John Edwards 2008: What’s not to like

WASHINGTON — There’s losing. There’s losing honorably. And then there’s John Edwards.

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Then there is John Edwards. He’s not going to be president either. He stays in the race because, with the Democrats’ proportional representation system, Barack Obama and Hillary Clinton might end up in a very close delegate race — perhaps allowing an also-ran with, say, 10 percent of the delegates to act as kingmaker at the convention.

It’s a prize of sorts, it might even be tradeable for a Cabinet position. But at considerable cost. His campaign has been a spectacle.

Edwards has made much of his renunciation of his Iraq War vote. But he has not stopped there. His entire campaign has been an orgy of regret and renunciation.

– As senator, he voted in 2001 for a bankruptcy bill that he now denounces.

– As senator, he voted for storing nuclear waste in Nevada’s Yucca Mountain. Twice. He is now fiercely opposed.

– As senator, he voted for the Bush-Kennedy No Child Left Behind education reform. He now campaigns against it, promising to have it “radically overhauled.”

– As senator, he voted for the Patriot Act, calling it “a good bill … and I am pleased to support it.” He now attacks it.

– As senator, he voted to give China normalized trade relations. Need I say? He now campaigns against liberalized trade with China as a sellout of the middle class to the great multinational agents of greed, etc.

Breathtaking. People can change their minds about something. But everything? The man served one term in the Senate. He left not a single substantial piece of legislation to his name, only an astonishing string of votes on trade, education, civil liberties, energy, bankruptcy and, of course, war that now he not only renounces but inveighs against.

Today he plays the avenging angel, engaged in an “epic struggle” against the great economic malefactors that “have literally,” he assures us, “taken over the government.” He is angry, embodying the familiar zeal of the convert, ready to immolate anyone who benightedly holds to any revelation other than the zealot’s very latest.

Nothing new about a convert. Nothing new about a zealous convert. What is different about Edwards is his endlessly repeated claim that the raging populist of today is what he has always been. That this has been the “cause of my life,” the very core of his being, ingrained in him on his father’s knee or at the mill or wherever, depending on the anecdote he’s telling. You must understand: This is not politics for him. “This fight is deeply personal to me. I’ve been engaged in it my whole life.”

Except for his years as senator, the only public office he’s ever held. The audacity of the all-my-life trope is staggering. By his own endlessly self-confessed record, his current pose is a coat of paint newly acquired. His claim that it is an expression of his inner soul is a farce.

A cynical farce that is particularly galling to left-liberals of real authenticity. “The one (presidential candidate) that is the most problematic is Edwards,” Sen. Russ Feingold told The Post-Crescent in Appleton, Wis., “who voted for the Patriot Act, campaigns against it. Voted for No Child Left Behind, campaigns against it. Voted for the China trade deal, campaigns against it. Voted for the Iraq War. … He uses my voting record exactly as his platform, even though he had the opposite voting record.”

It profits a man nothing to sell his soul for the whole world. But for 4 percent of the Nevada caucuses?

Washington Post 1/25/08

Clinton’s campaign responded by targeting Edwards’ previous consulting work for a hedge fund that owned a sub-prime lender.

“If John Edwards really cared about working people, he wouldn’t have taken a $500,000 salary from a hedge fund that is foreclosing on working people around the country,” said Clinton campaign spokeswoman Hilarie Grey. “Sen. Edwards should spend his time talking about how he’s going to help those people instead of launching ridiculous attacks against Sen. Clinton.”

Edwards worked part-time for Fortress Investment Group, getting paid $479,512. The former North Carolina senator redirected roughly $16 million invested in the fund after learning that two sub-prime mortgage companies it owned had sued to foreclose on 34 New Orleans homeowners. Edwards also used his own money to start a fund to help those homeowners.

He has said he won’t create a similar fund for homeowners elsewhere who were sued by the lenders.

Las Vegas Sun 11/16/07
http://www.lasvegassun.com/sunbin/stories/nevada/2007/nov/16/111610804.html

Yet at the same time, Edwards was also working for an industry that symbolized the overprivileged: a hedge fund, a partnership that specializes in high-return investments for the richest and most exclusive of clients. The firm, Fortress Investment Group LLC, hired Edwards in October 2005, several months after the poverty center opened, to help develop investment opportunities worldwide and offer strategic advice on global economic issues, according to a statement issued by Fortress in October 2005.

Edwards said in an interview that as he explored career options he talked with numerous firms, including Goldman Sachs, and decided to work as a part-time consultant to learn more about capital markets and to make money. Fortress did not return repeated calls for comment.

Edwards also said his role at Fortress was as an adviser, not a decision-maker.

“It was just being a consultant on the phone,” he said. “They would call and ask what I saw happening in Washington, sort of macro view of what was happening in Washington with the economy. What I saw happening in the world. Those were the kinds of things we talked about.”

He earned nearly $480,000 as a consultant in 2006, and stopped his work there by the end of that year; he still has about $16 million of his reported net worth of $30 million invested in Fortress funds. Employees at the hedge fund have given more than $150,000 in campaign contributions to Edwards, making the partnership one of his largest sources of funds.

After he joined the presidential race, Edwards’s involvement with Fortress became a political liability. Fortress had invested a portion of its assets in subprime mortgage lenders who recently began foreclosing on homeowners around the country, including some Hurricane Katrina victims, the poor people Edwards’s poverty center was set up to help.
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When the Fortress investments were revealed in the Wall Street Journal in August, Edwards responded by divesting his Fortress portfolio of funds tied to subprime mortgages. He also helped the Association of Community Organizations for Reform Now, or ACORN, a nonprofit organization helping low- and moderate-income families, launch a Louisiana Home Rescue Fund. He provided much of the $100,000 in seed money for the program, which gave loans and grants to families whose houses were foreclosed on by lenders, including in some case ones with ties to Fortress.

Still, Edwards sounded defiant when he was asked whether he regrets the work for Fortress.

“I don’t apologize,” he said. “Nobody ever gave me anything. I worked my rear end off, and I’ve been able to have some good luck and success in my life. I want everybody in this country to have this chance. I wanted my kids to have a better life. My parents wanted me and my brother and sister to have a better life. There’s nothing wrong with that. That’s America.”

Boston Globe 11/15/07
http://www.boston.com/news/nation/articles/2007/11/15/a_dark_diagnosis_reaffirmed_a_commitment/?page=6

Dennis Parrott spearheaded Edwards’ Jasper County efforts in 2004, but these days, he can’t decide between the self- described mill worker’s son and rival Barack Obama. He is not alone.

“John’s gotten very far left, more left than I’d like to see him,” said Parrott, who prefers yesterday’s genial centrist to the elbow-throwing liberal he sees today. “Maybe it’s the hedge funds, the expensive haircut, the expensive house. That’s where I’m having a problem.”

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Celsi had supported Edwards, even blogged for him, largely because of his “anti- poverty, two-Americas platform.” Then she heard reports of lavish living and “couldn’t reconcile it in my head.” Now, she said, she will caucus for Clinton.

Edwards’ widely derided $400 haircut and 28,000-square-foot mansion have raised eyebrows and questions alike. But perhaps more significant here is his connection to a hedge fund that invested a small amount in Whirlpool Corp. stock as the manufacturer was planning to close Newton’s Maytag plant.

Edwards earned $480,000 in 2006 working as a part-time senior advisor to Fortress Investment Group, a New York-based hedge fund that caters to select high-income investors and invests globally, his campaign aides have said.

On March 31, 2006, the hedge fund owned 9,867 shares of Whirlpool stock, according to documents filed with the Securities and Exchange Commission. The same day, Whirlpool announced it had finalized the deal to buy Maytag.

Less than two months later, Whirlpool announced that it would close Maytag plants in Iowa, Illinois and Arkansas. SEC filings from March 31, 2007, show that Fortress had purchased more than 74,000 additional Whirlpool shares after the deal to buy Maytag closed.

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Edwards no longer advises the hedge fund, but he and his wife, Elizabeth, still have $16 million in Fortress holdings. The fund is also a rich source of campaign money for the candidate — at least $233,000 in donations from executives and other employees of Fortress and their relatives, a review of his campaign finance reports shows.

Los Angeles Times 9/30/07
http://www.latimes.com/news/nationworld/nation/la-na-edwards30sep30,0,4910907.story?coll=la-home-nation

A total of 107 Iowa homeowners were foreclosed upon by subprime mortgage companies owned by Fortress Investment Group while Democratic presidential candidate John Edwards was associated with the equity company, court records show.

Fortress foreclosures have occurred in other states, but the Iowa cases bring Edwards’ tie to subprime lending to the leadoff presidential nominating state, where he has staked his political future.

Most Iowa Democratic activists interviewed by The Des Moines Register say the foreclosures by themselves do not undermine Edwards’ anti-poverty message. However, some say he should have known that his tie to Fortress, which paid him $479,500 for 14 months of work, would be scrutinized in the campaign.

Some former Edwards supporters in Iowa say the Fortress link is another reminder of his personal activities and opulent lifestyle, which they find troubling.

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The 107 Iowa foreclosures were filed by Green Tree and Nationstar from October 2005, to Aug. 17, 2007 - the day Edwards pledged to divest his Fortress holdings. During this period, a national subprime mortgage crisis has led to a spike in foreclosures nationally.

Edwards said he did not know about the Iowa foreclosures until his campaign was contacted by the Register.

Edwards said he has no plans to establish a charity for the Iowans with Fortress mortgages because they were not affected by Hurricane Katrina the way borrowers in New Orleans were.

Of the Iowa foreclosures, 60 resulted in Iowans losing their homes; 20 were dismissed; 27 were pending as of last week.

DesMoines Register 9/27/07
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20070927/NEWS09/709270393/1001/NEWS

EDWARDS’ MISERY MONEY
INVESTS IN N.Y. FORECLOSURE FIRM

WASHINGTON - Presidential candidate John Edwards has invested a big chunk of his personal fortune in a hedge fund tied to subprime lenders foreclosing on the homes of dozens of New Yorkers, The Post has learned.

The 64 homes are scattered across suburban Nassau, Suffolk, Rockland and Putnam counties, according to court records.

The families either have been kicked out of their homes for failure to keep up with mortgage payments or are still fighting foreclosure proceedings in court.

Edwards, who last December formally launched his populist Democratic campaign in New Orleans, promised last month to pull his money out of any fund linked to foreclosures in the flood-ravaged city.

His promise came after The Wall Street Journal reported that subprime lenders tied to Fortress Investment Group were suing 34 New Orleans homeowners in foreclosure proceedings.

Edwards invested a $16 million of his estimated $30 million fortune in Fortress, which has subsidiaries that offered subprime loans.

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In 2005 and 2006, Edwards also earned a hefty $480,000 fee advising Fortress.

Centex Home Equity and Nationstar Mortgage, both Fortress subsidiaries, are listed as plaintiffs in most of the 64 foreclosure proceedings. Fortress acquired both firms in recent years.

New York Post 9/14/07
http://www.nypost.com/seven/09142007/news/nationalnews/edwards_misery_money.htm

More Foreclosure Ties for Edwards

For John Edwards, the negative returns from his work at an investment in a New York hedge fund keep on accumulating.

The State newspaper in Columbia, S.C. reportedthis week that a subprime lender that is part owned by Fortress Investment Group, Green Tree Servicing, has foreclosed on or is in the process of foreclosing on 132 homes in South Carolina since Edwards went to work for Fortress in October 2005. Edwards earned nearly $500,000 for part-time work as an adviser to Fortress last year, and has about $16 million invested in it.

The Washington Post reported in May that Fortress owned a large stake in Green Tree Servicing when Edwards joined the firm, and then purchased several other large subprime lenders while Edwards was at the firm. The article noted that Green Tree had been cited in trying to foreclose on New Orleans residents shortly after Hurricane Katrina, Edwards, who has spoken strongly against the predatory practices used by some subprime lenders and made New Orleans’ recovery a centerpiece of his campaign, said at the time that he was unaware of Fortress’ subprime holdings and that he was asking Fortress to look into any Green Tree foreclosures in New Orleans.

Last month, The Wall Street Journal reported that Green Tree and another lender owned by Fortress, Nationstar Mortgage, had foreclosed on 34 homes in New Orleans since Katrina. Edwards acknowledged that Fortress had not dealt with the issue as he had requested, and said he would divest himself of holdings in any Fortress funds invested in the lenders, and that he would also seek to redress the New Orleans families, either by paying them out of his own pocket or arranging for a nonprofit group to assist them.

Now comes the article on the South Carolina foreclosures, which hits close to home for Edwards for two reasons: he was born in South Carolina, and it will hold the first primary in the South, an election that Edwards needs to do well in to prove his point that he can outperform Hillary Clinton and Barack Obama in the South. The State quoted University of South Carolina political scientist Blease Graham, who said Edwards could be damaged by the appearance of inconsistency between his populist message and Fortress connection.
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Would Glass-Steagall Have Blunted the Credit Crisis?

The modern era of banking began eight years ago. Was that such a good thing?

So asks MarketWatch’s Thomas Kostigen, who questions whether the repeal of the Glass-Steagall Act in 1999 — allowing commercial banks and brokerages to exist under one roof — played a role in this summer’s credit troubles. It may not have been the cause, but by knocking down walls, it has made finding the blame-worthy that much harder, Mr. Kostigen argues.

Glass-Steagall (which actually consisted of two acts) was enacted during the Great Depression as a means to separate commercial banking activity from securities work. The idea, as Mr. Kostigen writes, was to ensure that each remained relatively undiluted and untampered with.

Its repeal — after an intense lobbying effort led by Citigroup’s Sanford I. Weill — did not lead us to the current credit crunch. Even Mr. Kostigen says that the creation and selling of the collateralized debt obligations did not stem from the ashes of Glass-Steagall.

But the faith in the power of the Chinese wall to prevent the improper mixing of “sellers, salesman and evaluators” is as misplaced now as it was during the heights of the tech boom, he contends, adding that the spirit of Glass-Steagall, where different actors stayed on their separate stages, is something to consider resurrecting.

New York Times 9/10/07
http://dealbook.blogs.nytimes.com/2007/09/10/would-glass-steagall-have-blunted-the-credit-crisis/

Would Glass-Steagall save the day from credit woes?

SANTA MONICA, Calif. (MarketWatch) — Time was when banks and brokerages were separate entities, banned from uniting for fear of conflicts of interest, a financial meltdown, a monopoly on the markets, all of these things.

In 1999, the law banning brokerages and banks from marrying one another — the Glass-Steagall Act of 1933 — was lifted, and voila, the financial supermarket has grown to be the places we know as Citigroup, UBS, Deutsche Bank, et al.
But now that banks seemingly have stumbled over their bad mortgages, it’s worth asking whether the fallout would be wreaking so much havoc on the rest of the financial markets had Glass-Steagall been kept in place.

Diversity has always been the pathway to lowering risk. And Glass-Steagall kept diversity in place by separating the financial powers that be: banks and brokerages.
Glass-Steagall was passed by Congress to prohibit banks from owning full-service brokerage firms and vice versa so investment banking activities, such as underwriting corporate or municipal securities, couldn’t be called into question and also to insulate bank depositors from the risks of a stock market collapse such as the one that precipitated the Great Depression. (more…)

Since Oct. 10, 2005, when John Edwards went to work for Fortress Investment Group, the hedge funds subprime lender Green Tree Financial has moved to foreclose on at least 132 homes in South Carolina. The number could be higher, however. The 132 foreclosures are only the cases in counties where court records are available online.

Cases by county where the foreclosures took place
Greenville - 43
Anderson - 42
Lexington - 18
York - 11
Sumter - 10
Richland - 8
How cases were resolved

Foreclosed - 63
Dismissed - 36 (1)
Still active - 29
Owners filed bankruptcy - 2
Other - 2

(1) Dismissals include cases in which where the homeowner caught up on payments, sold the house or reached a payment agreement with the lender.

SOURCE: Court records

The State 9/9/07
http://www.thestate.com/news/story/168045.html

COLUMBIA — A subprime lender with ties to Democratic presidential hopeful John Edwards has moved to foreclose on more than 130 homes in South Carolina since the S.C. native went to work for its parent company, an analysis of courthouse records shows.

The lender, Green Tree Financial, also was once the subject of a $30 million class-action verdict involving thousands of South Carolinians.

Edwards’ ties to the company are disquieting to some supporters of the North Carolinian. On the campaign trail, Edwards has insisted he is the champion of lower-income families.

Edwards’ ties to Green Tree also could hurt him with voters in South Carolina, a state he must win if he hopes to win the 2008 Democratic nomination.

“I hate to hear that,” Sue Berkowitz, an Edwards supporter, said of his relationship to Green Tree, which says it is the nation’s largest lender for manufactured housing purchases.

Berkowitz is a Columbia attorney who has spent much of her professional career fighting for lower-income South Carolinians as director of the S.C. Appleseed Legal Justice Center. Because the center is a 501(c)3 nonprofit, Berkowitz said she could only speak as a private citizen, not as the center’s director.

Edwards, a native of Seneca, represented North Carolina in the U.S. Senate and won the 2004 S.C. presidential primary.

Edwards has built his second campaign for president around his argument that he is the one candidate with the interests of the struggling American family at heart. He has railed against predatory lenders that, he said, were causing Americans to lose their homes.

From October 2005 through 2006, Edwards worked for Fortress Investment Group, a hedge fund. Its subprime lending subsidiaries, Green Tree Financial and Nationstar, foreclosed on 34 homes owned by victims of Hurricane Katrina, The Wall Street Journal reported in August.

In response, Edwards promised to personally provide financial assistance to the New Orleans residents who faced foreclosure or had lost their homes.

In South Carolina, Green Tree has foreclosed on or is in the process of foreclosing on at least 132 homes since Edwards first went to work for Fortress. Edwards was paid nearly $500,000 for part-time work for the company, according to The Wall Street Journal. (more…)