chris Dodd, with Chris Dodd’s take and nuanced explanation on how he managed to partner with the unsavory Ed Downe and the “Third Man” – William Kessinger, the fellow who spotted two-thirds of the cottage.

But the most nauseating moment in the story is Dodd’s Biblical reference to the pardoning of  Downe by Bill Cinton in the last days of his presidency and without Justice Department review. Downe was Connecticut’s version of Marc Rich.  Downe made millions on inside trading which meant others lost millions.  Here is what Dodd said when President Bush “commuted” the sentence of Scooter Libby:

By commuting Scooter Libby’s sentence, the President continues to abdicate responsibility for the actions of his Administration. The only ones paying the price for this Administration’s actions are the American people.”

After Clinton gave Downe an 11th hour full pardon based on a letter from Dodd, all was forgiven.

I’m a great believer: You deplore the sin, embrace the sinner. Ed did something wrong. He broke the law and he stood up and [pleaded] guilty. He paid a price. … I didn’t walk away from my friend at a dark moment for him.

In the  Courant piece, written by Matthew Kaufman and Dave Altimari, Dodd downplays some of the more damning facts that have emerged from the work of Courant columnist Kevin Rennie- including the true value of the cottage when he bought out Kessinger and Dodd’s fuzzy explanation on why he only paid one third for the property. Dodd’s assertion that the property wasn’t worth as much as other properties in Ireland because of a rickety bridge is pure blarney.

Also on Sunday, Dodd sat down with Dennis House on Face the State, which was taped Thursday. In that interview, Sen. Dodd admitted he was “tired” because of all the hearings he has held on the Banking and Urban Affairs Committee. Sen. Dodd said he “understands the politics,” but was more concerned with “doing his job.” 

Dodd stood by his friend, Downe, and given their financial relationship, one can see why. Could it be that Sen. Dodd did everything he could knowing that Ed Downe might hold the secrets to the purchases of the Irish home, the condo and what else?

 It still comes down to this no matter how you cut it – Chris Dodd wanted to live a certain life that his income couldn’t afford. Dodd found people, rich people, to help him buy it and then he somehow later found the scratch to take the property over while fudging on the value to avoid the IRS and public disclosure that would raise questions. By Dodd’s own admission, when Downe was being investigated by the SEC for insider trading, Dodd got out of his arrangements with Downe on the condominium they owned in Washington, D.C.  Was it the SEC or something else?

For someone who claims to be a pauper, Chris Dodd had his name on four deeds in 2007 – a home in East Haddam, a cottage in Ireland, a home in D.C. and an apartment in Iowa.  By comparison, Sen. John Kerry, D-MA, has five homes with his heiress wife, Theresa.

That’s what you call leveraging.

Do yourself a favor and read the whole piece. 

The highlights:

The Senate Ethics Committee has been looking into possible conflicts of interest in Connecticut Senator Chris Dodd’s 2003 mortgages. Now questions about another Dodd real-estate adventure, this one in Ireland, should keep the Ethicists even busier. All the more because Mr. Dodd’s “cottage” purchase involves a crooked stock trader for whom the Senator once did a very big political favor…

The next year — according to a transfer document at the Irish land registry viewed by Mr. Rennie — Mr. Kessinger sold his two-thirds share to Mr. Dodd for $122,351. The Senator says he actually paid Mr. Kessinger $127,000, which he claims was based on an appraisal at the time. That means, at best, poor Mr. Kessinger earned less than 19% over eight years on the sale of his two-thirds share to Mr. Dodd. But according to Ireland’s Central Bank, prices of existing homes in Ireland quadrupled from 1994 to 2004…

Mr. Dodd is busy these days blaming everyone else for the real-estate bubble and financial meltdown. But he owes his constituents and the Senate an honest accounting of his Galway property over the past 15 years. If its value grew with the rest of the area, he needs to explain why Mr. Kessinger handed it over for a song, why that isn’t an unreported gift under Senate rules, and what role Mr. Downe might have played as a middleman.

It’s time, Senator – time to go.

As the recession continues to drag down the U.S. economy, the burdens on average Americans grow heavier each day.  The unemployment rate clocked in at 8.1% after February saw more than 651,000 Americans lose their jobs, according to the Department of Labor’s Bureau of Labor Statistics.  With the exception of a modest gain in health care, every other sector of the economy lost jobs.

Meanwhile, the Obama Administration has come under considerable fire in recent days for the slow pace at which the Treasury Department in particular is filling its ranks.  Treasury has been operating with a skeleton crew of senior staff despite the fact that Secretary Tim Geithner has been on the job since January 26, 2009.  An Associated Press story highlighted the issue and the reason why things are moving so slowly, even for government:

Treasury officials say the administration is taking extra care to vet possible appointees after embarrassing revelations about tax problems for Geithner, former Health and Human Services Secretary-designate Tom Daschle and others.

On the heels of this news, the White House today released the names of three new nominations to senior staff posts at Treasury.  As a side note, it seems that if you want to get something done in the federal government, all you have to do is get a lousy article about it into the newspaper.

Disconcertingly, President Barack Obama has appointed, among others, economist Alan Krueger to be Assistant Secretary of the Treasury for Economic Policy.  Krueger is well known in academic circles as one of the economists who generate evidence that raising minimum wage levels do not have a negative impact on employment.  Professor Krueger has written extensively on the subject as his Curriculum Vitae notes.

His scholarship is notable because it breaks with more than fifty years of academic research on the minimum wage, making it the foundation on which liberal politicians justify doing whatever they were going to do anyway.  Perhaps most frequently cited is the work of Professor Krueger and a fellow colleague at Princeton, Professor David Card, who authored Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania in 1994.

The counterpoint to Professor Krueger comes from a broad array of people.  The Congressional Joint Economic Committee compiled an interesting list of research that disagreed with Krueger, claiming that 50 years of economic research proved him wrong.  They noted this:

While it is not yet clear why Card, Katz and Krueger got the results that they did, it is clear that their findings are directly contrary to virtually every empirical study ever done on the minimum wage. These studies were exhaustively surveyed by the Minimum Wage Study Commission, which concluded that a 10% increase in the minimum wage reduced teenage employment by 1% to 3%.

They aren’t the only ones who profess the widespread acceptance of this commonly-held point of view.  Harvard economics professor Greg Mankiw asserts on his blog that fully 79% of economists agree with this statement: “A minimum wage increases unemployment among young and unskilled workers. (79%)”.

While the Professor’s qualifications are not in doubt, and his ability to pay his taxes have not yet been questioned, it seems remarkable that after more than a month of search, President Obama has come up with Professor who - on one of our day’s major economic questions – is viewed as wrong by nearly 80% of the other people in his profession.

Sources:

Bureau of Labor Statistics Press Release, Friday March 6, 2009.  http://www.bls.gov/news.release/empsit.nr0.htm

Chen, Edwin.  “Obama Nominates Three for Assistant Treasury Posts”.  Bloomberg.com, Monday, March 9, 2009.  http://www.bloomberg.com/apps/news?pid=20601103&sid=aTdTjB16donw&refer=us

Krueger, Alan.  Curriculum Vitae January 2009.  http://www.krueger.princeton.edu/Krueger01_15_09.htm

Joint Economic Committee of the U.S. Congress, “50 Years of Research on the Minimum Wage”, February 15, 1995.  http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm

Mankiw, Greg.  “News Flash: Economists Agree”.  Greg Mankiw Blog, Saturday February 14, 2009.  http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html

Wagner, Daniel.  “Understaffed Geithner Can’t Keep Up, Critics Say”.  Associated Press, Thursday March 5, 2009.  http://www.google.com/hostednews/ap/article/ALeqM5jpXe0jNEHGvyr0Vz_J-oYoclV-nAD96NUUQ80

Up until fairly recently, U.S. Senator Chris Dodd had lived a largely charmed public life.  Unlike some of his colleagues in the Senate over the years, the black brush of scandal never touched Dodd and the world seemed to be at his fingertips.  He caroused with Kennedys, partied with Bianca Jagger and Princess Leia, and came within a single vote of being Democratic Leader in the Senate. 

When he did come to visit Connecticut, the public held him in near-reverence and expressed their satisfaction by re-electing him with ease in 1986, 1992, 1998, and 2004.  Life was good for Chris Dodd.

But the Senator Dodd that handily won re-election in 2004 is not the Senator Dodd we know today.  He decided in 2006/2007 to “scratch” his now-infamous “itch”.  He had brought home the disease that most every U.S. Senator seems to pick up in Washington – a burning sensation when they think about being President of the United States.

And so, good old Dodd packed up his bags, his family, and his reputation to literally take up residence in Iowa for eight weeks.  He visited the State Fair, broke bread with housewives, and had coffee with the farmers while neglecting his duties to our State and to the nation as Chairman of the Senate Banking Committee.  And for what?  To win the nominating vote of exactly one delegate to the Democratic National Convention.

Meanwhile, back in Washington as they say, the nation’s financial house was aflame.  Many of the people that were paying for Dodd’s Iowa Adventure, like the bigwigs at Lehman Brothers, Citibank, and Fannie Mae & Freddie Mac were also the ones who, despite knowing that the loan applicants couldn’t really afford it, loaned it to them anyway on the belief that they, like thousands like them, could “flip this house” and make it all work out fine. 

It was a recipe for disaster that was cooking while Dodd was giving Iowa a try in Dubuque, Des Moines, Davenport, Marshalltown, Mason City, Keokuk, Ames, and Clearlake.

After his quixotic Presidential bid flopped (go figure), Dodd wasn’t back in Washington long before the downward spiral in the economy started to claim Dodd’s financial supporters as “victims”.  One such “victim” was Countrywide Financial, a corporation which had the foresight to butter Dodd’s bread back in 2003, with two VIP deals on home mortgages.  It took Doddie-boy 235 days to even try to come clean on the subject.

But the hits have kept coming on Dodd.  The Hartford Courant’s columnist/investigative reporter Kevin Renniedid another piece on Senator Chris Dodd today, this time exposing how Dodd’s business partner, friend, and convicted felon Edward Downe were co-owners of Dodd’s Washington D.C. condo for much of the late 1980s.  Turns out that Dodd may have been living in a condo paid for by a felon - a felon who was later pardoned by President Bill Clinton at the behest of Senator Dodd.

It also turns out that Dodd has a home in Ireland that would be worth perhaps $750k if you aren’t Senator Dodd, and $125k if you ARE Senator Dodd – quite a discount.  From Rennie’s piece:

Waterfront properties on the “Irish Riviera” don’t often come on the market. In today’s dire real estate market, a 750-square-foot, two-bedroom townhouse in nearby Roundstone is for sale for $750,000. A 900-square foot, three-bedroom semi-detached house, boasting of a view of Inishnee, the island where Dodd’s house stands high above Bertaghboy Bay, is offered for $700,000.

Dodd said through a spokesman two weeks ago that the price he paid Kessinger — $122,351, according to the Land Registry, for his two-thirds share in 2002 — was based on an appraisal. He hasn’t released it.

The summation here is that Senator Dodd isn’t the man we once knew, and he isn’t the man we once supported with enthusiasm.  He has gone Washington, and there is nothing we can do about it, except to fire him when the time comes in 2010.

Screenshot of Politico 44 Website, 4:25pm on Wednesday, March 4, 2009.

For more on Basement-Gate, keep reading The Everyday Republican.

The episode began when it was revealed that the Congresswoman, who represents the New Haven-based Third Congressional District in Congress – allowed former Congressman and now White House Chief of Staff Rahm Emanuel to live rent-free in the basement of her townhouse for five years.

The arrangement has raised eyebrows as speculation has put DeLauro at or near the top of the list for Obama Cabinet appointments.  The odds-on suspicion has been that because the Congresswoman has unprecedented access to Emanuel – literally down in the basement – she would end up in the Cabinet at some point.

Indeed, the likelihood of a Cabinet post opening up for DeLauro has seemed to grow in recent weeks, as numerous Obama appointees have been riddled with tax troubles.  Obama’s first choice for Health and Human Services, former South Dakota Senator Tom Daschle, ultimately flopped because of his failure to report and pay more than $100,000 in taxes. 

Obama’s Treasury pick, alleged whiz kid Tim Geithner, barely managed to squeeze through the confirmation process after taking considerable flak for his failure to pay $34k in back taxes, despite specific admonitions to do so from his former employer.  He blamed TurboTax.

But as America’s re-introduction to the Chicago Way of doing politics continues each day,  the “I sleep on Rosa’s couch” housing arrangement has eyebrows rising all over the country. 

Further complicating the situation is the fact that Rep. DeLauro’s husband, Democratic polling bigwig Stan Greenberg, did $240,000 worth of work for the Democratic Congressional Campaign Committee in 2005/2006, an outfit headed at that time by – wait for it – Rahm Emanuel.

So the question being posed now to the tax wonks is this: does the DeLauro/Emanuel arrangement have tax implications for Mr. Emanuel?  The jury seems to be out.

Professor Paul L. Caron, of the University of Cinncinati College of Law, believes that the situation “constitutes a gift for gift tax purposes”, according to an article in Tax Notes Today (2009 TNT 33-2), per Caron’s blog:

Prof. Paul L. Caron of the University of Cincinnati College of Law, who maintains the popular TaxProf Blog, told Tax Analysts that in Dickman v. Commissioner (465 U.S. 330 (1984)), the Supreme Court “clearly held that the rent-free use of property (there, an interest-free loan) constitutes a gift for gift tax purposes.”

The determination of whether a transfer is a gift is factual and based on the intent of the transferor. A statement given to the Hartford Courant on behalf of DeLauro characterized the rent-free occupancy as “hospitality between [Congress] members.” Emanuel represented the 5th District of Illinois before being selected as Obama’s chief of staff.

But that argument “falls apart since that is not how [DeLauro] in fact treated it,” Caron said. That is, DeLauro filed no gift tax return. “To me, it is a straightforward issue — the rent-free use of an expensive home for five years, owned by a person who provided hundreds of thousands of dollars of services for the lucky tenant, makes it very hard to argue that this is purely a gift,” he concluded.

The same article cites a counter-argument from Florida State University College of Law professor Joseph Dodge:

Prof. Joseph Dodge of the Florida State University College of Law also argues that there should be no tax impact at all. Dodge told Tax Analysts that the gift tax exists to back up the estate tax by preventing a taxpayer from depleting his estate. Therefore, only the transfer of income-producing property should result in gift tax. “If I let my son live in my vacation home, I’m not shifting any income to him,” he said, but “if I loan you my house for a year, and you rent it out, the rents are probably a gift from me. My son can’t rent it out unless I let him; it’s my decision.” “The failure to rent out personal use property — failing to augment my estate — has never been viewed as a concern of the estate or gift tax,” Dodge added. “Those taxes are on property I actually have, not on property I could have had with maximum economic exploitation.”

The argument continues, and it may well fall to the Internal Revenue Service to determine whether the DeLauro/Emanuel flim flam was a taxable event or not.

Also today, Toby Harden of The Telegraph, gives us some insights into the class of people that Sen. Dodd’s calls neighbor and what the real value of his “cottage” is in real dollars or Euros.  The questions now facing Sen. Dodd include how he managed to come up with the scratch to buy, refinance and then assume complete control of the 10-acres site and home and his long-time relationship with Edward Downe, Jr, the “private investor” who brought a business associate to the table to help Dodd make the initial purchase.

Dodd managed to get Downe, convicted of securities fraud in the 1990’s, a full Presidential pardon from William Jefferson Clinton in the last scandalous days of that administration. Downe is also a board member of the Thomas J. Dodd Research Center at the University of Connecticut.

Harnden writes:

“The nearby village of Roundstone is a celebrity hangout. When he’s there, the Sunday Times reported in 2007, he’s likely to “rub shoulders with [RTE's] Pat Kenny, Bill Whelan of Riverdance, Lochlann Quinn, the former AIB chairman, and the singer Brian Kennedy”.

Given the Irish property boom, a conservative estimate would be that the house would be worth approaching $1 million, and very possibly much more than that.  So why hasn’t Dodd declared a more realistic true value of the property? No doubt he didn’t want to highlight the fact that he had a third splendid pile, to go along with his residences in DC and Connecticut, as he sought the presidency (remember how all those homes harmed John McCain?). Maybe he knew it would mean further scrutiny of his connection with the pardoned crook Downe.

Now that President Barack Obama – whom Dodd enthusiastically endorsed for president over Hillary Clinton – has declared a new era of ethical government in Washington, his former Senate colleague will order a fresh, long overdue reappraisal of its value. Or perhaps the Senate Ethics Committee will look into the matter.”

Now, some pictures have come our way to share of the Dodd Estate:

You look at these pictures and you begin to wonder – did Chris  Dodd really think no one would ever figure out the intimate financial relationships betweeen Downe, Wiilliam Kessinger and himself?

Did he think no one in Connecticut would care if he deliberately undervalued the Irish properties at around $100,000 to $250,000 on his Ethics form when housing prices were tripling, especially on an exclusive isleland where a U2 band member, a bank president and one of those step dancers hang out?   

Sen. Dodd, after 35 years in Washington, D.C.,  he has adopted that long tradition of career politicians – only he, and he alone, will decide when he will retire.

We are comforted to know he has a nice place to do it.

Downe, near 80 now, appears to be one of the people that gets close to the political class, picks up the tab now and again but is always ready to make life more comfortable for the powerful.  Downe got pinched and convicted for insider trading in the early 90’s and received an $11 million fine and lifetime ban on securities trading.  But he had Chris Dodd as a friend.

So Downe says to a business partner, William Kessinger, you have a new friend also and his name is Chris Dodd.  Soon Kessinger puts up two thirds of the nut for a house and 10 acres on a island off an island. Dodd puts down $12,000 for his share.

Question 1. Why would Sen. Dodd agree to partner with someone he never met before Ed Downe put them together?

So, Dodd, living off a U.S. Senator’s salary, somehow comes up with the motgage payments and upkeep, or his share of it until he takes out another mortgage two years later.

Question 2. Can Sen. Dodd produce receipts, cancelled checks to show he was indeed meeting those one-third obligations?

Question 3 – Did Edward Downe subsidized William Kessinger’s  investment in the Dodd cottage? Maybe putting someone up on the witness stand under oath would clarify that.

Properties values in Ireland were soaring in the late 1990’s and early part of this century. Ireland’s economy was up to a couple of years ago. was the marvel of Europe. Housing was at a premium. Some studies show that average housing prices where tripling. But let us say that this 10-acre site with a fully heated home on an exclusive piece of land merely doubled. That would put it around $300,000 U.S.

Question 4 – Why did Sen. Dodd initially and repeatedly misstate the fair market value of the property, whether as a part-owner or full owner up to recently? 

Sen. Dodd didn’t have that problem denoting the fair market value of his Haddam home and Washington, D.C. townhouse on his Ethics filings.

Question 5. – Why would Sen. Dodd go to such pains to tell us what his two American properties were worth and yet be so cute with the Irish home which he has tried to characterize as a modest cottage?

Back to Edward Downe, Jr. It’s late in January, 2001 and Bill and Hillary Clinton are grabbing the ashtrays and furniture for their trip to Bedford, N.Y.  Sen. Chris Dodd makes one pitch for a pardon. It’s not someone who made a bad mistake, did time and put his or her humble life back together – maybe talking about the experience to young people. No, it’s a guy who tried to game the system by tipping off his rich friends at polo outings and even used his own son as straw-man “investor,” to persuade the feds it was legitimate.

Our Senator, Connecticut’s Senator writes a two-page letter to Bill Clinton asking to wipe the slate for Edward Downe, Jr., his pal and finder of generous real estate partners.

Rather than go through the Justice Department or even Eric Holder, Clinton issues a full and complete pardon for Downe, Marc Rich soulmate, who is then able to go back to securities trading as if nothing had ever happened.  Within a year, Sen. Dodd manages to secure enough financing to buy out William Kessinger for full-ownership of the Ireland estate while continuing the fiction that is has marginally increased in value.

Question 6.- Did Downe and Dodd have any conversations about the Ireland home after the pardon was issued? And how did Sen. Dodd manage to swing another home, along with his two other mortgages with Countrywide Financial?

Question 7.  Who has the mysterious tenant or tenants been at the Ireland home been all these years?  Tell us who has been writing those checks to keep the pipes from freezing.

And if that isn’t enough for one weekend, we have been told through one our sharper supporters, that Downe serves as a member of the National Advisory Board of the Thomas J. Dodd Research Center at the University of Connecticut.  Senator Thomas Dodd was censured by the U.S. Senate in 1967 by the U.S. Senate for improper use of his campaign funds. 

When Sen. Dodd was asked to comment Sunday at Manchester Community College by WFSB’s  Leon Collins, he didn’t look convincing. He said the entire matter was “politics” and then tried to bridge into a message about how people are losing their jobs and that is more important.

If this story was the least bit inaccurate, Sen. Dodd would have unleashed a fury of indignation and counter-attack. Instead, he was muted, hoping that no one will care how a $12,000 investment turned into a dream home worth 500 times that initial stake and all on a U.S. Senator’s salary.

The ghost of Tom Dodd is lurking.