Gov. Patrick: Would it have been too much to say “No”?

(Love Frontline. And we're all PBS, all the time now. - promoted by Charley on the MTA)

Good grief:

Governor Deval Patrick, who was criticized during the gubernatorial campaign for his involvement with a controversial subprime mortgage lender, called a top official at Citigroup, former US Treasury secretary Robert E. Rubin, two weeks ago to intercede on behalf of the owners of Ameriquest Mortgage as they sought urgent financial assistance from the global financial giant.

In a statement to the Globe, Patrick said he made the Feb. 20 call to Citigroup not in his role as governor but after a personal request to him from a top official at ACC Capital Holdings, the firm that owns Ameriquest Mortgage, which has frequently been accused of predatory lending.

Pretty much speaks for itself, I’m afraid. I’m amazed and appalled that Patrick didn’t just say, “Sorry, I can’t make that call. I’m governor now.” His constituents have a right to expect that he’s going to be governor, all the time, and not take some time out to help out old employers.

The caddy didn’t matter. The drapes don’t matter. This matters.

Update: I’m actually less sanguine about this than Jay:

“OK, checked the time line and the conversation occurred just before CaddyDrape-gate reached its Feb. 21 peak. It’s concerning. But it would have been even more concerning if it occurred after the lessons-learned crest. …

Doesn’t seem like a lesson you’d have to “learn”, to me.

FURTHER UPDATE (by David): WBUR reports that Patrick has conceded that the phone call was “a mistake,” and is refusing further comment.

FURTHER FURTHER UPDATE (by David): And here is the text of Deval Patrick’s statement (HT: Herald):

“Today’s Globe reports about a telephone call I made to a Citigroup executive as a reference for the current management of ACC Capital Holdings.

I have no financial interest in ACC Capital Holdings or its subsidiary, Ameriquest Financial.  I neither knew nor had any interest in the details of the transaction that ACC Capital and Citigroup were considering.

As a former board member, I was asked by an officer of ACC Capital to serve as a reference for the company and agreed to do so.  I called Robert Rubin, a former colleague from the Clinton administration and an executive at Citigroup, to offer any insight they might want on the character of the current management.  The conversation with Mr. Rubin lasted at most a couple of minutes.

Even though I made this call solely as a former board member, and I believe that was clear to Mr. Rubin, I appreciate that I should not have made the call.  I regret the mistake.”

A good statement — acknowledge responsibility, confess error, and move on.  Often, with these things, one has to choose between winning the argument and ending it.  In this case, ending it is clearly the right choice.

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103 Comments . Leave a comment below.
  1. You can't buy that kind of advertising

    An endorsement from the Governor!

  2. No conflict here .....

    Sometimes you just scratch your head and say, what are you thinking?

    "They had a very short phone conversation lasting only a couple of minutes," Sullivan said. "He did not advocate in any way for a deal between Citigroup and ACC Capital. He simply offered himself as a reference."

    I don't think it's a stretch to imagine that the phone call itself was a means of advocating the deal.  Then to compound the issue their only response was that the conversation was only a couple of minutes???

  3. Clinton Appointee

    Need anything else be said, really?

  4. Read the article.

    I didn't "get" why it was a problem until I read the article, specifically Citi's relationship with the state through other business ventures.


    • I still don't get it

      I could write copy precisely as long detailing the relationship with the state of Fancy Fingers nail salon on Mass. Ave. I could probably do the same regarding your relationship with the state. That was padding.

      There is a great deal of information missing from the article. Did Romney, Swift, Cellucci, Weld or Dukakis ever once call a business on anything other than state business? I don't know, but after reading the article, I should know, shouldn't I? Also, what is this reference business? Is this a typical step in a commercial loan of this type? What does it mean?

      I'd rather see the Globe publish the article tomorrow after finishing its homework.

      • Give it a shot.

        Write me up an article detailing the relationship of the state with a nail salon. And kindly link to the dozens of articles that have been appearing recently detailing the imminent collapse of the predatory manicuring industry, and its ruinous effect on people's financial lives hands.

        It has been a shame to watch as so many of the people who were just certain that Patrick was going to usher in a new style of governing are forced to defend his actions by comparing him to... past governors. It's shortening the yardstick.

        Are you saying the Globe doesn't like Patrick? That the story's biased? Because one thing you're not saying is that it's inaccurate. You seem to have a need to have every last negative proven to you - that his predecessors didn't do the same things as Patrick; that public trustees don't make phone calls on behalf of private interests on a regular basis - without any countervailing willingness to raise an eyebrow at the ethical issues at hand.

        My hunch? This story will appear again tomorrow, with more detail, and you won't like what it says about Patrick's relationship to big business.

        • You're kidding, right?

          Have you ever owned or worked in a small business? Do you know anything about Massachusetts sanitary regulations? Licensing proposals? The recordkeeping required for business taxes? sales taxes? worker's comp? unemployment insurance? inspectional services? Funny, I thought on page A16 we were complaining about Massachusetts' over-regulation of business, but on page A1 we're arguing that only Citigroup has close dealings with the state?

          You seem to have a need to have every last negative proven to you

          You clearly don't need to have any negative proven to you. Which is apparently why you're so satisfied with the Globe article.

          It has been a shame to watch as so many of the people who were just certain that Patrick was going to usher in a new style of governing

          You're talking about somebody other than me. But there's no point in letting the facts interfere with the storyline now, is there?

          • No. I wasn't kidding.

            And I await your exposé into how the state over-regulates nail shops? Are you then going to explain how this "relationship" equates to the governor of the state performing a favor for Citigroup?

            You clearly don't need to have any negative proven to you.

            Guilty as charged. I don't need negatives proven - I'd go insane if I did - but I am amenable to reasonable doubt. So while it's beyond dispute that he made the call, and while it's beyond dispute that he used to serve on the board of ACC, and while it's beyond dispute that he offered to serve as a character reference, it may in fact be the case that all of this amounts to a perfectly innocent act intended to bolster the Massachusetts economy - one that he would gladly perform on behalf of any of the small businesses for which your heart bleeds, whether or not he has ever been in their employ.

            Which is apparently why you're so satisfied with the Globe article.

            I don't take satisfaction in news. I'm generally suspicious of all centers of power - governor's offices and major metro dailies alike. But even a broken clock is right twice a day.

      • Aw, cut me a little slack...

        I was referring to this paragraph:

        Citigroup, the world's largest financial company, has a host of business interests in Massachusetts, many of which are regulated by the state. A key Citigroup subsidiary handles lucrative bond work for state agencies. In addition, Ameriquest is licensed by the state Division of Banks.

        Given DP's prior relationship with Ameriquest, his role as governor, and Citi's business interests in MA not related to Ameriquest, it seems a bit ugly.

        I'm not saying that was the intent, or that is the actual affect.  But, it sure could be perceived that way fairly easily.  You can't "take off your governor's hat" so easily.

  5. It's never as simple as it seems...

    If you check out the front page business section article in today's Globe, you will find the Patrick Administration is endorsing a very strong bill filed by Sen. Barrios and Rep. Torrisi that would further regulate Ameriquest and other subprime lenders.  I agree that the call regarding Ameriquest was a mistake but if this bill passes, it makes Massachusetts the national leader in cracking down on unfair and deceptive lending.

    • Where Are The Details

      The Globe article simply says that the state is looking to hit brokers up with a $250 fee, and alludes to (but does not state) a proposal, other than saying that the cash will go "hire more state loan-company examiners and to create a rescue fund for homeowners struggling to save their property". 

      I don't see anything substantive, other than the new fee.  Something substantive might exist - I'd appreciate it if someone could point it out.

      • Cue Sound of Crickets Chirping

        Anyone?  Details on what DP has proposed to tightly regulate predatory lending?

        • House Bill 1290

          I believe at this point there hasn't been a specific proposal from Gov. Patrick, though the ideas discussed by Sec. O'Connell in the article is similar to the efforts in that bill.

    • Mistake?

      What, he meant to speed-dial the Division of Banks but accidentally got Robert Rubin on the phone?

      With the sleazy subprime lending industry in very public crisis, such an endorsement was inevitable. Do I give the guy credit for endorsing it? Sure, but it would have been nice if Patrick the Populist had thought about introducing something like it.

      Instead, he made the call. On purpose.

    • The Barios/Torrisi Bill

      From the Globe article the key feature was a $250 tax fee on lenders.

      The tax"fee" will raise $7.5M.  Protection money. Alone it won't 'crack down on unfair and deceptive lending' but rather will allow it--a license to lend to those who can't afford to borrow.

      So according to the article, with that $7.5M from the 'unfair lending taxfee', the government will establish a $5.0M "rescue fund". 

      $5.0 million?  $5.0 mill will rescue what, 100 homeowners?  1000?  Wonder where the other $2.5 mill goes?  Oh yeah. Government treasury to banks:  "yum". 

      Subprime lending is a total Catch 22.  If a bank refuses to lend to marginal risk candidates it's accused of discrimination (thanks Clinton Justice department and you too Mr. Patrick); lend, and be accused of predatory practices.

      Well, at least Ameriquest has the State's endorsement.  Guess the new homeowner can trust Ameriquest.

      snark. out.

      The Responsible Lending Act (Federal), (also, BTW the Healey proposals) addresses the biggest solution to the Subprime problem:  EDUCATE THE BORROWERS. 

      Grant Government loan assistance contingent upon the borrower taking certain basic classes in the finance of homeownership.  i.e. give a $250 grant to means tested qualified homeowners contingent on them taking some basic education course.  There's a use for the $7.5 mill.

      Is that in the Barrios/Torrisi Bill?

      • The education....

        ...component of the Healey proposition would in effect lend legitimacy to the sub-prime lending and shift the burden of the unfair practice to the borrower.  "You knew what was going to happen because we told you."

        It would do precious little to discourage people from accepting whatever terms necessary to realize the "American Dream" of home ownership, which is becoming for many the "American Reality" of renting your house from a mortgage lender.

        • Disagree

          Education how teaser rates work,and how much of their income is reasonably spent on housing is a bad thing?  And so what if it does "little" to discourage people from accepting bad terms.  The current bill appears to do "nothing".

          And you say education would shift the burden?  The burden's already shifted!  When someone's home is foreclosed, you think they now have much recourse? Not very likely.

          • You pretty much prove....

   point.  If it does "little" to discourage people from accepting bad terms how is it money well spent.  Isn't it better to spend 5,000,000.00 to save some people (how that is "nothing" I'm not certain) than to spend the same to give the predatory lenders an increased waiver of liability?

            And the burden shifting I refered to was not in practical terms, everyone loses against the mortgage company, even sophisticated real estate professionals.  The burden would be shifted in the public perception of the problem and mustering sympathy for people who "knew what they were getting into" would be that much more difficult.  The Healey plan is essentially insurance for the state not to have to help homeowners in trouble.

            • The state shouldn't help homeowners

              Subprime loans should have been regulated more tightly. Teaser rates should never have been allowed. This is the primary cause of the high cost of living in this state. People stupidly bought houses they couldn't afford, and then complained about the cost of living. Meanwhile, people who weren't stupid enough to overpay for a house were forced to rent for several years. Now the idiots that bought overpriced houses want everyone else to bail them out. Even though everyone has already been paying for their actions for several years now in the form of higher housing costs.

              This crisis was predicted at least 4 years ago. That was the time to act by putting tight restrictions on mortgages. At this point, the only thing to do is make sure the state can handle the coming recession. In the long run, we will be much better off if we let housing collapse than if we prop it up. People who make risky decisions have to be allowed to lose money. If all the subprime borrowers were able to sell their houses for 40% more than they bought them for, they wouldn't be offering to pay the gains to the state in taxes. Why do they expect the state to pay for their losses?

              The state can't prop up housing forever. At most, we can make the fall go a little bit slower. But that just drags out the pain for everybody. House prices will fall until the cost of living here is reasonable again. Until then, we will have a recession. The next period of economic growth can't start until the housing bubble is taken care of.

              Most people weren't complaining about the predatory lenders in 2004 when house prices were going up quickly. Everyone was so happy about how banks were making houses affordable even at higher prices. Those of us pointing out that 2-4 years later the whole thing would collapse were ignored. A bit of education then might have prevented the crisis, or at least reduced its size. At the very least, banks should have been telling people what the worst case payment increases would be on adjustable rate mortgages and showing them graphs of historic trends in house prices to make it clear that the housing boom was probably temporary and that people shouldn't count on their home increasing in value faster than inflation. Because the banks failed to do that, housing became unaffordable, people are now losing their homes, and the banks are going out of business. The last time this happened on this scale was around 1930 (this is also the first housing boom since the depression that had a large percentage of interest-only and adjustable rate mortgages). There is little reason to think things will turn out any better this time around.

              • There is going...

       be little chance of this situation not escalating to a full scale govt. bail out, much like the savings and load debacle.  There will likely be moratoriums on foreclosure, forced adjustment of rates and on some level consumer assistance.  The issue is no longer what damage the individual home "owners but really renters" will suffer, but what damage the entire economy will suffer as a result.  Twenty percent of the mortgage economy cannot fail without negative and potentially disastrous results across the board. 

                • bail-outs don't help anyone

                  If we bail out people who overpayed for homes, the next bad housing bubble will come sooner. You have to make people face the consequences of their risky decisions, because otherwise people will make bad decisions. We should not create a situation where people are willing to pay any price for a house because they know that they will either be able to sell it for more later or the government will bail them out. That will just lead to higher home prices, a higher cost of living, and repeating housing bubbles. It also rewards people that are being stupid at the expense of people who aren't.

                  Home prices will fall until they are back to their historical norms. There is nothing the government can do to prevent that without causing much larger problems. The choices are to let it happen quickly and be done or to make it drag out for a long time. This recession won't end until housing has adjusted, government interference can make the economy bad for 5+ years instead of 2-3. The only thing that can be done is putting things in place to prevent housing bubbles from forming in the future. Stronger loan disclosures and more restrictions on loans will help. Most subprime loans probably shouldn't be offered, since by definition most people getting subprime loans can't afford the house they are buying (if they could they would be able to get a regular loan).

                  • I am talking...

                    ...about bailing out the industry and by extention only perhaps some hard hit borrowers.  Borrowers would largely only be assited by temporary moratoria on foreclosure and freezing of rates.  I don't necessarily think it is a good idea, but the writing is on the wall.  I predict the Govt. will step in withing the next 18 months.

                  • Bailouts

                    At minimum, bailouts do help some people: shareholders and lenders.

                    There can also be other effects in the economy as a whole that benefit broader groups. However this is incidental to the true purpose of helping shareholders, they who pay the bills in the form of lobbyists and campaign contributions.

        • Knowing is half the battle

          Do the warning labels on cartons of cigarettes lend legitimacy to tobacco companies' practices (e.g. adding extra nicotine to cigarettes) and shift the burden to the smoker?

          Well, surely, some do argue that. I for one don't understand smokers one whit -- but that doesn't mean it's OK for tobacco companies to do some of the crap they do. Smokers don't deserve lung cancer, and legal remedies still exist even after 25 years of "Smoking this shit will kill you" labels.

          Likewise, I think educating consumers on sub-prime lending practices will help a great deal. It doesn't make it OK, and doesn't shift the burden to the borrower, but it will surely help some borrowers, and on what planet is that not good?

          Knowing may only be half the battle, but I'd rather we only have to fight half a battle than a whole battle.

          (N.B. All I know of the Healey proposition is what I've read in this thread. I'm not endorsing it, only endorsing the principle of educating folks on predatory lending practices.)

          • The Truth...

   Lending Act already addresses the issue of disclosure of terms.  A state regulation could require very specific and easy to understand disclosures above and beyond federal requirements without costing millions of dollars that passes through govt. hands unnecessarily.  On this planet filtering millions of dollars through the govt. for the purpose of helping a few consumers when the same end can be realized without increased bureaucracy is a bad thing.

            • Truth in Lending? You can't handle the Truth!

              Agreed. I agree with everything you say in the immediate above comment.

              As I said, my comment was addressing the generality of "educating consumers is good". Simplified TIL paperwork -- I've been through the mortgage process twice and do not think TIL is particularly easy to understand -- would be a huge godsend.

              I know nothing about the particulars of the Healey/Federal proposals and know nothing about "filtering millions of dollars through the govt."

              I'm glad to see that we do, in the end, agree that more education (in whatever form) would be a good thing. I still, though, fail to see how it would shift any burden to the consumer.

      • Bill

        Is that in the Barrios/Torrisi Bill?

        Yes, promoting education is a major use of the fund in that bill.

        And I agree that education of borrowers must be a key component of any effort to address the subprime lending problem. But it shouldn't be the only component. Licensing and good faith requirements are also critical.

  6. This is one....

    .....of those situations that is best described as  having the appearance of impropriety.  There is no actual conflict of interest that has been described in the Globe article.  That being said, I firmly believe that elected officials at all levels and especially in the corner office should avoid the appearance of impropriety whenever possible. 

    In addition, anyone who pays attention to the financial news knows that there have been rumblings going on for months now about the crisis of potential collapse of the sub-prime mortgage industry.  On average nationally the percentage of homes purchased with sub-prime mortgages has increased from about 5% to about 20% and we are just hitting the point now where ARM increases are going to sweep in en masse.  Increases most will no be able to cover.  If the industry does collapse (and over 30 sub-prime lenders nationally have already gone belly up) it could have, best case, unfavorable, worst case, disastrous impact on the housing market over-all.  As far as I know MA is in line with national averages.  Long story short, there is an impending, possible crisis in the housing market nationally and here in MA.  Something that propping up sub-prime lenders might help to fix.

    So, there are two opposing issues.  Impropriety and the need to ensure that sub-prime lenders in MA stay healthy (and also perhaps the need to step in and slow down or forebear on foreclosures). 

    Did Patrick make his phone call with the sub-prime situation in mind?  I suspect he did.

    Was there a better way to handle the situation if his intentions were to help the state economy?  Of course.  He could have been completely transparent about what he did when he was doing it if his intentions were focused on protecting the Commonwealth. 

    Obviously the idea of transparency in corporate America is different than transparency in Govt and Patrick is failing miserably at grasping the distinction.  He needs to reach into his own pocket and hire an advisor to help him make the leap across the divide from private to public enterprise because if he shoots himself in the foot any more it is going to derail his train before it even leaves the station. 

    • Exactly

      The article's only mention of the subprime crisis was a backhanded reference to 32 Ameritrade foreclosures. One would think the reporter might occasionally read his own business pages. The subprime meltdown is now reaching into the prime market, as well as consumer goods. Additional collapse is extremely perilous to the economy at large.

      But what is in the administration's head, I don't know. Does Patrick expect neutral, benign press coverage? From the Globe? Or does he not see the need to explain himself?

      Two weeks ago I thought Patrick needed a new press team. Now I think he needs a new attitude.

  7. I just don't understand the criticism here...

    I don't know if you've been following the news, but subprime mortgage providers have been blowing up left and right (see ) - we're up to 32 gone at last count. In many cases (including Ameriquest's) their continued survival is entirely dependent on the forebearance of their creditors (like Citigroup). And whatever you think of them and their business practices, these companies still employ real people whose lives will be affected if they go bust. Why is it so wrong for Deval (as a private citizen) to be willing to be a character reference for the current management in these circumstances? And are your reasons strong enough that you could tell them to someone from Ameriquest who might be about to lose their job?

    It's not like he's doing something questionable for Ameriquest in his official capacity. If he were, that would be a serious problem. But, in fact, as we saw in another article today, his administration is in favor of more examination and regulation of subprime mortgage lenders.

    • Who's a private citizen?

      Not Governor Deval Patrick. Not for four more years, he ain't.

      As for the mass layoffs you predict if the predatory lending industry (or do you prefer the term "exotic"?) goes belly up, what about the economic harm being caused to a far greater number of people by its actual lending practices?

      • Two points...

        1. Of course Deval Patrick has a capacity as a private citizen. My employer doesn't own me 24/7 and neither does his. And from what I read, the phone call he made clearly falls within that category. Someone Deval Patrick has worked with (Adam Bass, legal counsel to ACC Capital) asked Deval to make a phone call to someone else he'd worked with (Robert Rubin) to serve as a reference. Nothing in that scenario has anything to do with Deval Patrick being Governor of Massachusetts. It has everything to do with him having worked with two people (Adam Bass and Robert Rubin) one of whom needs support from the other.

        2. I'm not a fan of subprime lending practices either. But, from what we can see, Patrick's administration is actually on board with regulating them and bringing the industry under control. If that changes, I'll certainly have a problem with that. 

        • He is Governor 24/7

          Being Governor is not the same as being an employee.  Even if what the Governor did on Americquest''s behalf was technically not unethical (which I think is questinable), it was politically stupid.  I expected more from him and his administration when I campaigned for him.  The story today was a huge disappointment. 

          • I'll agree that politically it isn't playing well...

            ... but I think that's a very slippery slope to start talking about when Deval Patrick does something as a private citizen. By that argument, Deval shouldn't be willing to serve as a character reference for his brother-in-law because of the headlines that would generate. Is that reasonable or fair?

            • There's a big difference

              between acting as a reference for your family (though even there a Governor has to be careful), and acting as a reference for a sub-prime lender whose parent company used to compensate you generously for serving on its board.

              'Nuff said.

            • Does this mean that Billy's covering for Whitey

              was reasonable and fair?

  8. Yikes

    This is getting to be quite a string of acts of political gross negligence, isn't it?

    The gold-plated coronation.  The quid pro quo with the legislature on raises.  The drapes that cost more than most peoples' car.  The car that cost more than the drapes.  The "fix" of the drapes and car 8issue by dropping some loose change.

    Now this.

    They better figure out a way to change the momentum soon.

  9. Are you seriously trying to dredge up controversy?...

    ...I seriously don't see any here.

    Cite me chapter and verse.  What did DP do, and what should he not have done, and why.

    Sometimes these manufactured controversies by political wackos get to be so...manufactured.

  10. who?

    Can someone educate me: who among the deputies is supposed to protect a rookie Gov from this stuff? 

    I know buck stops with Gov.  And he chose his deputies.  And sure, they will learn - West Wing style.

    So far, we've had 6 gaffes in 3 months.  On one hand, that's really a low number given the scrutiny -- you probably make 6 per month, me 6 per week (I rest on the Sabbath). 

    On the other hand, each gaffe bleeds for a couple days, so that's maybe 12 days of bad press....perhaps -12 from his approval rating. 

    Realistically, it's gonna take awhile for the Gov to fine-tune his judgment, no?  The pace of his job is warp speed; it's hard to sit back and reflect. 

    Should he add a counselor with well-honed "perception alarm" bell to play Tetris all day and once every two weeks raise his hand and say "Um, don't do that"? 

    • Great idea.

      Seriously.  It's like Deval just hobnobs with the ultra-rich--"$50000 drapes?  The peasants might get angry.  Better be austere and make it $20000."

    • My take

      My understanding is that protecting Governors tends to fall to the Chief of Staff.

      I know that if I were setting up my administration I'd want someone in that slot who is good in a knife fight. I know that is a crude image, but I would be looking for someone who knows me, knows the political landscape, is willing to protect me, and is willing to get their hands dirty to do so. Joan Wallace-Benjamin certainly fits the bill in some respects, in that she seems close to the Gov (though I don't know that for certain) and obviously she is bright and capable. However, it is as yet unclear if she has the political antennae to see problems (real or imagined) coming down the pipe and defend the Gov.

      That being said, I imagine any one of the deputies could take the role I described, if the CoS was not very political. However, I think the problem is that there is no one in that inner ring of advisers who feels comfortable saying "Jesus Christ you can't call Rubin for them. Are you kidding?" Let alone someone who says "Do you know what the headline about the Cadillac is going to look like in the Herald?"

      The people around Patrick are talented, and they are good people. But on some of these issues they are a bit out of their depth. I would bet that a majority of BMG readers see the drapes/car/aide flap as manufactured nonsense. Be that as it may, it is the stuff of hardball governing politics. While certainly some of Patrick's aides have been around long enough to see possible problems with these decisions, I don't know any of them would feel comfortable enough to step up and say so.

      Think about someone like Kyle Sullivan. Kyle seems to me to be the kind of guy who has political experience in Massachusetts that might make him say "Hold on" in some of these instances. But if you were one of the few, or maybe the only, member of the Gov's staff to come from the legislature, would you really want to be the disstenting voice spouting the standard Beacon Hill wiseguy line? Probably not.

      I think part of what we are seeing is why the Gov wanted Doub Rubin in the administration. I think Rubin is accomplished enough/confident enough of his relationship with the Gov to speak truth to power.

      GGW, I think if you look around the administration you'll see a lot of talented and well-meaning people, but no one with the bio that says "He/She would be the one to take the Gov aside." As best I can tell, there is no one who has that long-standing personal relationship, power independent of present position, and standing with the Gov to bring the hammer down when things go astray.

      Note: My post is based entirely on conjecture and my own reading of the tea leaves. I haven't spoken to any staff/members of the legislature about this issue. My opinion is my own, and probably not that accurate.

    • you are right on

      I don't know who Deval's Carville/Rove/Ferhnstrom is, but he might want to either wake them up or pay a bit more attention to them.

      I've laid the blame at the feet of the press folks, but now I wonder if the problem doesn't go higher. It's hard for the best press folks to make chicken soup out of chicken...

      It could be either that there is no one capable of ringing the bell or Deval's ignoring that bell.

      I still think the press folks could be doing better, but if they're being put way behind from the start, I have more sympathy than criticism.

    • Some Staff Shufling

      The Governor might have a lot of good campaign people on his staff now, but he certainly doesn't have people around him that are attuned to the realities of Massachusetts politics.

      Rewarding loyalty and hard work by your campaign staff is fine, but you need to balance that out by people who can guide you and tell you when to keep your mouth shut. That's not to say that the people he has hired are dumb, or not capable of learning the ropes. But they are certainly getting an education at the Governor's expense, which can be extremely detrimental in the long term.

      I really hope Patrick takes some time to look at what has happened to him in the media the past two months, and comes to the conclusion that changes need to be made. Because these screw-ups in the early part of the game can be extremely damaging even going into year 2, 3, or 4.

      • maybe, BUT

        I wouldn't let Deval off the hook so easily. It could very well be true be that the staff isn't up to the task. Maybe they're not seasoned enough or they're campaign good but not governing good.

        Maybe the news isn't that bad, it's the lack of spin or backspin by the communications office that's allowing the evildoers to score points on the Governor.

        But who hasn't worked for someone that listens to, but ignores, good advice because they think they know better?

        Call them Monday morning quarterbacks or 20-20 hindsighters, but would you be surprised to hear someday that staffers had tried to convince the Governor that he was about to make some of these mistakes, but were brushed aside?

        • Very true

          And I hope I didn't come across as letting Deval off the hook. And of course, if anybody is playing Monday Morning quarterback it's me!

          I don't expect the Governor to have all the answers. I do expect him to hire people that will have the answers when he needs them. And I just don't think this crop is up to the task.

    • Axelrod's gone

      Looking at how Obama's campaign is developing, I find myself giving Axelrod more and more credit for the victory.  Without him, I think Deval's having trouble catching his political balance.

      sabutai   @   Tue 4 Dec 7:00 PM
  11. I'm with Charley 100% on this

    Especially on this line, which was floating around in my head almost verbatim as I was thinking about the post to which Charley beat me:

    The caddy didn't matter. The drapes don't matter. This matters.

    The Governor is the Governor 24/7 -- that's what we elected him for.  He simply cannot advocate to a company that does business with the state, on behalf of a company that does business with the state and with whom he has a prior relationship, in this way.  At best, it's a major-league "appearance of impropriety," and he of all people should understand why such appearances should be avoided.  And, frankly, I wonder whether this doesn't tread dangerously close to the dividing line between appearances and the other thing.  Someone better versed in the state ethics law will have to sort that one out.

    Deval Patrick really doesn't have a "personal capacity" anymore, and I'm surprised he and his staff haven't figured that out.  And Jay's take, that Deval should get a sort-of-pass on this because he's never held elected office before and "there is a learning curve to these things," doesn't persuade me.  There's no "learning curve" for common sense.  Or, at least, there shouldn't be.

    Someone asked upthread whether previous Governors had made similar calls.  I can't recall such a case.  Maybe someone can scour the record and find one.

    • Interesting Comparison

      David - Mitt made his missteps in his first months too - but because he had grown up in a political family, none were so egregious.  And it ain't like the Glob wasn't looking!

      Patrick's never having held elective office - anywhere - is coming home to roost.  It appears that he really doesn't get the idea that he is no longer a private citizen.

      (BTW - I think you'd be hard pressed to find phone calls like that in the last ten years - Cellucci and Swift were both Senators, and understood political ethical conflicts, and again, Mitt grew up with this stuff.  Maybe Weld - but not for long, as he was a far quicker study than Deval is proving to be).

    • Not really true

      The caddy didn't matter. The drapes don't matter. This matters.

      They did matter. Without those stories, there would have been no storyline.

      • Exactly, steverino.

        This is a media creation.  And not top-of-the-fold news.

      • Beg to Differ....

        The problem is that you can't get the rest of us to acknowledge that a pile of excrement doesn't smell like roses.  This episode has a peculiar whiff, gentlemen, and it is not a conspiracy by the media (left, right, or indifferent - doesn't matter)to make Hizzoner look bad.  He's doing fine on looking bad all by himself.

        For the sitting governor of a state to make that kind of phone call "in support" of this ethically challenged, predatory lender is just inappropriate and doesn't pass the whiff test.  The new legislation does nothing to mitigate the smell of this phone call.

        And you've stated that it's not the curtains, the Caddy or anything else...but I will tell you this. Death by a thousand paper cuts is still dead.  There is such a thing as critical mass....and it can be reached. 

        • I can't untangle

          whatever it is you're trying to say.

          The copter, the drapes and the car were certainly media creations. The deniers lost all credibility when Emily Rooney broke the agreement of silence, and revealed that office furniture had dramatically collapsed during a press event that the press never reported on.

          Sorry, just the way it is.

          For the sitting governor of a state to make that kind of phone call

          What kind of phone call, exactly? You don't know; and you don't need to, apparently, to find it fecal.

          That's fine. I understand the urge to manufacture conventional wisdom. I'll take a pass on what you're selling, though.

          • That $quot;kind of phone call$quot; was in the Globe

            and I quote, "In the conversation, Patrick vouched for the "current management and the character of the company," said Kyle Sullivan, his spokesman.  Sullivan said Patrick told Rubin that he was serving as a personal reference for ACC as its owners pushed for the quick cash infusion from Citigroup that would stabilize their struggling lending firm."  (Boston Globe, Tuesday, March 6, 2007, Pg A1-A9.  Did you really think that Citigroup isn't going to feel pressured to act when a sitting governor of Massachusetts picks up the phone...or that the rest of us wouldn't see it?

            So, bite me, Smuggy!  Although you and some others want to play "see no evil, speak no evil, hear no evil," -spare me.  If this was some Republican pulling this crap, you'd be crawling up his ass. 

            There IS a conventional wisdom in "doing the right thing" - and Mr. Patrick did not do the right thing.  It's delusional to not acknowledge what this is, blinded as you are by the light that is Deval. 

            • I see your white flag

              blinded as you are by the light that is Deval.

              And accept your surrender.

              After all, if you have to start falling back on this well-trodden old ground when confronted by someone who never particularly liked Deval in the first place, you've completely abandoned the field.

              Did you really think that Citigroup isn't going to feel pressured to act when a sitting governor of Massachusetts picks up the phone

              Citigroup earns $120 billion a year in revenue. I'm sure its tiny pekingese paws can somehow manage to resist the mighty Massachusetts thumbscrews when it comes evaluating business arrangements.

              Fact is, while this all looks most unseemly, especially beneath the mug shot on page A1, I have yet to read a single coherent explanation of why it is unseemly. No one has laid out, exactly, what the conflict of interest is, what ethics rule was broken, what benefit Patrick hoped to receive, or what harm the state is supposed to have suffered.

              Alas. If only, I, too, were able to blithely forget the suspicious fact that the entire media storyline about Deval began with a series of stories about how he wasn't creating any stories. Perhaps then I, too, could be blinded by the light of the Globe.

              • Self Delusional, Smug and Sight-impaired is no way to go through life....

                There's no white flag here, Stevie.  You can declare a victory and it will have the same impact as Bush announcing "Mission Accomplished" on the deck of that aircraft carrier.

                And again - if a Republican pulled this, you would have crawled up his ass by now and you would have had no problem at all figuring out "what the problem is" and why it's "unseemly."  If fact, you would have declared his sorry Republican hind to be a Superfund waste site, and insisted on federal dis-ass-ter funds.  

                • Traffic hazards

                  I know some people who think that driving consists of talegating. In you, we seem to have met someone who thinks arguing and disagreeing consist in hurling invective alone. How delicious to be greeted with all your favorite rhetorical flourishes: "Bite me, Smuggy", "dis-ass-ter", "spare me", "delusional", "Stevie".  Apparently, there is no shortage in bile.

                  Also familiar is the observation, free from any evidence from Steverino about what he "would" do under certain circumstances.

                  • oops


                  • To be fair,

                    what other arguments does he have?

                    Today's Globe editorial reveals just how weak the press's position really is:

                    Impressions are important, however, both politically and legally. Section 23(b)(3) -- the "appearances" section -- is the best-known part of the state conflict of interest law. It forbids actions that a reasonable person might conclude would subject an official to undue influence from others. Since Citigroup and Ameriquest are both active in Massachusetts, and subject to state regulation, Patrick should have stopped himself.

                    Excuse me, but: What?

                    How did providing a reference "subject [Patrick] to undue influence from others?" Are we seriously to believe that the Globe so much as smelled "undue influence" over before they dug up this rule from the back of the closet? How mightily did they struggle with the shoehorn?

                    Oh, and this:

                    Since Citigroup and Ameriquest are both active in Massachusetts, and subject to state regulation, Patrick should have stopped himself.

                    Since that category covers every person, place and thing in Massachusetts, I hope the Globe doesn't forget to send a mob against every single state legislator and official who later takes any job in the public sector. Surely none of them were hired without references.

                    • Mea Culpas Have Already been issued by Deval

                      Stop blaming the Globe; the Globe didn't make him pick up the phone.

                    • Does anybody else hear

                      somebody mumbling "Rhubarb, rhubarb?"

                    • $quot;Undue Influence$quot; is out of the realm of possibilities in your opinion.

                      Take this little hypothetical for a moment. 

                      "Hey, Deval this is so-and-so at Citigroup.  Remember back in February when I did you that favor and helped out your buddy at Ameriquest?  Well I need a favor now.  Can you get me the inside tract on the bonding of such-and-such?"

                      Not "every person, place and thing in Massachusetts" can make that call because only one person (that we know of at this time) got the call from Deval.

                    • Please link to

                      your transcript of Patrick's call, since your description differs from his.

                      I have provided many references for jobs and other things over the years. If one of these employers were to call me demanding payback for the "favor" of listening to my reference, I would suggest counseling.

                    • This is NOT a job reference

                      There are very strict laws about what can be said in job references.

                      This is a reference for a bail out loan.  Big difference.

                      And since when do disclosed hypotheticals for something that could or could not happen in the future need references?

                    • There are no $quot;strict$quot; laws...

                      ....about what can be said in giving job references.  There are policies in both private and public enterprise about how employees should conduct themselves when giving references and there have been some tort awards for negligence and/or slander when giving references, but that ain't the same thing.

                  • Welcome, KB

                    KB - this was not "invective" alone.  This was a visceral response to a real problem in this party, and I have had a bellyful of it after decades of working within the party.  God almighty - even Deval Patrick is issuing mea culpas over this phone call, yet we have a couple of idealogues who just can't wrap their heads around the fact that this phone call was inappropriate for the office of the Governor, and insist on rationalizing it and spinning the accompanying bad press.  Yes, I am frustrated when there are people who excuse bad behavior because "it's one of ours," or pretend "no harm, no foul" when in fact - a foul odor is being emitted.  I'm sorry - I can't go there with you.  I just read Bob's latest piece....and now he's blaming the Legislature, the newspapers - and everybody else except the man who picked up the damn phone. 

                    As for what Steverino would do if this had been a Republican pulling this stunt...I'd say past performance is usually a good indicator of future performance.  I've been coming out to BMG for more than a year now, and I know what I've read.  It this had been Mitt, or even Billy Weld - I am sure you guys wouldn't be working overtime to justify the phone call and blaming the fallout on everyone else. 

                    What you and a few others really want is to reserve BMG for the people who think exactly the way you think...and when people disagree and even get offended by some of the nonsense that gets tossed around here - you like to tag-team them into submission.  This could well be why we're having a tough time attracting new people into the party.  What's the average age at your city committee?  I'd say the average age in mine is about 52.

                    • Instead of proving

                      You have provided no arguments:

                      • Your visceral response is not an argument.
                      • Your feeling sick is not an argument.
                      • Your bellyful of whatever is not an argument.
                      • Whatever it is you imagine smelling is not an argument.
                      • Your accusation of blindness in not seeing your non-arguments is not an argument.

                      None of the above is an argument -- no matter how passionately, vitriolically, or insultingly you state it. They all every one of them lack content.

                      Moreover, we live in times where Democrats are held to bizarre standards, and asking whether these questions about Patrick are real or merely an image issue is a legitimate question. It deserves to be answered on its merits. Some people are made sick by things that are only image. Your viscera do not constitute an answer -- even if your viscera speak to "Stevie" or "Smuggie" or any other pet name you devise.

                      Likewise, BMG is not one big unified lump -- and where you get the idea that Steverino is an ideologue is beyond me.

                      Here and in the other thread, you seem to be responding to the voices in your head, so it would be good if they too got an account with BMG and we could see both sides of the argument. Since we seem to know so much of you, I'm sure I'd be entertained by the discussion by the voice in the head, the viscera, the sense of smell, and the belly. I'm sure they'd have an interesting discussion of Bill Weld!

                    • Oh KB...

                      Careful dear, your elitism is showing.  Gotta watch that if you're going to reach and teach the "little people."

                      Your response is exactly why the party isn't gaining new members.  You don't care what anyone else thinks except your elite little bunch.  The fact is - you and Steverino were wrong on this issue, as evidenced by Mr. Patrick's mea culpas.  I really don't need any more support than that, do I - unless, of course, you now think Mr.Patrick is wrong for saying he was sorry.  In fact, he asked us to "not to give up on him, because he's not going to give up on us."  It's a pity that his biggest supporters are giving up on the rest of us. 

                      As for Dems being held to "bizarre standards" - produce the empirical evidence for that, will you? 

                    • I don't care what you think

                      I don't care what you think because you don't even pretend to think. You just report on your viscera. You don't even care what you think.

                      Your vitriolic style is attractive -- to whom exactly?

                    • And Snotty Elite is Just So Much More Entertaining....

                      and I'm still waiting on the empirical evidence of those "bizaah standards" to which Democrats are allegedly held.

  12. Where is the harm?

    So the Governor should never speak to the head of a company that does business in Massachusetts? He should live in a wooden box and only pop out on the hour to give policy statements? If Patrick has broken any laws, fair enough, but he hasn't. In fact, he has only arguably created, "the appearance of impropriety," whatever that is (the Spanish Inquisition might know -- they were in the business of opening windows into the hearts of men -- me, I'll stick to the law), because he used to work for a company that plays a role in our economy. This is just another manufactured hit piece that focuses on style and neglects substance. The important question is: what will happen to our economy if real estate collapses. Massachusetts is the seventh most dependent state in the Union on real estate. The important issue is: is Patrick taking wise steps to strengthen our state economy.

    • The harm... to the reputation of Patrick and his administration which is what the "appearance of impropriety" means.  Technically you have done nothing wrong but it looks funny nonetheless.  As far as I know, up to this point Patrick's actions being intended to protect the MA Mortgage Industry in general is just an inference, albeit, in my esimation a reasonable one.  When a Governor engages private industry on behalf of the State he should disclose it.  He didn't have to have full blown press conference, but a two sentence press release would have sufficed. 

      • Yeah, I agree with that but

        That wasn't the kind of "harm" I meant. My point was that the furore is misplaced on the merits. I want jobs for Massachusetts and a stable property market. If Patrick has to call every single one of his corporate friends to accomplish that, no problem, so long as he follows the law. That is the way the real world works. Patrick's contacts and experience in the corporate world are one of the reasons we elected him.

        • Except that

          according to the Gov's press secretary, Patrick made the call

          not in his role as governor but after a personal request to him from a top official at ACC Capital Holdings....

          If, in his role as Governor, he wants to take action to bolster the state's lending industry, and that includes outreach to companies, terrific.  That is similar to what he did to get the insurance companies on board with low-cost plans for the health care law -- he called them personally, in his role as Governor.  That is what he's supposed to do.  This is just a favor.

          • Ironically, it would have been BETTER to ahve made the call as Governor!

            Then he COULD make the argument about bolstering the Mass. economy, etc.

            Wasn't there ANOTHER funky phone call this week, having to do with helping now-aides cash in on a development in Cambridge about wetlands?  (I'm not being disingenuous - I really am having trouble keeping track of the Death by A Thousand Cuts thing that Deval has gotten himself into).

            • The wetlands thing

              you're talking about is this story, which is pretty much a zero.  It's consistent with the desire for expedited permitting, and the aides in question have recused themselves from the issue.

              But I agree with your first point.

          • That's a good point, but

            If we all agree that Patrick should have made the call, and the substance of the debate is whether he should have formally stated that he was doing it "as Governor," or "in his private capacity," then it doesn't seem to me like the Seventh Seal has been broken here. The important question is what practical steps is Patrick going to take to help the economy -- and how many lard-ass jobs is the hackocracy going to try to put in the way of whatever he wants to get done.

            • Actually,

              I don't at all agree that Patrick "should" have made the call in any capacity.  The argument that the call was somehow appropriate would have been stronger if he had done it in his "official capacity."  But as an argument, I still think it's a loser.

        • I agree.....

          ....with you regarding the lack of "actual" harm.  I'm just surprised by Patrick's behavior because of his corportate experience.  As a former Corporate Cousel he must be aware that reputational risk can be substantially more negaltively impactful to an organization (or an administation) than regulatory risk.  He should exploit that knowledge as readily as he exploits his contacts.


    • I'm with Bob.

      After reading Charley's post and Frank Phillips' article, I related the situation to my wife (who pays less attention to details in the news though she does follow politics) and she couldn't find anything worth getting worked up about.  So I don't think this is going to get the broader public up in arms.

      I do think this article fits nicely with the meme Frank Phillips pushed in the primary about Deval being a "corporate devil."  BMG did a good job of digging into that and showing there was no "there" there.

      As for people saying "the harm is to the reputation," I would like to remind everyone that when the New York Times and other big media pushed stories about Bill Clinton's "scandals" they turned out to be smoke and mirrors.  Wen Ho Lee was not a Chinese agent.  Vince Foster was not murdered.  The Clintons did not profit from the Whitewater real estate deals.  After tens of millions of dollars spent to investigate alleged improprities in real estate in the 1980s, all Ken Starr found was that Clinton lied about oral sex in the 1990s.  (Don't you think Starr would have made a case for fraud or worse if he could have?).  The bulk of the harm to Clinton's reputation came from reporters & writers pushing ideas without the evidence to back it up.  And because everybody said bad things about the Clintons, there must have been something dastardly going on with them!

      It might be wise for Democrats to avoid piling on Deval Patrick over this.  The most important thing right now is to make sure a balanced budget gets approved without abandoning the vulnerable in our commonwealth and without perpetuating crazy tax loopholes that let Wal-Mart deduct the rent it pays to itself.  If we let the "appearance of impropriety" be the top story, then we lose momentum to protect the vulnerable and deliver health insurance help to those who need it and make businesses like Wal-Mart pay their fair share.

      That's the Big Deal.  The phone call?  Not so much.

      • Joel - thanks for clearing up all those Clinton scandals!

        Did they ever explain why they had all those FBI files on Republicans?

      • I am waiting

        for the Globe to link Patrick to a shocking keyboard vandalization scandal.

        The real story here is, of course, the story itself. How did this long series of non-news become news--starting, as I pointed out above, with complaints by the media that Patrick wasn't making any news?

        As you note, all of the early stories on Clinton were completely fabricated, and agenda-driven, chiefly by Richard Scaife. They weren't a "series of missteps;" they were a paid-for negative ad campaign.

        There are agendas at work here, too: on Beacon Hill, and on Morrisey Boulevard. That's the story I want to read.

        • Ok then

          You ought to demand that your team play defense, or even offense, in addition to dilegently working on wonky budget issues behind closed doors.

          • I have

            and repeatedly.

          • Already done!

            Steverino has been quite insistent that the Governor is playing inadequate defense.

            I find myself more confused by this. There seem to be a combination of things going on.


          • Patrick comes very much from a corporate culture. That was part of what made him an attractive candidate -- that and his apparent ability to balance that with other concerns. (Cue the "bottom line" sections of his speeches.)
          • The Administration's commitment to transparency is guaranteed to expose it to all sorts of trouble: lots of stuff that has always been done but never revealed will sell copies of the Boston Herald. (Is that a newspaper?) Transparency carries risks.
          • The campaign surprised the heck out of me because it was positive and it worked. Democrats have been trying to pull off that magic trick for years and years and this was the first success. So we expect a "different kind of leadership" but we just don't know what that'll mean. Will this work politically or it will sink under an accretion of "bad appearances".
          • Framing this, I think, are the difficulties of the state budget to which no fix will be popular.
          • ul

  • I agree, Charley, but...

    That photo the Globe used is atrocious.

    They may as well have used a photoshop to make Deval look like Emperor Palpatine or something.

    Deval shouldn't have made that call... but the Globe needs to start writing half-decent articles. This article is another example of he-said-she-said hackish journalism. Nothing's really answered in it... Quite frankly, I'm tired of it. It's the type of story that REALLY could have been important IF the Globe spent a few more days on it and did the research necessary. They could have pressed to find out what the phone call was actually about, in reality, or at least tried harder doing it.

    I'm being quite honest when I say I want articles in the Globe that really criticize the Governor, especially when he deserves it. However, they need to be good articles and display good journalism. Maybe my expectations are too high, but I think it's good to have those kinds of expectations when we're talking about things like our Governor. It's not some article about Tom Brady's soon-to-be kid(s), after all.

    • Ryan - I read the Glob online so as to avoid contributing to their financial base.

      Now, I'm gonna have to consider purchasing a copy - the Emperor Palpatine, you say?

      • lol

        the photo is on the website too. i actually get the globe at my house, but even when I'm home I still read it online. It's just so much easier/more convienant that way.

        The photo is taken basically from a vantage point under Deval, so he's towering over the camera with a sort of devious expression (at least from that angle). Then, on top of that, it's in a building with a huge atrium that climbs upwards as far as the picture goes. The combination of those two aspects make Deval look downright menacing in it... which sets the wrong tone for what should be an impartial story. It's those kinds of things that bother me when I read the so-called "Paper of Record."

    • Brilliant

      You are exactly right Ryan. Palpatine it is, if anyone. Now if we could just get that Council of Elrond convened on health care while we are at it with the references.

  • One more thing..

    A lot of people have asked, "how do we get him to stop making these mistakes?" A lot of people have suggested he hire some sort of advisor on these matters.

    I just don't see how that would work. First, I'm sure he does have people advising him on these things. Secondly, he's got a strong, hands-on type of personality - so I doubt he's the type of person who would want someone over his shoulder criticizing everything he says and does all the time. Lastly, I don't want someone doing that to him either - didn't a good chunk of us vote for him, in large part, because of his he wasn't the typical politician in what he says and does?

    Everything he's done since in office has shown he's not the typical politician. He just hasn't grasped that the little things become huge stories becuase, sadly, they sell newspapers. Yet, while many politicians hate working on minute policies and decisions, Deval has shown that he clearly has an interest. I think we've seen the beginning of a complete overhaul of how this state works - and I think that's a very, very good thing.

    So how do we fix everything? How do we reconcile that? I don't really know. I don't think you can say "Deval, don't talk to the CEOs about such and such a thing," because that's not the kind of person he is. He wants close, personal relationships with the business community in Massachusetts to help keep them here and move more here. So, as far as I'm concerned, it's a good thing.

    I just think he needs to be more transparent about it. Let the media know exactly what the conversation was about. In fact, don't just let the media know, post the summary of that conversation - and a dozen others - online. Let's know what the Governor is chatting about with business leaders in this state. Leave no mysteries and act honestly and sincerely whenever possible.

    There maybe some policy decisions that have to be kept wrapped tight for a while, but when it's possible - release all the pertinent info. For example, it helps to develope a whole budget plan behind closed doors, that way you don't have every step scrutinized in the developing process, but when the final decision is reached - air out everything in a great, big speech. It's amazing how, when the Governor did that, his budget was taken by the public amazingly well. People, by and large, were very happy with it. We need more of that, less of the personal blunders. I'm sensing a great, new Governor's blog coming up! It would be the perfect venue for this kind of revolutionary change.

    • No thinking person believes he makes $quot;mistakes$quot; please

      tht is hilarious.  Are you kidding?

      You need t read the newspaper power corrupts and corruption means doing favors against the public interest, benefitting personally or through friends and on and on.

      The whole sorry litany of

      'lessons leearned' oops, I made a mistake" and the hundred other sorry a** excuses that people have been lapping up really have to go.

      Patrick is what Patrick does. 

  • One question...

    ...Does the state government have much power to regulate in what is substantially a federally regulated mortgage market?

    • The answer is yes....

      ....but with qualifications.  The Commonwealth is free to regulate the banking and lending industry within its jurisdiction.  Generally it can enact more stringent standards but cannot lower federally mandated standards.  States need to be careful not to highjack federally regulated programs to the point that they are seen to interfering with Congress' powers to regulated inter-state commerce because Congress will win. You will find that all states have their own banikng regulations that in some cases affirm the national standard verbatim and in other cases include modifications.

      • Are you sure?...

        ...If the courts determine that the federal regulation is intended to exclude state regulation (that's the case in some cases regarding interstate commerce) then the state's attempt at more extensive state regulation will be held to have been unconstitutional.

        I admit to having no knowledge of banking and mortgage banking regulation.

        • Actually....

          ....I am certain.  I work in banking regulatory compliance.  Obviously, if there were a tension between regulations the supremacy of the Federal Govt. in commerce matters would prevail but states are still free to regulate around the federal statutes.  Disclosure is a good example.  TILA provides basic disclosure standards for lenders but MA is free to add requirements or create its own plain language requirements for lenders who do business in the Commonwealth.  There are also state regs that fall outside of the scope of federal law.  The MA 18/65 law is a good example.  State chartered banks are not allowed to charge service fees for account holders under 18 and over 65.  Federal law says that banks may charge reasonable fees for service.  I don't know if the 18/65 law has ever been challenged.  I suspect that it hasn't.  Even if it were I think it would hold up.

          • Anthony - to back you up - that's why we have so few insurance companies as well.

            They have to conform to goofy Mass. mandates.

          • It's doubtful that the Feds would seek to regulate state-chartered banks if no FDIC is involved, but...

            ...what about banks whose mortgage "lending" is little more than mortgage brokering--that is, operating as a broker for the federally-guaranteed mortgage market (Fannie Mae, Freddie Mac)?  In the latter case, it would seem that federal regulation would supercede state regulation, even if the state sought to impose tighter regulation.

            • First off...

              ...the FDIC is always involved, even in small state chartered banks as deposit insurance is not voluntary.  In some cases the Fed Reserve is also involved, especially if a bank processes wire transfers through the Fed system.  As far as the federal loan programs go and in specific to the sub-prime market, the actual federal issues that have arisen were under civil rights statutes, not banking statutes.  In regard to national banks, states are still free to regulate and tighten banking standards, again up to a point but of course, not permitted to lower federal standards.  The banking regulations are in many ways minimum standards and not absolute directives.  Think of it like the pay for play federally mandated drinking age of 21.  If they want the money from the feds a state has to institute a drinking age no lower than 21, but there is no reason why a state can't make the drinking age 25, doing so would not offend congressional power.  A good corollary is the electronic check rule.  Federal regs say that banks can now, in lieu of returning actual canceled checks to its account holders, send an electronic facsimile instead.  MA is not one of them, but there are some states that still require banks, when feasible, to send the actual cancelled check to customers domiciled in those states if the account was opened there.

  • Thank you, Deval

    Apology accepted. It was a mistake.

    Now, let's all move on to more important issues facing the state.

    I hope, for example, that everyone here [well, maybe except Gary] can get behind the Guv's proposals to end the corporate tax avoidance schemes that have deprived the state of $300 million of much-needed revenue.

    Thank you.

    • Ameriquest

      Can someone answer what would be the problem if Ameriquest went belly up? Filed for bankruptcy? Wouldn't the court allow the sale of assests? Someone would buy the mortgages?

      In every real estate bubble people get hurt. You can't insulate the economy totally from that. In the last real estate bubble it took years for some people to have a positve equity.

      I agree with the opening line that the Governot should of just said no to the request. As a private citizen it would of been ok, as Governor no.

      • The problem.... not just Ameriquest going under, or this or that other lender going under.  The problem is the floor falling out of the sub prime sector all together.  It could have 2 effects -

        1) Housing bubble might finally burst because foreclosures have flooded an already sinking market and are being sold off at a discount in an effort to keep some money in the pockets of the lenders and as a result real estate prices could drop dramatically across the country (let us not forget what happened in the 80's - different circumstances but real estate can suffer a massive correction).

        2) Banking industry could suffer greatly.  Subprime lenders don't exist in a bubble.  If they go under because people can't pay their mortgages then their lenders (because sub-prime lenders aren't the deep pockets - they borrow the money they lend) will then foreclose on all of the homes that are now worth less than the value of the loans that they secured (see #1).

        Would these two thing coming to pass have a ripple effect large enough to cause serious economic issues?  Who knows for sure.  Some people are worried.

  • Hmm

    I wonder why Deval keeps dropping the ball and his performance has continued to disappoint me, on the other hand I also wonder if the "no new is some news" mentality of the Boston media is making a bigger story out of these things than they should. I mean honestly now, drapes, caddy's, nobody cared when Mitt got a new car or Kitty had a staffer, the helicopter rides was a dumb idea considering how Swift got swiftboated over it just six years ago but I do wonder how many controversies are just overblown by the media. 

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