It’s time for Deval Patrick to resign from the board of ACC Capital Holdings, the parent company of Ameriquest. Here are some reasons why.
- Mission accomplished. According to Patrick, he joined the ACC board in large part to help the company deal with allegations of predatory lending, and to reform its lending practices to avoid such problems in the future. Patrick appropriately took credit for his role in the $325 million nationwide settlement intended to compensate borrowers for Ameriquest’s bad practices in the past. If he leaves now, he can credibly say “I joined to take care of a problem, I took care of the problem, and then I got out.” The longer he sticks around, though, the more difficult it becomes to cabin his role on the board to resolving a discrete problem, and the easier it becomes to paint him as a well-compensated director of a shady company rather than a problem solver. He should declare victory and move on.
- Fiduciary duty. As everyone knows by now, Ameriquest just announced that it is closing its operations in Massachusetts, probably resulting in job losses here, and possibly in violation of state banking laws (though the company denies it). According to an unnamed spokesman, “Patrick had worked to prevent the layoffs but had not succeeded.” Now, obviously, Patrick’s membership on the board of a company that is closing Massachusetts operations is awkward, to say the least, for someone who is running for Governor of Massachusetts. And it is therefore not at all surprising that Patrick “worked to prevent the layoffs.” But it is quite possible that the layoffs are in fact in the company’s best interests – after all, according to Patrick’s chief press person, “the company has made some business decisions today to remain competitive.” Certainly, the majority of the board and the company’s management think the decisions were right, otherwise they wouldn’t have made them.
Patrick, as a director of ACC, has a fiduciary duty to act in the company’s best interests, and if he lets other interests get in the way of what’s best for the company, he’s not doing his job as a director. So, if the fact that Patrick is running for Governor is clouding his judgment as to what is best for ACC, then he should get off the board immediately. And it’s hard to imagine that his campaign has no effect on his board service – can you imagine that he would have backed the layoffs, even if they were clearly best for the company, while simultaneously running for Governor? I can’t – if he did, and it ever became public, his campaign would be over. It’s a conflict of interest that neither he nor ACC needs.
- Smart politics. At this point, Patrick’s service on Ameriquest’s board can’t do anything but drag down his campaign. That doesn’t necessarily mean he should resign – but that, coupled with the other reasons I’ve already given, is another consideration that should push him in that direction. Tom Reilly has clearly signaled that he intends to make as big a deal as he can out of Ameriquest. But it’s still early, and if Patrick resigns now, he defuses the issue and no one will care much about it in a few months. If he resigns in August after Ameriquest does some other politically inconvenient thing, however, it’ll be a major liability for his campaign. (In addition, resigning now would mute claims that he’s on the board because he needs the cash.) Best to cut his losses.
- He’ll have to resign anyway if he wins. Patrick is in the Governor’s race to win, not to make a point. And of course, if he wins, he will have to resign from every board he sits on, including ACC. So why not just ditch ACC now.
Patrick did the right thing in accepting ACC’s offer to join the board to help clean up the predatory lending mess. He did the right thing in helping Ameriquest reach the $325 million settlement that both he and Tom Reilly deserve some credit for. (I’m less psyched about Patrick’s backing of Roland Arnall for an ambassadorship, but that’s not that big a deal.) He should do the right thing now and resign from ACC.
Your last point is your best. If he seriously considers himself the front runner in this race, it might be time to take appropriate steps like clearing any appearance of conflict. But if he does that at this point, does it look like he’s running from Ameriquest?
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And is this an issue that will resonate with voters? I’d love to see some polling data.
David, I enjoyed your analysis. I found your thoughts about Patrick’s fiduciary responsibilities to Ameriquest and the potential conflicts of interest that arise from his continued involvement (both present and future) especially novel. I don’t think anyone else has picked up on that.
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However, I have some questions and maybe you or another BMGer can answer:
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Other than Deval Patrick himself, has anyone ever verified that he was actually brought onto Ameriquest’s board of directors for the specific reason of addressing their predatory lending problem? You say that he can depart the board now and claim victory, but that assumes that he was, in fact, brought on to the board for that express purpose. Maybe he was, but I have never seen another source, other than Patrick, confirm that fact.
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[A related question] Other than Deval Patrick himself, has anyone ever verified that he was actually involved in Ameriquest’s settlement? In order to claim victory, he would have actually had to play a role in the outcome, right? Again, I heard Patrick say that he deserved a share of the credit during the Keller debate, but I have never seen that fact verified. How much credit, if any?
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So far, Deval Patrick has only said that he makes “more than $100,000” for sitting on Ameriquest’s Board of Directors, but that figure could be double or triple that amount, maybe more. If that is the case, and the answers to the above two questions do not reflect Patrick’s favorable account of his decision to join Ameriquest’s board and his role in the settlement, I do not see how Patrick can just “declare victory and move on.” The alternative is an entirely different portrait altogether.
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If anyone can provide some insight into the above questions, I am all ears. (Or is it eyes? Either way.)
unless someone wants to call up Roland Arnall and ask him. But I don’t think he’d take my call.
simply disclose all the details and let the truth come out .
If he resigns the mystery will never end no matter what type of spin he puts on the story.
Is it just a ridiculous rumor or is there confirmation that Ameriquest’s parent board, with Deval Patrick sitting on it, gave $5 million to the Swift Boat Veterans for Truth?
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Obviously, I can’t imagine Deval would have voted for such an appropriation, but it is exactly that type of move that should prompt a progressive, partisan-Democrat board member to quit the board in disgust.
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Is there confirmation of this somewhere?
Patrick should resign, you’re right. But you’re wrong on all the reasons. The guy is a fraud and he’s sitting on the board of a company that has preyed on the people of Massachusetts for its own gain.
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Now that people like Tom Reilly have stepped in, their business model is failing – i.e., taking advantage of the little guy.
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Patrick ought to resign in shame, not in triumph.
One of the largest and most powerful unions in the Northeast is pressing gubernatorial candidate Deval Patrick to give up his seat as a director on the board of the mortgage giant Ameriquest, which announced yesterday office closings expected to result in nearly 4,000 layoffs. In a statement, the union, which has endorsed Attorney General Thomas Reilly, said “the execution of these layoffs certainly fell within Deval Patrick’s oversight … either he is on the side of Massachusetts working families – or on the side of one of the worst examples of corporate greed.” Patrick, who has said he will disclose the compensation he receives from Ameriquest but not yet done so, also received a letter from the National Association of Government Employees questioning him about the company’s decisions. Patrick spokeswoman Libby DeVecchi was not immediately available for comment.
Anyone who wants to know what many NAGE members think about their union, which is the only union to my knowledge bashing Patrick, should check out this website — http://nagemembers.blogspot.com. It’s an eye-opener. It’s nice to see that NAGE leadership appears to be so concerned about corporate greed, but that position is not entirely consistent with the way some progessive NAGE members view NAGE’s leadership.
I am afraid that BMG is going the way of other popular blogs like DailyKos based on the recent flood of negative, pointless comments. Instead of being a good place for conversation I feel like we are all degenerating into uber-partisans.
I like your comments SSL, but you I suppose would agree that your postings and comments are among the most partisan at BMG. There is nothing wrong with that, since they are not personal attacks and they generally include citations, but they are hardly examples of elevated discourse.
The comment was largely directed at Acorn but also directed at all the people who are using this site to just dump their nonsense without any links, without any proof, without any facts.
Acorn did not attack anyone personally, which is our #1 rule and the hallmark of places like dailykos and freerepublic. I agree it would have been better if they had linked their sources, but at least they were quoting and providing useful information as opposed to, for example, screaming. As to “all the people who are using this site to just dump their nonsense without any links, without any proof, without any facts,” I’m interested in the specific examples you find objectionable, with links please.
I think David does an excellent job of calling people on their factless arguments. (A few examples here, and here Look at the recent post about why Deval needs to disclose, there are examples there. As for Acorn while he didn’t make any personal attacks he adds nothing when he “spams” people’s comments and degrades the discussion. Personally, when I look at some of his comments I think that they are personal attacks directed at Patrick supporters.
Also, others (and here) seem to be making the same observations so I don’t feel like I am too off base. As a whole I think BMG is a great site, I am just saying that I think its popularity is turning it more from meaningful discussions and exchanges to campaign website extensions and ad hominen attacks.
That’s why I wanted to know exactly which posts you were concerned about. I agree that that has started happening more frequently, and David Charley and I are trying to figure out how best to deal with the issue. With respect to this particular comment, however, I didn’t think the complaint was really justified: people were just arguing — with, perhaps, greater or lesser degrees of sincerity, but that’s life — for their positions. They weren’t making personal attacks and they were presenting reasoned arguments. That seems broadly OK to me, and not comparable to dailykos or freerepublic.
Would any of you really join a company with this history? And hope for a political life????
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Remember Old Man Potter asking George Bailey to join his company????
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Well Deval Patrick ain’t no George Bailey!
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It seems people should get real. Deval Patrick is not the first person to take advantage where they could. This is America. But no matter how you look at it he will be tarnished by this. If he was planning a political career he made a mistake. Think of the video possibilities! Sad story of couple losing home to predatory lending. Shot of a new home in Western Mass financed by said predatory lender. Somewhere Howard Finklestein acolltes are salivating.
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Is it fatal? We shall see.
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Is Deval now wishing he could say
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“Take me back Clarence take me back”
Deval needs to put this behind him. Get out now, and spin it positively, or let it hang like an albatross.
I hope Deval and his people read it.
Adam Reilly of the Phoenix just posted this letter. This is the huge service employees union that recently endorsed Tom Reilly (no relation). Obviously, they are a pro -Tom Reilly group, but I suggest it will receive a lot of attention the next few days in the press.
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p> May 3, 2006 Deval Patrick Democratic Candidate for Governor The Deval Patrick Committee 56 Roland Street, Suite 100D Boston, Massachusetts 02129
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p> Dear Deval:
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p> The members and leadership of 1199SEIU were extremely disappointed today to read reports that the direct subsidiary of ACC Capitol Holding Board, Ameriquest, has chosen to fire up to 90 Massachusetts workers and approximately 3,800 employees nationwide. As one of five board members for ACC Capital Holding Board, the execution of these layoffs certainly fell within your oversight.
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p> In addition, itâs also troubling to learn that you knew about these layoffs ahead of time, and yet did not take the proper steps to give the workers or the state advance notice as indicated by the spokesman for the Massachusetts Division of Banks in todayâs Boston Globe. Ameriquest was required by law to give the Massachusetts Division of Banks 30 days notice before closing branch offices, and yet it failed to do so.
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p> This is the latest in a long line of anti-worker and anti-consumer practices in which Ameriquest has engaged. These layoffs come in the wake of Ameriquest’s $325 million settlement with Attorneys General in 49 states, including Massachusetts. The settlement included a $12 million penalty for Massachusetts consumers who were taken advantage of by the deceptive tactics of Ameriquest, threatening their most valuable asset – their homes.
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p> The Attorneys General also alleged Ameriquest falsified loan documents, inflated borrowers’ earnings to tie them into costlier loans, and used high-pressure tactics to force them into bad loans. All the while, Ameriquest was spending millions on high-impact advertising campaigns, including Super Bowl sponsorships and backing the massive Rolling Stones tour of North America.
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p> You have defended Ameriquest’s practices, calling it a “good” company and defending its owner, Roland Arnall, even encouraging the United States Senate to reward him with an ambassadorship to the Netherlands. Arnall and his wife were significant donors to President Bush’s campaign and helped fund attack ads against Massachusetts Senator John F. Kerry.
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p> You have also refused to disclose how much money you are being paid to sit on this board of directors. Did you propose to reduce the compensation of executives and board members to offset the amount of layoffs of workers? We believe you should make clear how many hundreds of thousands of dollars you are making while at the same time consenting to fire dozens of Massachusetts workers.
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p> You have a choice to make – either you are on the side of Massachusetts residents or you are on the side of one of the worst examples of corporate greed. With Ameriquest’s massive firings of workers and long history of preying on consumers in Massachusetts, you should immediately resign your position on the board of ACC Capitol Holding Board, the parent company of Ameriquest.
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p> We appreciate in advance your immediate response.
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p> Sincerely,
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While the should he or should he not resign discussion is interesting, I think it misses the larger question here. Which candidate for Governor will be the first to endorse legislation (S562/H3011) that would rein in mortgage lenders like Ameriquest? Deval Patrick could separate himself from Ameriquest by endorsing the bill. Tom Reilly could prove that he has an interest in the issue that goes beyond scoring points in the Governor’s race. Chris Gabrieli could be the first to endorse a long-term solution while his two opponents trade barbs about Ameriquest.
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Anyone interested in learning more about the high-cost lending problem in Massachusetts should check out a recent study by Jim Campen for the Massachusetts Community and Banking Council. Good reading.
Thanks for posting them.
Well written, David. But then again, Patrick should also release his tax returns unless he has something to hide. I suspect this is a case of a corporate executive with no previous political experience proving to have a bit of a deaf ear for what will resonate with the public. It will be interesting to see (a) what his advisors suggest, and (b) how he reacts to their advice as the campaign starts to heat up — especially after the Convention — and the pressure begins to mount. One thing I think is pretty clear: he is not going to be able to run as a corporate insider with conflicts and win. A pair have been identified — Ameriquest and the sources of his personal wealth. There will be more in all likelihood. He is going to have to eliminate those conflicts — by variously resigning or “clarifying,” disclosing etc. (I wonder, has he filed the disclosure forms he promised to file during the debate last week?) — or somehow convince people that they are not actually conflicts.
I don’t think much of the tax returns issue, which is why I’ve pretty much stayed out of it. I think it’s a sideshow, and no one ever won or lost an election because they did or didn’t disclose their tax return. In due course he will file his Statement of Financial Interests, as required by the state ethics law, which will have lots of information (more than his tax returns would in some respects) about where his wealth comes from, whose stock he owns, etc. I agree that he would be well served to file that statement sooner rather than later. Ameriquest, however, I see as a much more significant issue that he needs to be proactive about.
As some might say. Sure, Patrick won’t win or lose on the issue of whether or not he releases his tax returns, but people are suspicious of corporations and anyone with a lot of money. Sometimes that doesn’t matter as in Willard’s case. Sometimes handlers can change the subject, as in King George the Lesser’s case. But when it becomes an issue, and the candidate can’t change the subject, as appears to be happening here, then each little part is a thread in the whole story. Time will tell.
a position is that you lose all power to work within the board. sometimes a resignation is the only way to go, but not always. and it’s certainly not the first measure for a good fighterm which it seems like Deval is.
I might agree with you. But they’re not – in particular, Patrick is running for Governor, and that ought to be a lot more important to him than the fate of one company. It’s getting to the point where he has to choose which he wants to do more – become Governor, or work for change within Ameriquest. That shouldn’t be too hard to answer.
at the estimable Left in Lowell, and [http://www.thephoenix.com/TalkingPolitics/PermaLink.aspx?guid=e91a47ac-dfe9-44ce-a79c-4d290637a52e Adam Reilly at The Phoenix too. Both agree that Ameriquest should be spelled Albatross in Patrick campaign literature.
You make a convincing case for why it would be a good political move for Patrick to resign. I’m not entirely convinced yet. But regardless of whether it makes political sense for him to do so, he is the kind of person I’d like to see on corporate boards, because I think he’s a very good influence on them. If it hurts his chances in the election, that leaves me with mixed feelings about whether I’d like him to resign.