[How the 2020 Democratic presidential contender helped a
Republican billionaire rip off the middle class.]
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DEVAL PATRICK, FORECLOSURE MOGUL  
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Zach Carter
April 12, 2019
Huffington Post
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_ How the 2020 Democratic presidential contender helped a Republican
billionaire rip off the middle class. _

Now-former Massachusetts Gov. Deval Patrick departing the statehouse
in Boston at the end of his last term, Jan. 7, 2015. His tenure at a
subprime mortgage lender raises serious questions about his role at
other scandal-plagued corporations. ,

 

When Deval Patrick’s daughter was growing up in the 1980s, her
kindergarten teacher gave her an assignment: Go home and describe the
four seasons to your mom and dad. So she did: “First you drive up
and the doorman takes your car.” For the daughter of a Boston power
lawyer, the Four Seasons Hotel seemed as sensible a homework topic as
the basics on winter, spring, summer and fall.  

Patrick loves this joke. He has been telling it to audiences since at
least 2007
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It’s in his memoir
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it pops up in radio interviews
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deployed it to charm a crowd at a Washington think tank. The key to
the story isn’t his easy smile but who he is. Coming from Mitt
Romney, the same narrative would be a crass celebration of inherited
wealth. But from a black man who can remember his mother cashing
welfare checks on the South Side of Chicago, it’s inspirational
stuff ― a symbol, as Patrick says, of what makes America an
exceptional country.

Which makes Patrick, a Democrat, an extremely effective messenger for
a fundamentally conservative idea. “What I feel we often describe as
income inequality is a shorthand for economic mobility,” he told
that think tank crowd. “The ability to move from where you are to
where you want to be ― that is the source of continuing anxiety,
notwithstanding what the statistics say about the strength of the
economy.”

This isn’t true, of course. Economic mobility and income inequality
aren’t interchangeable concepts, and people don’t really get them
mixed up. In 2012, Romney’s soon-to-be running mate, Rep. Paul Ryan
(R-Wis.), made the difference between the two ideas a key distinction
between the Republican ticket and the vision of President Barack
Obama.

“We have to make a decision in this country,” Ryan told a
right-wing radio host
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Republicans wanted to “celebrate the right to rise” by
“protecting equal opportunities,” while Democrats, Ryan said,
“saw the government’s role” as “equalizing the outcome of our
lives.”

But as the Democratic Party prepares for the 2020 primaries,
Patrick’s message is receiving a powerful signal boost from none
other than Obama himself
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The two men have more in common than a Chicago connection. Both
attended prep school on scholarships, and both earned Harvard Law
degrees before beginning careers as civil rights attorneys. During his
2008 presidential run, Obama even cribbed some rhetoric
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stump from speeches Patrick gave during his 2006 gubernatorial race.
Today much of the 44th president’s inner circle
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is promoting Patrick
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gatherings
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And while Patrick hasn’t made anything official, his friends
launched a political action committee in August, allowing his team to
start courting donors ahead of 2020.

Patrick has plenty of political assets ― an understated sense of
humor and the experience of two terms as governor of Massachusetts
among them. But the support from Obama is the chief reason Patrick is
being mentioned as a top 2020 contender in the Democratic Party. And
it might be best if Democrats didn’t go hunting for other reasons.
Told from a different angle, Patrick’s biography isn’t an
uplifting rags-to-riches story but an ugly tale of corruption among
the American power elite. Patrick didn’t just make a lot of money;
he made a lot of money helping a Republican billionaire rip off the
black middle class.

In 2005, President George W. Bush nominated Republican Party megadonor
Roland Arnall to serve as ambassador to the Netherlands. Arnall, his
wife and the companies they controlled were the biggest contributors
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to Bush over the previous three years, spending over $1 million on his
second inauguration alone
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Ambassadorships are frequently dispensed to big donors, but Arnall had
no diplomatic experience. Even his business was a domestic affair. The
appointment looked bad enough that a few senators, including a
newcomer from Illinois named Barack Obama, cried foul.

But Arnall got some support from an unlikely source. Patrick and
Arnall got to know each other in 1996, when Patrick helmed the civil
rights division at the Department of Justice. Arnall was running Long
Beach Mortgage Co., which the DOJ was investigating for racial
discrimination in the subprime lending market. The DOJ and Long Beach
eventually reached a $4 million settlement. The idea was to send a
message to subprime lenders about some of their shadier practices
without crimping the flow of credit into the still-developing sector.
“We recognize that lenders understand the industry in ways we
don’t,” Patrick said at the time. “That is why there is so much
flexibility in the decree.”

When Arnall came up for the ambassadorship, Patrick wrote
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Senate Foreign Relations Committee to heap praise on Arnall. The
billionaire was “a good man,” Patrick wrote, and Arnall’s
Ameriquest was “a good company.” Arnall had “really stepped
forward” after the settlement in the 1990s. “He used the
experience to make a better company” and would make a “fine
ambassador
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It wasn’t true. After signing Patrick’s slap-on-the-wrist
settlement, Arnall developed his mortgage operation into Ameriquest,
which became the world’s largest subprime lender
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during the housing bubble. It was notorious
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“the worst bottom-feeder of them all,” in the words of New York
Times business columnist Joe Nocera
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wrote a book
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with Bethany McLean documenting the company’s horrors and its
relationship with Patrick.

Ameriquest’s business model used high-pressure sales techniques to
push homeowners with existing mortgages into new loans with sky-high
interest rates. If the family couldn’t pay, investors who bought the
loans would acquire the house through foreclosure. When home prices
were soaring during the housing bubble, it was a tremendously
profitable strategy, turning Arnall into a billionaire.

But Ameriquest was a financial time bomb targeting middle-class
families, particularly families of color. There is no nationwide
database on Ameriquest’s lending that sorts by race, but we can get
a look at the company’s general operations by looking at individual
cities. In Milwaukee
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all” Ameriquest loans issued from 2003 to 2005 were refinancings,
according to data from the University of Wisconsin, and half of them
were made to households making less than $50,000 a year, with more
than a third going to inner-city neighborhoods covered by the federal
government’s Community Development Block Grant Program. In Detroit
the company was responsible for over 2,500 foreclosures, 70 percent of
them on homes that were blighted or abandoned by 2015, according to
The Detroit News
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A 2010 study
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by researchers at Ohio State University found that Ameriquest
disproportionately targeted black neighborhoods in Minneapolis.

And Patrick was making $360,000 a year working for Ameriquest. He
joined the company’s board in 2004, lending his credibility as a
former civil rights attorney to both the company’s operations and
the public image of its founder. Two months after Patrick vouched for
Arnall to the Senate, Ameriquest agreed to pay $325 million
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to settle predatory lending allegations in 49 states and the District
of Columbia.  

When the mortgage business began to implode, Patrick left Ameriquest
to run for governor of Massachusetts. Though his corporate background
generated plenty of controversy in the primary ― he pointedly
refused to release his tax returns
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during the campaign ― he entered office in 2007 as Ameriquest was
collapsing. Patrick called Citigroup executive Robert Rubin
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to plead for funding to rescue the dying firm, using the weight of the
governorship to quite literally call in a favor for a Republican
billionaire.

In a statement provided to HuffPost, Patrick spokesman Alex Goldstein
described the former governor’s Ameriquest tenure as a victory for
progressive change.

“Governor Patrick believes that real change cannot always be
achieved from the outside, and sometimes requires us to bring our
judgement and conscience inside to have an impact,” Alex Goldstein
wrote. “In 2004, he agreed to serve on the board of ACC Capital
Holdings as the Board’s internal liaison to Ameriquest management,
helping to reach settlements with states seeking compensation for
those harmed by Ameriquest’s predatory lending practices. Governor
Patrick served in this role as he has throughout his career ―
without leaving his conscience at the door.”

If so, Patrick’s tenure at Ameriquest raises serious questions about
his role at other scandal-plagued corporations. He did some work on
the mortgage settlement, and the details that have come to light ―
particularly in a book by former Wall Street Journal reporter Michael
Hudson [[link removed]] ―
implicate Patrick in the company’s attempt to wine and dine its way
out of liability.

Arnall introduced Patrick to a group of state attorneys general at a
dinner he had arranged hoping to bring down the temperature of
negotiations that would eventually end in the $325 million settlement.
The pricey evening became an immediate government ethics debacle for
the prosecutors ― a transparent effort by Arnall and Patrick to buy
off their adversaries with a night on the town. Public servants are
generally barred from accepting gifts from corporations they are
investigating for fraud. But Ameriquest insisted on taking care of the
check, resulting in months of negotiations over how prosecutors would
pay their tabs. Several ended up sending the company personal checks.

In corporate America, Patrick was not so much a reformer as he was a
public relations figure.

Patrick’s personal line on government ethics issues has always been
aggressive. His decision to work at a company he had investigated for
racially discriminatory lending was, even by Washington standards, an
audacious turn through the revolving door. But the Ameriquest episode
wasn’t the first time he ran that particular routine.

Under Patrick’s leadership in 1997, the DOJ signed a $176 million
settlement with Texaco for racial discrimination against its
employees. A year after a court approved the deal, he left the DOJ for
a job as Texaco’s top in-house attorney.

Four years later, he left Texaco for Coca-Cola, which was trying to
clean up its image after signing a $192 million racial discrimination
settlement
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― the largest in history. The pattern was clear: Patrick was the guy
you hired if your company needed to look serious about fixing
high-profile racism.

He arrived at Coca-Cola as outrage was building over its practices in
Colombia, where its bottling plants hired paramilitary forces to
intimidate and murder employees in an effort to thwart union activity.
By 2003, international labor unions were calling for a boycott of the
company. Patrick’s legacy with Coke is complex. He defended
Coca-Cola against a lawsuit filed by labor unions
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violence [[link removed]], and when
courts dismissed the case, he praised the result
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“the right legal outcome.” But in 2004 he pressed for an
independent investigation of the death squad allegations as a check
against Coca-Cola’s own investigation. When the company’s
executives recoiled at the idea, he resigned
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But he wasn’t done taking Coke’s money. He accepted $2.1 million
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in consulting work with Coke the year after he stepped down.

Prominent civil rights leaders, including the Rev. Jesse
Jackson, have defended
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for Coca-Cola as substantive. But some companies can’t be fixed from
the inside. It’s hard to imagine a Democratic politician boasting
about her ability to boost wages at a tobacco giant, for instance.
Patrick knew that Arnall ran a problem company in the 1990s and
praised him as a sincere reformer even as his company was falling
apart for _again_ mass-producing foreclosures that disproportionately
affected minority families. The good guys in 2005 weren’t trying to
score ambassadorships for Ameriquest’s founder. They were trying to
put him out of business.

“The subprime market had evolved to the point where we needed to do
anything we could to shut it down,” says Prentiss Cox, currently a
University of Minnesota Law School professor who worked on the
states’ settlement with Ameriquest and wanted to bring the case to
court.

In corporate America, Patrick was not so much a reformer as he was a
public relations figure. He gave corporations a story to tell about
the good things they were supposedly doing ― even if when they were
simultaneously busying themselves with very bad things. By comparison,
his tenure as governor of Massachusetts is pretty tame. His
transgressions against progressive orthodoxy ― securing $1 billion
in tax breaks and subsidies for pharmaceutical and biotech companies
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increasing sales taxes
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(a regressive change that hits the poor harder than other tax
increases) by $1 billion, overruling state regulators
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the way for Uber ― never came close to threatening his re-election.
He finished both terms with sky-high approval ratings.

After leaving government, he accepted a job at Bain Capital, where he
focuses on making investments in midmarket companies with high social
and environmental impact.

The day Bain announced the hire, Mitt Romney called Patrick to
congratulate him.

Zach Carter, Senior Reporter, HuffPost

 

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