by Pete the Banker
Ed note: The former governor was given a pass on the issue in the debate last night. He attempted to smooth over the issue, but what’s the back story? There is little question that the Residential Mortgage Licensing Laws were violated. Press coverage has established that Kitzhaber took a loan out secured by real estate, his primary residence. Former Governor Kitzhaber has not yet released evidence to back his assertion that it was a loan secured by a securities account.The loan was from Bidwell and Company to Kitzhaber based on documentation including tax reporting statements published by Willamette Week clearly designating the interest paid as mortgage interest.
According to press reports, Bidwell and Company (now Ameritrade) was strictly a Discount Retail Stock Brokerage without an Investment Banking or Banking Division. Therefore it could not be defined as a Federally Regulated “Depository Institution” under Oregon Mortgage Banking Statutes and it therefore would not have been exempt from the statutes.
The Mortgage Banker/Broker Residential Licensing Law was enacted in 1993. The intent of the legislation was to register all Residential Mortgage Banking and Brokerage firms in the state as well as their employees. The only exemptions were Federally Regulated “Depository” Institutions given Federal preemption since they and their employees were federally regulated. The second exclusion included non-financial professional firms, like attorneys, accountants or other consultants, who made an occasional mortgage loan to a client incidental to their normal course of business practice. Bidwell did not qualify under either of these exceptions . HERE.
Kitzhaber became Governor in 1994 and as Governor was responsible for organizing, implementing the regulatory authority and administrative rules enforcing the then new Residential Mortgage Licensing Laws.
Kitzhaber took out a residential mortgage in June, 1999 from Bidwell and Company. Bidwell and Co was not licensed to originate residential mortgages in the State of Oregon .
Bidwell violated the State’s Mortgage Licensing Laws. The State’s Chief Executive Kitzhaber, knowing better, accepted the loan from Bidwell and Co. The violation of the Licensing Law would fall primarily on Bidwell and Company, but Kitzhaber would have known that it was a violation given his leadership role described above. He took the loan without disclosing it in his financial reports, so he was certainly complicit in the violation and would have at very least violated State Ethics Standards and Laws.
Bidwell violated the State’s Mortgage Licensing Laws. The State’s Chief Executive Kitzhaber, knowing better, accepted the loan from Bidwell and Co. The violation of the Licensing Law would fall primarily on Bidwell and Company, but Kitzhaber would have known that it was a violation given his leadership role described above. He took the loan without disclosing it in his financial reports, so he was certainly complicit in the violation and would have at very least violated State Ethics Standards and Laws.
Even if Bidwell had an Investment Banking Division, there would still have been a violation since the Kitzhaber mortgage loan was made in June 1999 and the repeal of the Glass Steagall Act by the Gram Leach Bliley Act post dated the funding of the Kitzhaber loan. The repeal of Glass Steagall was enacted in November, 1999 and effectively repealed the firewall between Banks and Investment banks. HERE
Kitzhaber received terms not generally available to other consumers at the time the loan was done. With the disclosures last Friday by Willamette Week, that the loan obtained by Kitzhaber was at 4.9% interest rate, not 8,25% and that the loan was secured by real estate, this becomes a significant issue HERE. This type of loan was not generally available to other consumers under similar rates and terms. A loan was reported to be 100% of the homes value which was not available to others at that time, nor were five year loan terms or 5 yr adjustable rate mortgages common. These mortgage products became more common a few years later during the subprime financing boom.
Kitzhaber subsequently appointed Jerry Bidwell to the Oregon Investment Council.
ed note again: Is this stuff ever wrong if Democrats do it? Apparently not, as Michelle Malkin points out here.
Kitzhaber subsequently appointed Jerry Bidwell to the Oregon Investment Council.
ed note again: Is this stuff ever wrong if Democrats do it? Apparently not, as Michelle Malkin points out here.
Tell ’em where you saw it. Http://www.victoriataft.com
