After several other stories raising questions of hypocrisy, The Wall Street Journal finds a contradiction between Edwards political speech on foreclosures and his ties to lenders. The present several quotes from Edwards on foreclosure:
“While Washington turns a blind eye, irresponsible lenders are pulling a fast one on hard-working homeowners,'’ Mr. Edwards said a few days later. … It’s time to put an end to the shameful lending practices that are compromising our strength as a nation.”
– April 4, 2007, in Davenport, Iowa
“I said, ‘This is not okay that this is happening.’ I don’t know how many cases there are . . . but the right thing is to go back and fix this.”
– May 11, 2007, to the Washington Post, explaining his reaction when he found out that Green Tree had foreclosed on Katrina victims
“In Cleveland this morning, I saw something that would absolutely break your heart. … In a one-block radius, 38 homes have been foreclosed. … What I saw first-hand this morning in Cleveland is a perfect example of why we have got to have a national predatory lending law.”
– July 17, 2007, in Pittsburgh, on his Road to One America tour
The story begins with a review of Edwards’ ties to lenders foreclosing on Katrina victims.
As a presidential candidate, Democrat John Edwards has regularly attacked subprime lenders, particularly those that have filed foreclosure suits against victims of Hurricane Katrina. But as an investor, Mr. Edwards has ties to lenders foreclosing on Katrina victims.
The Wall Street Journal has identified 34 New Orleans homes whose owners have faced foreclosure suits from subprime-lending units of Fortress Investment Group LLC. Mr. Edwards has about $16 million invested in Fortress funds, according to a campaign aide who confirmed a more general Federal Election Commission report. Mr. Edwards worked for Fortress, a publicly held private-equity fund, from late 2005 through 2006…
On the campaign trail, Mr. Edwards has particularly attacked lenders behind foreclosures in storm-slammed Louisiana. In April, he visited the devastated Lower Ninth Ward neighborhood to voice one of his main antipoverty planks: a proposal to rein in subprime-mortgage companies whose “shameful lending practices,” he said, threaten millions of working-class homeowners. “While Washington turns a blind eye, irresponsible lenders are pulling a fast one on hard-working homeowners,” Mr. Edwards said a few days later.
At the time in late 2005 when Mr. Edwards went to work for Fortress, it already had a stake in one subprime lender that subsequently foreclosed on some Katrina victims, Green Tree Servicing LLC. While he was there, Fortress acquired a second, Nationstar Mortgage LLC. Fortress paid Mr. Edwards $479,512 in 2006 for part-time work, a Federal Election Commission report in May showed.
After leaving the firm, he kept about half of his net worth in Fortress funds. And Fortress employees have collectively made up the largest class of political contributors to Mr. Edwards. Workers there put up more than $150,000 toward his presidential run in the first six months of the year.
This isn’t the first time Mr. Edwards has been confronted with the possibility that Fortress-directed companies might be foreclosing on New Orleans homeowners. In May, the Washington Post said that shortly after Katrina hit, Green Tree sent a letter to a 67-year-old storm victim, admonishing her to get current on her mortgage or face losing her house. At the time, most mortgage companies doing business in the city had agreed to a house-payment holiday for storm victims.
“This is not okay that this is happening,” the Post quoted Mr. Edwards as saying. He added that he planned to speak to the lender about its practices.
Yesterday, Mr. Edwards said he did later speak to Fortress about Green Tree and was told the matter had been taken care of. At the time, Mr. Edwards said yesterday, he didn’t know how many foreclosures Green Tree might have filed in New Orleans. The Post didn’t ask him about Nationstar’s activities in New Orleans, and he said yesterday that he was unaware that that lender was also pursuing.
The Wall Street Journal also reported further on Edwards’ reactions, including a promise to remedy the situation, possibly at his own personal expense:
Asked about the matter, Mr. Edwards yesterday pledged that he would personally provide financial assistance to New Orleanians who are facing foreclosure by Fortress-affiliated businesses or have lost their homes already. “I intend to help these people,” the former North Carolina senator said.
He also promised to cleanse his portfolio of any investments that may be profiting from their losses. “I am going to divest” from any Fortress funds that have a stake in the subprime lenders that filed the foreclosures, he said in a telephone interview. “I will not have my family’s money invested in these firms.”
Mr. Edwards didn’t give details on how or when he was going to proceed, either to alter his holdings or to aid borrowers. He said he plans to begin making amends to New Orleans homeowners first by contacting them and “seeing where they are in the process.” He said his help may come from his own cash or in collaboration with a charity that specializes in repairing homes. The foreclosures, Mr. Edwards said, “run counter to what I’m about.”yesterday that he was unaware that that lender was also pursuing…
The candidate has said he had no involvement in Fortress units’ subprime lending when he worked for the private-equity firm and wasn’t aware of it at the time. He has said his job at Fortress was to provide information about what he saw happening economically in the U.S. and overseas. He has also said he was there “primarily to learn” about finance.
In the interview yesterday, Mr. Edwards said that when he first joined Fortress, “I made clear that I didn’t want to have anything I was investing in to be antilabor or involved in predatory lending practices.” But he added that he didn’t fully understand the firm’s complex operations, saying: “They’re diverse. They’re very diverse.”
Stories such as this which raise questions of hypocrisy regarding Edwards’ positions on poverty are especially damaging in light of the manner in which Edwards used his Poverty Center as a means to campaign while avoiding FEC regulations. It is good that he intends to help those who suffered, but this is an easy political gesture to make after being discovered.
Edwards’ defense to today’s criticism comes down to pleading ignorance. In other words, he was at Fortress “primarily to learn” but has no idea of what the company does. This is far more meaningful than the recent report that Republicans such as Mitt Romney and Sam Brownback having stocks in companies which have some involvement in stem cell research, especially considering the holier than thou attitude of the Edwards campaign. Even if we were to accept his explanation based upon ignorance, it only provides further evidence that Edwards is not qualified to be President. As Bob Shrum wrote, Edwards is “a Clinton who hadn’t read the books.”
Not surprisingly, conservative bloggers have been very critical of Edwards over this report. Ed Morrissey writes:
Bear in mind that this is not a case of a blind-trust investment choice, like the silly meme regarding Mitt Romney and stem-cell research. It’s not even about a personal investment choice supposedly made in ignorance. John Edwards worked for the owner of a subprime lender during 2005 and 2006, when Hurricane Katrina hit and the company initiated foreclosures on the victims. In fact, he made almost a half-million dollars advising Fortress while it purchased a second subprime lender during that period.
Nor did he cut all ties to Fortress after he stopped consulting for them. He invested half of his net worth in Fortress, according to the WSJ. Fortress employees have contributed $150,000 to his presidential campaign in the first two quarters of this year.
Edwards has conducted a “poverty tour” as part of his campaign this year, emphasizing his Two Americas theme. One of the stops was in Cleveland, where he walked a neighborhood particularly affected by foreclosures. He told reporters, “This is not complicated, this is wrong,” as he walked the streets, but the WSJ did some checking afterwards– and four of the foreclosures came from Fortress Investment lenders.
Apparently it’s more complicated than Edwards knows.
Remember this the next time Edwards attacks “shameful lending practices”. His own firm, the one who used his consulting to operate and acquire companies like Nationstar, conducts those same practices. Will Edwards return the $150,000 in contributions to Fortress managers who run these lenders? Will he return to that Cleveland neighborhood and apologize for his hypocritical posturing on their streets?
And will Edwards finally get seen for what he is — an ambulance chaser, a poseur, and a fraud?
Many liberal writers will try to write off Ed’s comments, as well as the reports in The Wall Street Journal as a right wing attack. This is a right wing attack of the most dangerous sort–an honest and valid attack. So far we are only seeing the tip of the iceberg regarding what will come up should Edwards manage to get the nomination. Unlike in the case of Kerry and Gore, the right wing will not need to fabricate charges to Swift Boat the Democratic candidate. As Edwards campaigns on his new populist agenda, he is also loosing the support of independents. I’ve previously written that any Democrat, even Edwards, can probably get elected in 2008. That may or may not still be true, but nominating John Edwards would sure give the Republicans a fighting shot at winning.
Written by Ron Chusid
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