Democratic Presidential Candidate John Edwards in a Foreclosure Pickle
While Democratic presidential hopefuls have begun to address how they would solve the foreclosure crisis in the country, John Edwards has found himself in the midst of a conflict of interest that has some questioning his campaign messaging.
Edwards has previously described homeownership as the “foundation of the American dream” and vowed that he would support a national law that would get rid of predatory lending practices in the subprime mortgage industry.
Imagine the embarrassment that his campaign must have felt when the Washington Post reported in May that more than half of Edwards’ $29.5 million in assets are invested in the hedge fund Fortress Investment Group (FIG).
So what’s the big deal? Well, it turns out that FIG has its own investments in lenders offering subprime mortgages, the very same thing that Edwards has said that he would fight.
To make matters worse, FIG owns a stake in Green Tree Servicing, a company that is known for managing high-priced mortgages for risky borrowers. Green Tree Servicing is one of two subprime mortgage lenders, the other being Nationstar Mortgage, that are owned by FIG and currently filing foreclosure lawsuits in New Orleans.
And how does New Orleans have any significance here?
Edwards has frequently visited and provided relief in New Orleans since Hurricane Katrina and has made the area a major aspect of his anti-poverty campaign message. Thus, it didn’t look good for Edwards that $16 million of his investments are with a company that owns other companies foreclosing on the needy in New Orleans.
And it got even more embarrassing for Edwards, who has done consulting work for FIG in the past and been paid $479,512 for his services. Fortress executives have also donated more than $150,000 to the Edwards’ campaign in the first months of this year.
While Edwards denied that he knew of FIG’s involvement with subprime mortgage lenders in May and said that he would ask the company to help Katrina victims who needed to stop foreclosure, he finally made the decision last week to get rid of all assets tied to FIG.
In announcing that decision and answering questions about the subject, Edwards said his relationship with FIG does not damage his image as a poverty fighter. However, try telling that to fellow Democratic presidential hopeful Chris Dodd, who has used this situation as a forum to challenge Edwards and his campaign promises via his voting record in the past.
Just a couple of days after Edwards announced that he’s severing investment ties with any companies working with subprime mortgage lenders, the Dodd camp released a press release indicating that Edwards’ voting record does not reflect his campaign messaging.
While Edwards has said that he would rewrite bankruptcy laws in wake of the foreclosure epidemic, Dodd noted how his opponent voted for the Bankruptcy Overhall bill in 2000. That bill would have revised bankruptcy laws and made it easier for courts to make debtors repay their debts. Naturally, Dodd noted how he was one of 12 Democrats to reject this bill and then added that President Bill Clinton vetoed it because it was too hard on debtors.
Throughout the press release, Dodd noted how Edwards voted for the same bill in 2001 and rejected several other measures that would have benefited those in financial trouble. While acknowledging that Edwards doesn’t take money from the lobbying machine in Washington, the Dodd press release basically asserted that Edwards has voted with special interests in mind. While Edwards has said that he would help financially-troubled people on the verge of bankruptcy, Dodd basically states that Edwards’ political history doesn’t indicate such a promise.
Read more about the Dodd press release criticizing Edwards in the following article at Total Bankruptcy:
• Bankruptcy at Center of Politics between Democratic Presidential Hopefuls.
Ultimately, the John Edwards foreclosure controversy and Dodd’s allegations about the former personal injury lawyer in North Carolina reveal that even a pressing issue like foreclosure is not privy to escaping political gesturing.
It shall be interesting to see whether voter opinions of Edwards will be affected by the issues above or whether these controversies will turn out to be a non-issue in the grand scheme of his campaign.