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Ties for Edwards

For John Edwards, the negative returns from his work at an investment in a New York hedge fund keep on accumulating.

The State newspaper in Columbia, S.C. reportedthis week that a subprime lender that is part owned by Fortress Investment Group, Green Tree Servicing, has foreclosed on or is in the process of foreclosing on 132 homes in South Carolina since Edwards went to work for Fortress in October 2005. Edwards earned nearly $500,000 for part-time work as an adviser to Fortress last year, and has about $16 million invested in it.

The Washington Post reported in May that Fortress owned a large stake in Green Tree Servicing when Edwards joined the firm, and then purchased several other large subprime lenders while Edwards was at the firm. The article noted that Green Tree had been cited in trying to foreclose on New Orleans residents shortly after Hurricane Katrina, Edwards, who has spoken strongly against the predatory practices used by some subprime lenders and made New Orleans' recovery a centerpiece of his campaign, said at the time that he was unaware of Fortress' subprime holdings and that he was asking Fortress to look into any Green Tree foreclosures in New Orleans.

Last month, The Wall Street Journal reported that Green Tree and another lender owned by Fortress, Nationstar Mortgage, had foreclosed on 34 homes in New Orleans since Katrina. Edwards acknowledged that Fortress had not dealt with the issue as he had requested, and said he would divest himself of holdings in any Fortress funds invested in the lenders, and that he would also seek to redress the New Orleans families, either by paying them out of his own pocket or arranging for a nonprofit group to assist them.

Now comes the article on the South Carolina foreclosures, which hits close to home for Edwards for two reasons: he was born in South Carolina, and it will hold the first primary in the South, an election that Edwards needs to do well in to prove his point that he can outperform Hillary Clinton and Barack Obama in the South. The State quoted University of South Carolina political scientist Blease Graham, who said Edwards could be damaged by the appearance of inconsistency between his populist message and Fortress connection.

"There's a famous old South Carolina saying: 'You have to be right as well as look right,'"Graham was quoted as saying. "Edwards looks right, no doubt about that. His message is passionate, and I'm sure well-intended and comes straight from the heart. (But) ... he may have raised some real questions again about the compatibility of that message."

The Edwards campaign played down the South Carolina article, noting that Edwards' Fortress holdings did not include any money invested specifically in Green Tree (they did include investments in Nationstar.) "Edwards' record and policies speak for themselves," said campaign spokesman Eric Schultz. "Edwards has been a long-time advocate in the fight to stop predatory lending. For many families, home ownership is not possible without subprime lenders, and he believes they can serve a valuable purpose. At the same time, he has proposed tough regulations to stop lenders from taking advantage of families who need help the most. Edwards has proposed the strongest national legislation against predatory lending and new steps to let homeowners escape unaffordable mortgages."

By Washington Post editors  |  September 11, 2007; 3:54 PM ET
 
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Comments

In response to the post comparing this situation to Enron employees not knowing what was going on and Washington Post staffers unaware of everything that goes on in different departments at the paper, those comparisons miss a very important point. John Edwards was not some middle-management employee of the Fortress Group, he made half a million dollars consulting for them and he has $16 million of his own personal fortune invested with them. On top of that, the man is RUNNING FOR PRESIDENT! These two facts make him much more liable to know exactly what is going on with a company that is investing such a large amount of money for him, and exactly how he his making a portion of his income.

Posted by: jfdorman | September 12, 2007 8:24 PM | Report abuse

Edwards is "a long-time advocate in the fight to stop predatory lending" -- but as long as it's happening he's going to make a few bucks off it.

As a first-rate trial lawyer, Edwards is used to enriching himself on others' misfortune. Must be a hard habit to break.

Posted by: ed1123 | September 12, 2007 11:20 AM | Report abuse

I saw John Edwards speak once. He basically said that he's not thinking about anything that Lyndon LaRouche's name is attached to, so you can get over that one.

Posted by: OEST | September 12, 2007 7:36 AM | Report abuse

Is John Edwards man enough endose this??
The Lyndon LaRouche Political Action Committee is mobilizing to get Congress, on return from recess after Labor Day, to enact a Homeowners and Bank Protection Act of 2007.

This is legislation that Lyndon LaRouche proposes as the only means, at this late date, for stopping millions of home foreclosures and evictions this year and next, and for launching a larger process of bankruptcy restructuring of the U.S. and global dollar-based financial system, which is now already doomed. Governors and state legislators all across the United States will enthusiastically join in this effort, which some leading bankers and Democratic Party figures, briefed on LaRouche's proposal, have already declared is "doable" and the "only salvation" for the American people.

Here are the essential features of the Homeowners and Bank Protection Act of 2007:

1. Congress must establish a Federal agency to place the Federal and state chartered banks under protection, freezing all existing home mortgages for a period of how ever many months or years are required to adjust the values to fair prices, restructure existing mortgages at appropriate interest rates, and write off all of the cancerous speculative debt obligations of mortgage-backed securities, derivatives and other forms of Ponzi Schemes that have brought the banking system to the point of bankruptcy.

2. During this transitional period, all foreclosures shall be frozen, allowing American families to retain their homes. Monthly payments, the effective equivalent of rental payments, shall be made to designated banks, which can then use the funds as collateral for normal lending practices, thus recapitalizing the banking system. Ultimately, these affordable monthly payments will be factored into new mortgages, reflecting the deflating of the housing bubble, and the establishment of appropriate property valuations, and reduced fixed mortgage interest rates. It is to be expected that this process of shakeout of the housing market will take several years to achieve. In this interim period, no homeowner shall be evicted from his or her property, and the Federal and state chartered banks shall be protected, so they can resume the traditional functions, serving local communities, and facilitating credit for investment in productive industries, agriculture, infrastructure, etc.

3. State governors shall assume the administrative responsibilities for implementing the program, including the "rental" assessments to designated banks, with the Federal government providing the necessary credits and guarantees to assure the successful transition.

By September-October, unless this legislation is enacted as a first order of business of the 110th Congress in September, many millions of Americans will be evicted from their homes, setting off a process of social chaos that must be avoided. The freezing of foreclosures is the vital first step in a thorough reorganization.

Under this plan, the Federal Reserve System will be, itself, put through bankruptcy reorganization, and transformed into a Third National Bank of the United States. As developed in Lyndon LaRouche's just-released draft platform for the Democratic Party, these actions shall be complemented by the creation, by treaty agreement among leading nation-states, of a new Bretton Woods System, based on fixed exchange rates, and long-term treaty agreements for large-scale development projects on a global scale.

LaRouche said the foreclosure tsunami is occurring, not in a mere housing crisis or mortgage crisis, but a disintegration of the entire global financial system. There is no bottom to this collapse--unless a legislative fire-wall is created now, and a halt to the income drain on the population, brought on by the hyperinflationary debt bubbles created by Alan Greenspan and his ilk.

Posted by: bjerryberg | September 11, 2007 10:04 PM | Report abuse

South Carolina Council Woman Linda Dogan, a prominent African American leader in the state, endorses Edwards because he remembers what he came from and what its like to be poor.

That's the bottom line. John Edwards is for working people, no matter how much you try to smear him.

Posted by: marshamark | September 11, 2007 9:33 PM | Report abuse

What can I add to the first post, which is dead on balls accurate?

The Post's coverage of this story, implicating Edwards is ridiculous, about as accurate as Judith Miller was about Iraq.

This is guilt by association.

If only the Post would actually cover the policies being proposed by the candidates.
But then, they'd actually be a source for real news, instead of part of the establishment.

Posted by: dailykos1 | September 11, 2007 7:39 PM | Report abuse

When will you smear merchants in the media give it a rest already?

Does everyone who works for THE WASHINGTON POST know everything that goes on at the Washington Post, everything that the owner of the paper does, every business deal?

Should we hold every employee of ENRON accountable for the business decisions of its executives, including the employees who were affected?

There is no employer or investor out there who knows EVERY SINGLE THING that done by the company that they work for or invest in, so for you all to even keep digging around in Fortress Investment Group as if John Edwards is responsible for everything that Fortress has ever done, especially since Edwards only worked for the company FOR A SHORT TIME AT THAT, is absolutely ridiculous.

What? Are you all trying to create FAKE SCANDALS against John Edwards just like you all did against Al Gore in 2000?

Posted by: OEST | September 11, 2007 4:59 PM | Report abuse

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