Chris Dodd Has Lost His Mind

Dennis Kucinich, maybe, I could understand. Even John Edwards, with his populist

streak. But Chris Dodd? I know the chap’s presidential campaign is

struggling, but has he forgotten that he’s chairman of the Senate Banking Committee?

It

would seem so.

Senate Banking Committee Chairman Chris Dodd said on Tuesday that U.S. Treasury

Secretary Henry Paulson needs to clear up questions about his former employer’s

role in originating securities related to subprime mortgages.

Dodd, who also is a contender for the 2008 Democratic presidential nomination,

said he was concerned about issues raised in a New York Times column on Sunday,

December 2, about the activities of Goldman Sachs in reportedly selling collateralized

mortgage obligations (CMOs) while Paulson led the Wall Street firm…

The article, by columnist Ben Stein, said Goldman also was selling the securities

short…

Dodd said he was concerned because it appeared that Goldman Sachs was "aggressively

pushing subprime mortgages that they knew to be of concern while simultaneously

shorting collateralized mortgage obligations."

If so, it could raise suspicions why the Bush administration’s waited until

recently to begin initiating a plan to help homeowners who took out subprime

mortgages and now face losing their homes because their mortgage loans are

due to reset at higher rates, driving up their payments.

Dodd said Paulson should "address the concerns" raised by the New

York Times article and added a warning: "Failure to do so may be cause

for a formal investigation."

(There’s similar coverage at Bloomberg

and Dow

Jones.)

I swear that just reading this makes me feel nauseous. This is worse than a

common-or-garden abuse of political power. The Senate is meant to be the more

statesmanlike and deliberative of the two houses of Congress. And the Banking

Committee, especially at a fraught time like now, is not the place

to be launching a distracting, polarizing, and cowardly attack on a Treasury

secretary who’s finally waking up to the need to do something about the housing

crisis.

I am going to try my hardest to keep Ben

Stein out of this. He’s a newspaper columnist who is good at pushing bloggers’

buttons, my own included. Dodd’s initiative has nothing to do with Stein, and

everything to do with creating a sideshow which can’t help but hurt Paulson’s

attempts to get to grips with the subprime crisis. I sincerely hope that all

the other Democrats running for president will quickly and publicly distance

themselves from this complete and utter idiocy.

But for no end of detailed explanations why Dodd’s thesis is insane, you might

as well start

here.

(Thanks to Colin Barr

and Alea for the heads-up.)

Update: Dealbreaker has the

Dodd statement in full:

"I am deeply concerned about the questions raised by Mr. Stein’s story

in the New York Times yesterday about the activity of Goldman Sachs in aggressively

pushing sub-prime mortgages that they knew to be of concern while simultaneously

shorting collateralized mortgage obligations. If these facts are indeed true,

the Administration’s inaction when this crisis began to emerge earlier this

year, is increasingly suspect. It is in the best interest of resolving this

crisis if Secretary Paulson, who was leading Goldman at the time in question,

addresses the concerns raised by Mr. Stein’s article. Failure to do so may

be cause for a more formal investigation."