Thursday, November 05, 2015

Did You Think It Was Only Republicans Who Are Campaign Finance Sleazebags? Think Again


Chris Van Hollen, top Dem on the Budget Committee-- as slimy as any Republican

As you may have seen yesterday, I was going through the campaign contributions of the Members of Congress Wall Street likes best. There were only two Democrats on the list: Patrick Murphy (FL), the worst shill for the banksters in the entire House Democratic conference, and Budget Committee Ranking Member Chris Van Hollen (MD). Murphy scooped up $659,600 from the Finance Sector so far this cycle and Van Hollen took in $340,807 so far. One of the shadowy organizations whose name I didn't recognize and whose members gave over and over and over to Van Hollen is called Promontory Financial Group. Most were heavy contributions and they totaled $34,250, although I noticed that Van Hollen returned a $2,700 check from the operation's founder and CEO, Alfred Moses of McLean, Virginia (who seems to have illegally donated $10,800 to Van Hollen.

Based in DC, Promontory has additional headquarters in financial centers the world over-- from Dubai, Hong Kong, Brussels, London, Milan, NYC, Tokyo and Paris, to San Francisco, Denver, Singapore, Atlanta, Sydney and Toronto where they advise well-heeled clients and corporations on how to legally avoid compliance, conduct internal investigations, get around regulatory issues and pursue acquisitions. Promontory has a terrible reputation for conflicts of interest and overbilling clients and is well known for its poor corporate citizenship record. According to in 2013 "Promontory Financial Group was founded in 2001 by Eugene Ludwig and Alfred Moses, two long term partners of Covington & Burling, a law firm with intimate ties to Wall Street banks. Moses was listed as working as a senior counsel for Covington while the firm was performing the foreclosure review... Moses’ dual roles at Promontory and Covington & Burling will hopefully be probed by the Senate panel investigating the serial conflicts of interest on the part of consultants hired to deliver restitution to defrauded homeowners in foreclosure. Bank of America and Wells Fargo, listed above as clients of Covington & Burling, were two of the firms for which Promontory had a contract to root out foreclosure abuse under the government’s Independent Foreclosure Reviews.

Also in 2013, the NY Times "Some lawmakers question whether a consultant’s regulatory connections helped it secure contracts. ... Promontory, the firm examining loans for Wells Fargo, Bank of America and PNC, was founded in 2000 by the former head of the comptroller’s office, Eugene A. Ludwig. When the contracts were initially awarded, some housing advocates complained that consulting firms could not objectively evaluate banks with which they had pre-existing business relationships." But Chris Van Hollen didn't question squat. He solicited them for campaign contributions instead. Promontory had developed a shady reputation, but not too shady for Van Hollen. According to the Times, it "was one of several firms that stumbled in the recent review of foreclosure abuses. In 2008, MF Global hired Promontory to improve its risk controls after a rogue trading blowup; three years later, the brokerage firm collapsed. Banks are also privately raising concerns about Promontory and its steep fees, which can total as much as $1,500 an hour, according to people with knowledge of the matter. Bank executives, who were not authorized to speak publicly, said they sometimes hired Promontory to appease regulators, who think highly of the firm’s expertise."

They are best known as a firm that has cemented sleazy ties between Washington and Wall Street. This year, while Van Hollen was raking in contribution after contribution from Promontory executives, the firm was settling legal actions with New York regulators.
When New York State’s financial regulator challenged the independence of a top Wall Street consultant, the Promontory Financial Group, the firm threatened to sue, vowing to “litigate the matter and defend our firm against this regulatory overreach.”

On Tuesday, Promontory tried a different approach: compromise.

Promontory-- whose founder and chief executive, Eugene A. Ludwig, is a former top banking regulator and a law school friend of Bill Clinton-- agreed to admit that its actions on behalf of a big British bank did not meet current consulting requirements, the New York State regulator announced.

The statement, while a sharp contrast from Promontory’s threat of litigation, was not as sweeping an acknowledgment as the New York regulator originally sought.

And in another indication of compromise, Promontory agreed voluntarily to abstain from certain consulting arrangements in New York for six months, a shorter period than once expected. The firm also agreed to pay a $15 million penalty.

The deal, which caps a two-year investigation that cast a pall over the firm, coalesced over the last two days after Mr. Ludwig agreed to revisit a narrow admission of what went wrong in the firm’s work for the British bank Standard Chartered, people briefed on the matter said. Mr. Ludwig, these people said, traveled from Washington to New York on Monday to negotiate the deal in person.

...The case carried broad significance for the consulting industry and the regulator. A lawsuit from Promontory would have been the first significant challenge to the New York regulator’s authority, and a possible threat to its power.

The Department of Financial Services, an agency created just four years ago, has quickly gained a reputation as a thorn in the side of Wall Street. It often extracts hundreds of millions of dollars from banks that pay far less to settle with federal authorities.

A Promontory lawsuit carried risks for the firm as well. It could have alienated regulators with no guarantee that the firm would prevail in court. A settlement, while a blow to its reputation, offers closure for the firm.

“Promontory will seek a stay of the N.Y.D.F.S. action in New York State Supreme Court,” the firm announced on the day that the New York regulator released its report.

That report effectively suspended Promontory from consulting for misbehaving banks. Using an obscure state law that provides regulators the authority to withhold confidential documents that consultants need to advise a bank, the agency said in its report that it “intends to deny all such requests until further notice.”

...While Promontory agreed to acknowledge that it fell short of the agency’s current standards for consultants, it persuaded the agency to drop a demand for harsher admissions.

“Throughout the negotiations Promontory insisted that it would not admit it lacked independence, integrity and autonomy,” Mr. Shechtman said, referring to the words in previous settlements with PwC and Deloitte. “The matter did not settle until it was agreed those words weren’t required.”
So this cycle, so far, the Budget Committee Ranking Democrat-- not the Republican one would expect this from, the Democrat-- took 19 separate contributions from top Promontory executives, including both Ludwig ($5,400) and Moses. The head of their San Francisco office, Konrad Alt sent Van Hollen 3 checks totalling $7,900 all for his Senate campaign.

Donna Edwards, the progressive who is leading in both published polls, is being financed primarily by small donors. You can contribute to her campaign at the Blue America ActBlue Senate page. If one of those maniacs we saw at the GOP debate last week is elected, we need someone in the Senate like Donna Edwards, not like Chris Van Hollen. These people are all insane:

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