Ed Perlmutter's "green" conflict of interest
The Washington Times reported yesterday that Colorado’s 7th CD Congressman, Democrat Ed Perlmutter, added a provision to the Waxman-Markey cap-and-trade (cap-and-tax) bill which is likely to benefit a bank owned by himself, his family, and donors to Perlmutter’s campaign.
While the Times describes Permutter’s action as apparently benefiting “a donor", my search of the Federal Election Committee database for contributors who list New Resource Bank as their employer reveals four names and a total of $4,500 in contributions to Ed Perlmutter’s campaign (as well as more than $6,000 in contributions to other Democrats, and none to Republicans) while directly affiliated with the bank. But that understates the financial connections. For example, a search of the name of one of the Bank’s founders and its former Chairman, Daniel Yohannes, shows over $8,000 in contributions to Perlmutter beginning in 2006 and continuing through this year. At least one other founder of the bank has also contributed to Perlmutter.
The text of the Perlmutter self-dealing provision (see Section 299e in the TEXT of Waxman-Markey) begins by requiring that “The Federal banking agencies shall prescribe guidelines encouraging the establishment and maintenance of ‘green banking’ centers by insured depository institutions to provide any consumer who seeks information on obtaining a mortgage, home improvement loan, home equity loan, or renewable energy lease…” It should come as no surprise that New Resource Bank is involved in all of those businesses (with the possible exception of renewable energy leasing, whatever that means) with additional “green versions” such as “Solar Home Equity Financing.”
While Ed Perlmutter is probably no more corrupt than the average Congressman, he’s clearly no smarter either. He certainly should have known that at least the appearance of a conflict of interest would be found no matter how sneaky his methods of air-dropping the provision into the bill. And to be clear, this is not just an appearance. This is an obvious conflict of interest and likely an unethical action by the Congressman. As David Harsanyi points out,
According to the House Ethics Manual’s guidance on outside employment and income: “Although the term ‘conflict of interest’ may be subject to various interpretations in general usage, under federal law and regulation, this term ‘is limited in meaning; it denotes a situation in which an official’s conduct of his office conflicts with his private economic affairs.’ The ultimate concern ‘is risk of impairment of impartial judgment, a risk which arrises whenever there is a temptation to serve personal interests.’”
It’s not surprising that Perlmutter might want to strengthen his and his friends’ investments in New Resource: Last month, New Resource Bank received a “cease and desist” order from the FDIC which criticizes the bank for:
(a) operating with management whose policies and practices are detrimental to the Bank;
(b) operating with a board of directors which has failed to provide adequate supervision over and direction to the active management of the Bank;
© operating with a high percentage of poor quality loans;
(d) engaging in unsatisfactory lending and collection policies;
(e) operating in such a manner as to produce operating losses;
(f) operating with inadequate policies and practices regarding liquidity management; and
(g) operating in violation of Section 22(h) of the Federal Reserve Act, 12 U.S.C. § 375b, and section 215 of Regulation O of the Board of Governors of the Federal Reserve System, 12 C.F.R. § 215, made applicable to state nonmember banks by section 18(j)(2) of the Act, 12 U.S.C. §1828(j)(2), as more fully described in the ROE as September 30, 2008, dated November 10, 2008.
It’s also not surprising that a group of people who run a green bank and only give money to Democrats “operate in such a manner as to produce operating losses.” Nor that those “green bankers” would think it’s OK to use government to funnel taxpayer dollars into their money-destroying projects because they have such nice earth-hugging intentions. After all, while the bank’s leadership does have finance experience, they also appear to be committed ideologues: The Chairman of the Board is primarily interested in “social finance.” The Vice-Chairman serves on the Boards of two environmentalist organizations. And the President (also CEO) is a self-described “longtime finance executive and environmentalist.”
But their so-called good intentions can’t mask the blatant self-dealing and cronyism of Ed Perlmutter whose unethical actions are the obvious and necessary result of giving politicians dominance over our economy and the ability to choose winners and losers within the economy. Nobody should be surprised when the proposed winners happened to have contributed to the party in power.
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