Fannie Mae: Corker’s Filing Errors Latest in a String of Unexplainable Behavior – We all make mistakes, there’s no doubt about that. But failing to disclose millions of dollars in income from real estate, hedge funds and other investments? Not exactly a run of the mill mistake.
Yet here we are, with the third-ranking Republican on the Senate Banking Committee having done just that. Late Friday, Tennessee Senator Bob Corker finally acknowledged his filing errors and took steps to rectify them. His corrective action comes only after the Campaign for Accountability (CFA), a D.C.-based political watchdog, called for an SEC and ethics investigation into Corker for insider trading, and after the Wall Street Journal responded to the allegations by probing further, as well.
Corker’s spokesperson initially dismissed CFA’s complaint, stating “these baseless accusations from a political special interest group are categorically false and nothing more than a smear campaign.” But unfortunately for Corker, the facts don’t lie.
The Wall Street Journal investigation found that Corker had failed to properly disclose at least $2 million in income from investments in three small hedge funds. He also failed to report at least $3.8 million generated by his commercial real estate investments. Millions of dollars in other assets and income from other financial transactions were omitted, as well, the Wall Street Journal finds.
[drizzle]The magnitude of Corker’s omissions came to light last week when Corker filed a series of amendments to his personal financial reports. “I am extremely disappointed in the filing errors that were made in earlier financial disclosure reports,” Corker said, though he still chocks these errors up to simple accounting errors. Congressmen face no penalties for violating federal law and Senate rules in this manner.
This is the latest in the saga of Senator Corker’s sketchy investment behavior.
Between 2008 and 2015, Senator Corker and his immediate family made 70 stock trades in the real estate investment firm CBL & Associates Properties – more than triple the number of transactions he made with any other stock. (Of note, another analysis finds that Corker had 930 equity trades in 2014, nearly 24x more than his next closest colleague on the Senate Banking Committee, Jack Reed – who had 39 total trades.) One common theme: Corker always bought low and sold high. For instance, in 2009, he purchased between $1 and $5 million in CBL stock which he sold five months later for a 42% profit—a fact he did not disclose until a recently amended filing.
If only we were all so lucky!
Corker’s relationship with CBL is long-standing, the CFA complaint notes. Out of college, he worked for a construction company that did work for CBL and which is now substantially owned by CBL. When Corker first ran for Congress in 2006, CBL executives were among Corker’s “first and most generous donors,” as the CFA complaint noted. Both directly and indirectly, CBL has continued to give generously to Corker. For instance, CBL is owned by Stephen Lebovitz, and Lebovitz is the chairman of the International Council of Shopping Centers (ICSC) and board member of the National Association for Real Estate Investment Trusts (NAREIT). ICSC and NAREIT are, coincidentally, large Corker donors.
Corker’s relationship with and investment in CBL is not inherently offensive. It becomes so, however, when Corker fails to disclose these investments. It’s even more abhorrent given Corker’s specific role on the Senate Banking Committee, which oversees the real estate and financial services sectors. While he’s been on the Committee, Corker has pulled for legislation that would directly benefit CBL, ICSC, NAREIT and others.
Fannie Mae reform
Fannie Mae reform is one such example. Bethany McLean, in an article written for Yahoo! Finance, highlighted how Corker sponsored a bill – which passed the Senate Banking Committee in spring 2014 – that would do away with Fannie Mae and Freddie Mac. While there’s no question that Fannie Mae reform is sorely needed, the dissolution of the Fannie Mae and Freddie Mac would indirectly benefit CBL though the direct benefit provided to Wells Fargo, CBL’s primary bank.
Is Corker advancing such legislation “because he thinks it’s good for the nation or just good for his bank account?,” CFA Executive Director Anne Weismann has asked. After all, it becomes awfully difficult to make unbiased policy decisions when those decisions could negatively impact on your biggest supporters.
Time for the SEC and ethics committee to conduct that CFA-requested investigation, no?