WASHINGTON (Reuters) - A U.S. Senate panel dismissed ethics charges against two powerful Democrats Friday but said the lawmakers should have exercised greater care in their personal dealings with Countrywide Financial Corp.

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Senators Chris Dodd and Kent Conrad committed no ethical violations in obtaining loans from the troubled mortgage lender, the Ethics Committee said after a year-long probe.

But in letters to the two, the committee -- composed of three Democrats and three Republicans -- added that they should have “exercised more vigilance in order to avoid the appearance that you were receiving preferential treatment.”

Dodd, chairman of the Banking Committee, and Conrad, chairman of the Budget Committee, refinanced properties as members of Countrywide’s VIP program.

Dodd led an effort this year to win Senate approval of a $300 billion housing rescue bill to help thousands of American homeowners facing foreclosure on their home loans.

Dodd told reporters earlier this year he did not think he was getting any special deal when told in 2003 that he had been placed in a VIP program while refinancing two home mortgages with Countrywide.

Countrywide, which became a symbol of some of the worst excesses of the subprime mortgage crisis, was bought by Bank of America last year for $2.5 billion.

Conrad also had denied any wrongdoing and said he welcomed the ethics investigation prompted by a complaint from a citizens watchdog group.

In a statement Friday after being cleared, Conrad said: “This is most welcome news. The Ethics Committee’s exhaustive inquiry confirms what I have said all along: I did not ask for or receive any preferential pricing on my loans.”

“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.

Dodd, who polls show has been hurt politically by the matter in his bid for re-election next year, scheduled a news conference for later in the day to offer his response.

Citizens For Responsibility and Ethics in Washington, which filed the complaint, mocked the panel’s conclusions.

“The Senate Ethics Committee has cleared the senators of any wrongdoing despite the fact that the senators participated in a program the committee found ‘offered quicker, more efficient loan processing and some discounts,’” said Melanie Sloan, head of the group.

“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.

“Now would be a good time for the committee to start proactively providing its promised advice,” she said.