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.
The rest of the piece is behind a subscriber wall but Ed Morrissey has additional excerpts. He observes that “Edwards has spent plenty of campaign time talking about the Bush administration’s callousness towards the victims of Hurricane Katrina” and has “hurled some invective at the latest economic villains for the Democrats, subprime lenders,” making this a two-fer.
I’m not sufficiently familiar with Fortress Investment’s business practices to condemn Edwards just yet but I must admit this smells fishy. Last month, David Swanson of Democrats.com reported that, “The bulk of John Edwards’ wealth is invested in, his recent income derives from, and his biggest contributors are employed by Fortress Investment Group. Fortress, which paid Edwards almost half a million dollars to advise them, deals in hedge funds and private equity.” He observes that, “The list of companies invested in is large, but presumably well known to Edwards as a result of his well-paid advising and his massive investment in Fortress. It includes companies from a variety of industries, creating all sorts of conflicts of interest for a would-be public official.”
Still, it’s quite conceivable that Edwards was hired mostly as a rainmaker and for his connections on the Hill and is not conversant with every aspect of Fortress’ business. A 2005 Business Week story on Edwards’ hiring quotes Edwards spokesperson Kim Rubey as saying her boss would be “providing support in developing investment opportunities worldwide and strategic advice on global economic issues.” The piece also noted that Edwards’ work was “part-time.”
Indeed, Edwards claims to be shocked by these revelations. More from the WSJ piece via Betsy Newmark:
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.”
And goodness knows, Edwards values diversity. On the other hand, MSN’s Tim Middleton reported on this a month ago.
Former Sen. John Edwards has exploited the middle of his famous three H’s — his $400 haircuts, his hedge-fund consulting and his new 28,000-square-foot home — to spread his fortune around a maze of trusts and accounts that total something between $29.5 million (his campaign’s estimate) and $62 million (the high end of ranges described in his federal disclosure).
Edwards’ sprawling, 48-page campaign-finance disclosure for 2006 (.pdf file) reveals substantial investments in limited partnerships, subprime-mortgage lenders and an offshore hedge fund. The latter two run contrary to stands he has taken as a candidate.
Among his other investments, this is rather notable, too: “Schlumberger, the chief rival to Halliburton (HAL, news, msgs), where Vice President Dick Cheney was once CEO.” One presumes he doesn’t mention that when he attacks Halliburton in his speeches.
Oh, and there’s more:
Edwards generated most of his wealth as a trial lawyer, but last year his principal employment was as a senior adviser to Fortress Investment, a large hedge-fund operator, for which he received $479,512. His and his wife’s investment in Fortress Investment Fund III (Fund D) totaled between $1 million and $5 million.
Fortress, based in New York, owns subprime lender Nationstar Mortgage, formerly Centex Home Equity. The Dallas company calls itself “one of the nation’s leading mortgage lenders offering nonprime mortgages and home-equity loans.” As a presidential candidate, Edwards has lashed out at subprime lenders, saying they are “pulling a fast one on hardworking homeowners.”
Fortress Investment Fund III is based in the Cayman Islands. Edwards’ campaign said he opposes offshore tax havens and, “as president, he will end them.”
Now, of course, offshore tax havens aren’t illegal now and there’s no reason he can’t exploit the system as it now exists. But it sure doesn’t look good.
Oh, and there’s this:
According to Federal Election Commission records, Fortress employed more of Edwards’ campaign donors than any other company, with combined contributions of nearly $125,000 in the first quarter. Fortress also hosted a fundraiser for Edwards in March that garnered him more than $1 million.
Again, perfectly legal. And several of the other candidates are getting major contributions from hedge funds, too. Then again, they’re not campaigning against hedge funds. Indeed, it’s rather odd that a hedge fund would work to put together over $1 million to back a longshot candidate who is running against hedge funds.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
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Again, perfectly legal. And several of the other candidates are getting major contributions from hedge funds, too. Then again, they’re not campaigning against hedge funds. Indeed, it’s rather odd that a hedge fund would work to put together over $1 million to back a longshot candidate who is running against hedge funds.
It sounds to me like he was just covering his ASS in case....well, in case THIS HAPPENED.
hmmmmmmm i wonder if he was as aggressive going after these guys as he was INVESTED. Its gotta be a nice chunk of his net worth
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
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DEMS ATTACK EDWARDS FOR KATRINA MORTGAGE TIES By CHARLES HURT, Washington Bureau Chief
AFTER THE STORM: Ex-Sen. John Edwards greets Sen. Hillary Clinton after yesterday's debate in Des Moines, Iowa, with Sen. Barack Obama in the background.August 20, 2007 -- DES MOINES, Iowa - Democrats in the chase for the White House yesterday attacked former North Carolina Sen. John Edwards about his financial dealings with a company that invested in mortgage firms that were foreclosing on Hurricane Katrina victims.
Former Alaska Sen. Mike Gravel, who is even lower in the polls than Edwards, quickly accused the former trial lawyer of hypocrisy during the Dems' debate here yesterday.
"Just follow the money of the people on this dais, and you'll see a response," Gravel said.
New Mexico Gov. Bill Richardson piled on, adding, "This is the Katrina of the mortgage-lending industry."
Despite his populist rhetoric against mortgage companies that foreclose on the victims of Katrina, Edwards invested roughly $16 million with Fortress Investment Group, a hedge fund that held several mortgage firms in its portfolio. Edwards also drew a hefty paycheck from the company while preparing for his current run for the White House.
Asked yesterday if he thought home loan rates should be lowered, Edwards said yes.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
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Indeed, it’s rather odd that a hedge fund would work to put together over $1 million to back a longshot candidate who is running against hedge funds.
This statement is bothering me....WHATS SO ODD ABOUT COLLUSION?
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
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'08 PROSPECTS: EDWARDS' HEDGES Edwards: From haircuts to hedge funds, hypocrisy as a way of life. August 21, 2007 -- FRANCOIS de La Rochefoucauld had a point when he said, in his frequently quoted formulation, that hypocrisy is the tribute that vice pays to virtue. In the case of John Edwards, however, hypocrisy is simply a way of life.
The infamous $400 haircut - actually, some of his hairstyling sessions ran as much as $1,200 all told - wasn't a freak embarrassment for a candidate so self-righteously devoted to the poor. It was part of a pattern so pervasive that it has become the defining aspect of Edwards' candidacy.
When he lambasted hedge funds for incorporating offshore to avoid or delay paying U.S. taxes, what could be more natural than that he made nearly $500,000 for part-time work at the Fortress Investment Group, with hedge funds incorporated in the Cayman Islands for tax purposes?
When he hit other candidates for taking donations from Rupert Murdoch's media holdings, wasn't it inevitable that it would turn out he had taken $800,000 from Murdoch's HarperCollins for a coffee-table book?
Or when he attacked subprime lenders for foreclosing on victims of Hurricane Katrina, he would have $16 million - half of his net worth - invested in Fortress while it was foreclosing on a couple dozen homes in New Orleans?
Most of us uphold ideals that we can't meet, but liberal populism shouldn't be such an impossible standard. The late Minnesota Sen. Paul Wellstone, a liberal populist to his core, never had such embarrassments. The former North Carolina senator is experiencing a kind of toxic shock from his synthetic political persona.
In 2004, John Edwards was Mr. Congeniality, for no other reason than that seemed the market niche for him in the race. Today, he is the angry populist, for no other reason than that seems the market niche for him in the race. He thrived in the Iowa caucuses four years ago as the fresh new thing; this year he looks like a version of Dick Gephardt, the union-pandering populist with the negative campaign.
Edwards' anger has about all the heft and seriousness of a 5-year-old's tantrum. All candidates fear making a gaffe in one of the debates. Edwards has to worry that Hillary Clinton will blow on him and he'll float away - like Mary Poppins with her magic umbrella, carried off by the unbearable lightness of his own political being.
If a paranoid theory were needed to explain Edwards' candidacy, there are two, equally plausible options. Is he a plant from the Democratic National Committee designed to make Clinton and Barack Obama look impressive by contrast with his sheer insubstantiality? Or is he a plant of the Republican National Committee designed to pull the top-tier candidates as far to the left as possible?
On the big issues of the day, Edwards specializes in can't-keep-his-story-straight contrivance. Democratic consultant Bob Shrum described in his book "No Excuses" how his political advisers talked Edwards into voting for the authorization of the Iraq War in the fall of 2002. Edwards vehemently denies it, but also says that he didn't express "the huge conflict" he had in his own mind about the vote, which makes it sound like politics played as big a role in his decision as his conscience.
On gay marriage, he said that he opposes it because of his religious background, but then explained that it had been wrong for him to say that. He now offers no real reason for his opposition. Surely, the hindrance is simply that it is the most politically contentious item on the gay-rights agenda.
Edwards says on the campaign trail that he can beat the special interests the way he beat them in the courtroom as a trial lawyer. Back then, how John Edwards lived and his past record didn't matter, so long as he told the jury what it wanted to hear. Edwards still seems to think he's in the courtroom, which is why he is so deaf to the jarring incongruities of his lamentable campaign.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
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