Tuesday, April 21, 2009

Feinstein Helps Hubby's Business

There's nothing like one of the Senate's wealthiest members, Sen. Diane Feinstein, making money off of the mortgage crisis in this country, but that is exactly the appearance her official actions as a U.S. senator give off. The Washington Times reports that Feinstein sponsored a $25 billion appropriation for the FDIC after her husband's commercial real estate firm had been awarded a lucrative contract to handle foreclosed properties. The Times reports:

On the day the new Congress convened this year, Sen. Dianne Feinstein introduced legislation to route $25 billion in taxpayer money to a government agency that had just awarded her husband's real estate firm a lucrative contract to sell foreclosed properties at compensation rates higher than the industry norms.

Mrs. Feinstein's intervention on behalf of the Federal Deposit Insurance Corp. was unusual: the California Democrat isn't a member of the Senate Committee on Banking, Housing and Urban Affairs with jurisdiction over FDIC; and the agency is supposed to operate from money it raises from bank-paid insurance payments - not direct federal dollars.

Documents reviewed by The Washington Times show Mrs. Feinstein first offered Oct. 30 to help the FDIC secure money for its effort to stem the rise of home foreclosures. Her letter was sent just days before the agency determined that CB Richard Ellis Group (CBRE) - the commercial real estate firm that her husband Richard Blum heads as board chairman - had won the competitive bidding for a contract to sell foreclosed properties that FDIC had inherited from failed banks.

About the same time of the contract award, Mr. Blum's private investment firm reported to the Securities and Exchange Commission that it and related affiliates had purchased more than 10 million new shares in CBRE. The shares were purchased for the going price of $3.77; CBRE's stock closed Monday at $5.14.

Spokesmen for the FDIC, Mrs. Feinstein and Mr. Blum's firm told The Times that there was no connection between the legislation and the contract signed Nov. 13, and that the couple didn't even know about CBRE's business with FDIC until after it was awarded.

Senate ethics rules state that members must avoid conflicts of interest as well as "even the appearance of a conflict of interest." Some ethics analysts question whether Mrs. Feinstein ran afoul of the latter provision, creating the appearance that she was rewarding the agency that had just hired her husband's firm.

"This clearly gives the appearance of a conflict of interest," said Kent Cooper, a former federal regulator who specializes in government ethics and disclosures. "To maintain the people's trust in government, it is incumbent on a legislator to take the extra steps necessary to ensure that when she introduces any legislation that it does not cause people to question her motives or the business activities of her spouse."

Mrs. Feinstein and Mr. Blum, a wealthy investment banker, are a power couple in both Washington and California who sat behind President Obama during his inauguration in January. Mrs. Feinstein also is mentioned as a candidate for California governor.

The FDIC contract "highlights the problem of a senator with a spouse who has extensive business interests that intersect frequently with the federal government," said Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington (CREW). "Even if there is no actual conflict of interest, it often has the appearance of a conflict."

The story points out that CBRE's business is on the commercial real estate side and that it has no experience handling foreclosed residential properties, which begs the question of why the FDIC chose CBRE instead of a business with residential experience. Despite the appearances, Sen. Feinstein will probably skate on any ethics charges. As the Times reports:

Robert L. Walker, a former chief Senate Ethics Committee counsel, said the Senate conflict rule is so narrow that it "almost requires a senator's sponsorship of a private bill resulting in some personal or family benefit before a violation of the rule would be found."


Sir Hailstone said...

"Never waste a good crisis" - Rahm Emmanuel

Mike Kole said...

I'm shocked, I tell you. Shocked!

Kevin in Brownsburg said...

Hey, there's nothing here. "Everyone does it". Look over there! See how rotten Bush & Cheney were to those poor "overseas contingency operators" and "man made disaster creators" Please keep all attention on the Bush/Cheney boogey man where it belongs (sarc).