The Senate Ethics Committee decided Friday that Senate Banking Committee Chairman Christopher Dodd (D-Connecticut) and Senate Budget Committee Chairman Kent Conrad (D-North Dakota) did not violate the legislature’s rules on accepting gifts by participating in a V.I.P. mortgage program offered by Countrywide Financial.

The bipartisan committee’s unanimous ruling followed a year-long congressional probe into the two lawmakers’ dealings with the once-subprime leader – a probe that was prompted by the Washington watchdog group Citizens for Responsibility and Ethics (CREW), which asked both the House and Senate ethics panels to launch an investigation last June. In response to the dismissal of CREW’s complaint, the organization’s executive director Melanie Sloan had harsh words for the Senate committee’s handling of the matter.

“Apparently, clearing the senators was insufficient penance for the committee for having the audacity to investigate in the first place. Like a battered woman who explains she brought the beating on herself, the committee faulted itself for failing to ‘provide more guidance to the Senate community about issues surrounding mortgage negotiations,’“ Sloan said.

Under question was the senators’ placement in the “Friends of Angelo” (FOA) V.I.P. loan program between 2002 and 2004, which was created by Countrywide’s chief executive at the time, Angelo Mozilo.

According to the Ethics Committee, Dodd received “quicker, more efficient loan processing and some discounts,“ but it found no evidence that he received preferential terms or conditions on his two Countrywide mortgages for homes in Washington and Connecticut.

The committee said the same of Conrad’s two loans obtained through Countrywide, which included a refinance on an apartment building he owns and a Delaware beach house.

The Senate committee poured over 18,000 pages of documents from Countrywide to arrive at their decision, as well as detailed records from the senators and hours of testimony.

Part of that testimony was from a former Countrywide loan officer, Robert Feinberg, who stated under oath last month that both Dodd and Conrad were aware they were part of a special program that gave below-market-rate mortgages to a select group, which also included two former Cabinet members and a former ambassador to the United Nations.

Although the committee said it found “no credible evidence that [Dodd or Conrad] knowingly accepted a gift, including a loan not available to the public,“ the lawmakers’ peers did chide them for their judgment, or rather lack of, in the matter.

“...the committee does believe that you should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as a senator,” the committee wrote to both Dodd and Conrad. “Once you became aware that your loans were in fact being handled through a program with the name ‘V.I.P.’ that should have raised red flags for you.”