John Edwards: Champion of the Little Guy
in this episode john edwards makes a guest appearance as snidely whiplash
By streiff Posted in Democrats — Comments (6) / Email this page » / Leave a comment »
Democrat John Edwards said Tuesday that he worked for a hedge fund between presidential campaigns to learn about financial markets and their relationship to poverty - and to make money too.
In an interview with The Associated Press, the former North Carolina senator said his yearlong, part-time position with Fortress Investment Group helped his understanding of the connection but he has more to learn. Edwards has made eradicating poverty a focus of his second White House bid
According to the Washington Post:
Fortress hired Edwards as an adviser in October 2005, nearly a year after his losing campaign as Democratic vice presidential candidate. At the time, it owned a major stake in Green Tree Servicing LLC, which rose to prominence in the 1990s selling subprime loans to mobile-home owners and now services subprime loans originated by others.
Fortress and its partners bought Green Tree in 2003. According to documents filed with the Securities and Exchange Commission in April, its holding in Green Tree was as high as $492.4 million at the end of 2005 -- 4 percent of Fortress's holdings at the time.
Last July, Fortress expanded its stake in the industry by buying Texas-based Centex Home Equity, a top-25 subprime lender, for an estimated $540 million. In December, Centex Home Equity, now called Nationstar Mortgage, bought the loan-origination division of Champion Mortgage, bringing another subprime lender into the Fortress portfolio.
In March, Newcastle Investment Corp., a real estate investment trust managed by Fortress, announced that it, too, was moving into the subprime market with the purchase of a $1.7 billion loan portfolio. Also in March, Fortress bought about $4 billion in subprime loans from Fremont General Corp.
Edwards, straight shooter that he is, answers the allegations directly.
Edwards said yesterday that he recalls being told at the time of his hiring that some of Fortress's private equity holdings did lend to start-up businesses, which is why he asked about predatory lending practices. But he could not recall whether the firm's partners told him it had a major stake in Green Tree.
"Those are the things I remember," he said. "They may have told me more." Had he learned that Fortress owned a loan servicer with a history of predatory lending practices, he said, "I would have asked some very specific questions about it."
Let’s put this bonejarringly blatant howler into context. From the AP story first linked:
Fortress was the single biggest employer of Edwards donors during the first three months of the year. Donors who listed "Fortress" as their employer contributed $67,450 to Edwards' campaign and supporters who identified their employer as "Fortress Investment Group" gave $55,200 to the campaign, according to Federal Election Commission records.
Do we really believe that a politician who was alive during the Clinton era when Johnnie Chung equated access to the White House with a subway turnstile (put money in it and it opens) would accept some $120K in bundled donations from a company and not do due diligence? Do we really believe a politician with presidential ambitions accepted employment from a firm without reading their SEC filings? Do we really believe that Edwards never received correspondence during his employment regarding the strategic direction his employer was taking in the subprime lending market? Do we really believe in leprechauns?
Adding to the irony, or rather utter hypocrisy, of the situation is that Edwards, he of the bazillion square-foot mansion, is campaigning on the idea of “Two Americas.” Presumably the one he inhabits versus the one the rest of us live in. When he, or one of his minions using his name, blogged over at TPM this is what he had to say:
First, we need to help families fight financial rip-offs. Low-income households sometimes pay thousands of dollars more for the same mortgage. The head of Fannie Mae once said that as many as half of families who are getting subprime mortgages could actually qualify for prime mortgages—they’re steered to where they have to pay more. The Center for Responsible Lending, based in Durham, North Carolina, finds that predatory lending costs families $9.1 billion per year. We need a strong national law to stop predatory lending—to stop outrageous points and fees and deceptive terms that drain equity and cost families more every month. Paul Sarbanes has an excellent proposal to go in the right direction; unfortunately, some members of the House are pushing bills that sound good on the surface but will actually take a step backward.
I guess that the next story will be that Edwards went to work for Fortress not only to research poverty but to find out how the subprime industry operates. He can even use the same comment he made to AP:
"It was primarily to learn, but making money was a good thing, too," the 2004 vice presidential nominee said in an hourlong interview with AP reporters and editors.