Daily Archives: October 6, 2010

Kitzhaber Home Loan: Still Illegal

By Pete the Banker
Eds Note: As Pete the Banker amply pointed out in his recent post here, the Kitzhaber home loan in the 90’s was illegal. Now Kitzhaber’s staff is claiming documents they possess somehow exonerate him from complicity in his dirty deal. No dice. In 1999, then Governor Kitzhaber received a loan no one else could come close to getting–until laws were changed and subprime loans became de rigeur years later. Kitzhaber received: 

A subprime loan at little more than 4% interest when mortgages were going for nearly twice as much. 
A subprime loan from an investment company without a license to issue mortgages. 
A 5 year term for a “mortgage” which was unheard of at the time. 
A 100% loan—nothing down which was irregular.

Pete stirred it up with his recent post here and responds to the Zero’s story here which appears to take at face value Kitzhaber’s claim that the issue is settled.

“As far as the Kitzhaber campaign is concerned, the documents put an end to the contention that Bidwell & Co. provided the then-governor with a sweetheart mortgage loan.”

Pete writes:
The statement contained in the article which was released by the Kitzhaber campaign is meaningless.

““John bought a home in 1999,” said campaign spokeswoman Jillian Schoene. “He borrowed the money from a firm that he’d been with for more than 10 years. He made the required payments. He paid tens of thousands of dollars in interest. And now, we produced the IRS forms that support all of this.””

Lots of Oregonians got loans in the late 1990’s from firms they had done business with in the past decade and made their required payments, paid thousands of dollars in interest, did so legally and paid taxes.  That’s the minimum standard expected of a borrower.
Yet most Oregonians did something that Kitzhaber has yet to establish and that is they used Mortgage Lenders licensed and authorized to do business in the State of Oregon. 
I haven’t seen the IRS statements addressed in this article.  The prior statements suggested a mortgage loan because of “mortgage interest paid” and accordingly don’t suggest a borrowing against a securities account. 
 It is possible with a variable rate of interest that the interest deduction would be lower in the years 2003 – 2005 (I believe these were the years of the statements which were released previously). I will check tomorrow when in the office to see if a variable rate was in the 7 – 8% area in 2001.  I suspect it might have been, but that does not negate other potential violations here.   And even if it was a market rate and variable rate, a five year term and 100% was certainly not generally available to the borrowing public at that time. 
Why are they simply releasing tax information?  The tax documents really don’t change anything but the discussion of interest paid.  There are lots of other potential questions and legal questions here. 
They suggested it wasn’t a mortgage initially that it was based on a securities margin account. Why haven’t they released the non-mortgage documents evidencing a securities account that would at least change the course of the discussion.  But even if they used a securities account, I suspect there are problems with Bidwell and Company allowing a securities accounts to be used as a source of a client home loan prior to the enactment of Gram Leach Bliley.  If they released actual mortgage documents, that may also change the course of discussion. 
In any event, most discussion has centered on this being a mortgage and if this was a mortgage loan then Bidwell and Company was not authorized to do the loan under the Residential Mortgage Banking/Broker Licensing Laws regardless of the interest rate he paid and terms of the loan.  Period end of discussion.
Kitzhaber evades the major questions raised to date:

First, was the mortgage obtained from a Financial Institution which was licensed in the State to make mortgage loans. NO.
Second, Kitzhaber would have intimate knowledge of the Oregon Mortgage Banking/Broker licensing laws in the State since he guided those laws through the Senate as Senate President and subsequently in his first years as Governor was responsible for implementing the legislation by organizing the Agency responsible for enforcing the law and approving additional Administrative rules.  Yes.
Third, Kitzhaber was not a typical consumer and knew the State Laws governing Mortgages yet didn’t seek out a licensed Mortgage Banker/Broker and didn’t report it as required of as a public official. At very least his suggests to the most casual observer that he had a tremendous conflict of interest and potentially violated public officials ethics laws.  Especially when followed up by the appointment of Jerry Bidwell to the Oregon Investment Council.   
Fourth, why hasn’t the actual loan documentation been produced since the loan was only paid off in 2006.  Lenders and for that matter borrowers should keep for at least 7 years for tax purposes (and he seemed to have diligently saved his other tax documentation).

It seems that the Kitzhaber campaign is simply trying to obfuscate the issue by dwelling on the 1098 IRS documentation and interest paid, but avoiding the very laws he was directly involved in both legislating and administering.   Bidwell violated the law, and I suspect, though this is not my area of expertise, that Kitzhaber violated ethics laws first by accepting the loan and secondly by not reporting it. 
Do we really want a repeat Governor who pledged to uphold the Constitution and Laws of the State of Oregon during his first term and yet subsequently evaded and violated the very laws he was involved in legislating and administering?

Tell ’em where you saw it. Http://www.victoriataft.com

Kitzhaber Pulls a Rahmbo: You Can’t Fund Education During Good Times Because Democrats Spend All the Money

…so why would we trust him now? 

“You can’t do this sort of thing during a good economy because the money just keeps coming over [makes waterfall motion]–and you allocate it in the old ways which is really what happened in the ’90’s.” 

Translation: We were rolling in dough and spent it on other programs, not the basics. So we have to do it in a critical time like this to make it happen. See the entire break down of the Kitzhaber education positions in his interview with the Zero in my post here.
This reminded us on the show yesterday of this old chestnut from Rahmbo Emanuel:

“Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.”  

Find Kitzhaber’s comment at 21:35:

John Kitzhaber on Education
Tell ’em where you saw it. Http://www.victoriataft.com

Kitzhaber on Education: Wants Kids at Age "Zero;" With Added Oops! on Funding.

The Zero recently reported that there wasn’t a “dime’s worth of difference” on the issue of education between the two major candidates to become Oregon’s governor. I beg to differ. I’ve highlighted during the past couple of days on the show the ideas about education championed by candidate John Kitzhaber. The following are observations I made about the Kitzhaber interview with the Oregon editorial board (and apparently others, including educators). Kitzhaber calls for the state to begin the educational process at age “zero” (who needs parents when you’ve got ‘the state?’); state, not local, control of schools and funding;  wants teachers unions involved in selecting curricula and teaching methods (who needs administrators?); want to redistribute the money that under Measure 5 would go equally to all students to go to more troubled schools that don’t have as much “parental involvement” (throwing a bone to Portland);  The observations are followed by a time reference where you can find it on the following video. Kitzhaber wants:

  • The state in charge of child’s education starting at age “zero” [2:07].
  • Full state–not local control–of education [2:10].
  • Instead of equally distributing education money, wants his education czars to redistribute it to schools they deem more deserving [3:37].
  • Non governmental organizations (NGO’s) selected by state to participate in education [4:34].
  • Oregon Teachers Association to help select curricula and teaching methods [11:36].
  • A statewide pot of money from which all schools would be funded [21:35].
  • To end the kicker, Measure 5 because he would like more of your money [22:57].

Two more interesting observations: at 17:28 he discusses the lack of jobs available for high school drop outs and those who only finish high school Then he gives the example of ‘back in the day’ when you could make a good living working in a mill. The irony escapes him, obviously. It was his political party that killed most natural resource jobs in Oregon through their radical environmental policies and old growth/spotted owl myths. And at 21:35 he makes this extraordinary admission about how his new education czars (appointed by the Governor) would fund education and how you can’t do this during a good economy because Democrats just spend the money on other stuff.  They fund everything else first–their pet programs–and leave education till the last. The Republicans begged them last time to start with education first and the D’s scoffed at them. It’s that attitude that puts Oregon at, to say the least, a fiscal disadvantage. It’s why they need to go.

John Kitzhaber on Education
Tell ’em where you saw it. Http://www.victoriataft.com

Kitzhaber Home Loan: Still Illegal

By Pete the Banker
Eds Note: As Pete the Banker amply pointed out in his recent post here, the Kitzhaber home loan in the 90’s was illegal. Now Kitzhaber’s staff is claiming documents they possess somehow exonerate him from complicity in his dirty deal. No dice. In 1999, then Governor Kitzhaber received a loan no one else could come close to getting–until laws were changed and subprime loans became de rigeur years later. Kitzhaber received: 

A subprime loan at little more than 4% interest when mortgages were going for nearly twice as much. 
A subprime loan from an investment company without a license to issue mortgages. 
A 5 year term for a “mortgage” which was unheard of at the time. 
A 100% loan—nothing down which was irregular.

Pete stirred it up with his recent post here and responds to the Zero’s story here which appears to take at face value Kitzhaber’s claim that the issue is settled.

“As far as the Kitzhaber campaign is concerned, the documents put an end to the contention that Bidwell & Co. provided the then-governor with a sweetheart mortgage loan.”

Pete writes:
The statement contained in the article which was released by the Kitzhaber campaign is meaningless.

““John bought a home in 1999,” said campaign spokeswoman Jillian Schoene. “He borrowed the money from a firm that he’d been with for more than 10 years. He made the required payments. He paid tens of thousands of dollars in interest. And now, we produced the IRS forms that support all of this.””

Lots of Oregonians got loans in the late 1990’s from firms they had done business with in the past decade and made their required payments, paid thousands of dollars in interest, did so legally and paid taxes.  That’s the minimum standard expected of a borrower.
Yet most Oregonians did something that Kitzhaber has yet to establish and that is they used Mortgage Lenders licensed and authorized to do business in the State of Oregon. 
I haven’t seen the IRS statements addressed in this article.  The prior statements suggested a mortgage loan because of “mortgage interest paid” and accordingly don’t suggest a borrowing against a securities account. 
 It is possible with a variable rate of interest that the interest deduction would be lower in the years 2003 – 2005 (I believe these were the years of the statements which were released previously). I will check tomorrow when in the office to see if a variable rate was in the 7 – 8% area in 2001.  I suspect it might have been, but that does not negate other potential violations here.   And even if it was a market rate and variable rate, a five year term and 100% was certainly not generally available to the borrowing public at that time. 
Why are they simply releasing tax information?  The tax documents really don’t change anything but the discussion of interest paid.  There are lots of other potential questions and legal questions here. 
They suggested it wasn’t a mortgage initially that it was based on a securities margin account. Why haven’t they released the non-mortgage documents evidencing a securities account that would at least change the course of the discussion.  But even if they used a securities account, I suspect there are problems with Bidwell and Company allowing a securities accounts to be used as a source of a client home loan prior to the enactment of Gram Leach Bliley.  If they released actual mortgage documents, that may also change the course of discussion. 
In any event, most discussion has centered on this being a mortgage and if this was a mortgage loan then Bidwell and Company was not authorized to do the loan under the Residential Mortgage Banking/Broker Licensing Laws regardless of the interest rate he paid and terms of the loan.  Period end of discussion.
Kitzhaber evades the major questions raised to date:

First, was the mortgage obtained from a Financial Institution which was licensed in the State to make mortgage loans. NO.
Second, Kitzhaber would have intimate knowledge of the Oregon Mortgage Banking/Broker licensing laws in the State since he guided those laws through the Senate as Senate President and subsequently in his first years as Governor was responsible for implementing the legislation by organizing the Agency responsible for enforcing the law and approving additional Administrative rules.  Yes.
Third, Kitzhaber was not a typical consumer and knew the State Laws governing Mortgages yet didn’t seek out a licensed Mortgage Banker/Broker and didn’t report it as required of as a public official. At very least his suggests to the most casual observer that he had a tremendous conflict of interest and potentially violated public officials ethics laws.  Especially when followed up by the appointment of Jerry Bidwell to the Oregon Investment Council.   
Fourth, why hasn’t the actual loan documentation been produced since the loan was only paid off in 2006.  Lenders and for that matter borrowers should keep for at least 7 years for tax purposes (and he seemed to have diligently saved his other tax documentation).

It seems that the Kitzhaber campaign is simply trying to obfuscate the issue by dwelling on the 1098 IRS documentation and interest paid, but avoiding the very laws he was directly involved in both legislating and administering.   Bidwell violated the law, and I suspect, though this is not my area of expertise, that Kitzhaber violated ethics laws first by accepting the loan and secondly by not reporting it. 
Do we really want a repeat Governor who pledged to uphold the Constitution and Laws of the State of Oregon during his first term and yet subsequently evaded and violated the very laws he was involved in legislating and administering?

Tell ’em where you saw it. Http://www.victoriataft.com

Kitzhaber Pulls a Rahmbo: You Can’t Fund Education During Good Times Because Democrats Spend All the Money

…so why would we trust him now? 

“You can’t do this sort of thing during a good economy because the money just keeps coming over [makes waterfall motion]–and you allocate it in the old ways which is really what happened in the ’90’s.” 

Translation: We were rolling in dough and spent it on other programs, not the basics. So we have to do it in a critical time like this to make it happen. See the entire break down of the Kitzhaber education positions in his interview with the Zero in my post here.
This reminded us on the show yesterday of this old chestnut from Rahmbo Emanuel:

“Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.”  

Find Kitzhaber’s comment at 21:35:

John Kitzhaber on Education
Tell ’em where you saw it. Http://www.victoriataft.com

Kitzhaber on Education: Wants Kids at Age "Zero;" With Added Oops! on Funding.

The Zero recently reported that there wasn’t a “dime’s worth of difference” on the issue of education between the two major candidates to become Oregon’s governor. I beg to differ. I’ve highlighted during the past couple of days on the show the ideas about education championed by candidate John Kitzhaber. The following are observations I made about the Kitzhaber interview with the Oregon editorial board (and apparently others, including educators). Kitzhaber calls for the state to begin the educational process at age “zero” (who needs parents when you’ve got ‘the state?’); state, not local, control of schools and funding;  wants teachers unions involved in selecting curricula and teaching methods (who needs administrators?); want to redistribute the money that under Measure 5 would go equally to all students to go to more troubled schools that don’t have as much “parental involvement” (throwing a bone to Portland);  The observations are followed by a time reference where you can find it on the following video. Kitzhaber wants:

  • The state in charge of child’s education starting at age “zero” [2:07].
  • Full state–not local control–of education [2:10].
  • Instead of equally distributing education money, wants his education czars to redistribute it to schools they deem more deserving [3:37].
  • Non governmental organizations (NGO’s) selected by state to participate in education [4:34].
  • Oregon Teachers Association to help select curricula and teaching methods [11:36].
  • A statewide pot of money from which all schools would be funded [21:35].
  • To end the kicker, Measure 5 because he would like more of your money [22:57].

Two more interesting observations: at 17:28 he discusses the lack of jobs available for high school drop outs and those who only finish high school Then he gives the example of ‘back in the day’ when you could make a good living working in a mill. The irony escapes him, obviously. It was his political party that killed most natural resource jobs in Oregon through their radical environmental policies and old growth/spotted owl myths. And at 21:35 he makes this extraordinary admission about how his new education czars (appointed by the Governor) would fund education and how you can’t do this during a good economy because Democrats just spend the money on other stuff.  They fund everything else first–their pet programs–and leave education till the last. The Republicans begged them last time to start with education first and the D’s scoffed at them. It’s that attitude that puts Oregon at, to say the least, a fiscal disadvantage. It’s why they need to go.

John Kitzhaber on Education
Tell ’em where you saw it. Http://www.victoriataft.com