WASHINGTON (CNN) - Two prominent U.S. senators were cleared by the Senate Ethics Committee Friday after a year-long investigation into allegations they received special, unusually favorable terms on mortgages from lender Countrywide Financial.
The six-member committee, split evenly between Democrats and Republicans, found "no substantial, credible evidence" that mortgages given to Sen. Kent Conrad of North Dakota and Sen. Chris Dodd of Connecticut, both Democrats,
violated Senate ethics rules.
At the same time, it concluded that the senators "should have exercised more vigilance in (their) dealings with Countrywide in order to avoid the appearance that (they) were receiving preferential treatment."
In June 2008, it was revealed that Countrywide - one of the companies accused of fueling the subprime mortgage crisis - gave favorable mortgage rates to Conrad and Dodd.
The two senators were enrolled in Countrywide's "V.I.P." program, designed to process and fund home loans for certain customers and senior-level Countrywide employees. Some V.I.P. customers referred by former Countrywide CEO Angelo Mozilo were also known as "Friends of Angelo," according to the committee report.
The committee noted, however, that all V.I.P. and "Friends of Angelo" mortgages were required to meet standards similar to the company's other loans. It also found that discounts offered by the two programs were not the best deals available at either Countrywide or in the broader mortgage marketplace.
Dodd said he sought out Countrywide in 2003 to refinance his two homes - one in his home state of Connecticut and the other in the District of Columbia. He claimed that he never met or discussed the loans with Mozilo.
Conrad used Countrywide in 2004 to obtain a loan for a beach house in Delaware and an apartment building in Bismarck, North Dakota. He told the committee he "briefly" spoke with Mozilo about obtaining a mortgage for the beach house.
The committee concluded that neither Conrad nor Dodd sought to be included in the V.I.P. program. But once they became aware that their loans were "being handled through a program with the name 'V.I.P.,' that should have raised red flags," it noted.
Conrad and Dodd, who insisted they had not acted improperly, both said they were gratified by the committee's finding.
"While I should have shown more vigilance in the appearance of these transactions, the committee has concluded I did nothing unethical, and that is the truth," Conrad said in a written statement.
Dodd, who is facing a tough re-election bid in 2010, said he hopes that the dismissal of the charges "will go a long way towards restoring the bond of trust and confidence that I've worked long and hard to build with the people of (Connecticut)."
But "now that the facts have been aired and the lessons learned, it's time to move on."