The Washington Times reports that Senator Dianne Feinstein (D-CA) took unusual steps to route government funding to an agency that usually works from a separate stream of revenue just after the agency awarded her husband’s firm a lucrative contract. The FDIC gave Richard Blum’s firm, property management firm CB Richard Ellis, contracts to handle residential foreclosures at a higher rate than normal market price, even though CBRE had less experience in that market than other competing firms. And Feinstein got the FDIC the money even though she has no connection to the Senate Banking Committee, the body that normally deals with the FDIC:
On the day the new Congress convened this year, Sen. Dianne Feinstein introduced legislation to route $25 billion in taxpayer money to a government agency that had just awarded her husband’s real estate firm a lucrative contract to sell foreclosed properties at compensation rates higher than the industry norms.
Mrs. Feinstein’s intervention on behalf of the Federal Deposit Insurance Corp. was unusual: the California Democrat isn’t a member of the Senate Committee on Banking, Housing and Urban Affairs with jurisdiction over FDIC; and the agency is supposed to operate from money it raises from bank-paid insurance payments – not direct federal dollars.
Documents reviewed by The Washington Times show Mrs. Feinstein first offered Oct. 30 to help the FDIC secure money for its effort to stem the rise of home foreclosures. Her letter was sent just days before the agency determined that CB Richard Ellis Group (CBRE) – the commercial real estate firm that her husband Richard Blum heads as board chairman – had won the competitive bidding for a contract to sell foreclosed properties that FDIC had inherited from failed banks.
About the same time of the contract award, Mr. Blum’s private investment firm reported to the Securities and Exchange Commission that it and related affiliates had purchased more than 10 million new shares in CBRE. The shares were purchased for the going price of $3.77; CBRE’s stock closed Monday at $5.14.
In other words, Richard Blum bought 10 million shares at the same time his wife arranged for an unusual and extremely large chunk of taxpayer money to go to FDIC. Blum must have been an investment genius to guess that his wife’s intervention would coincidentally precede the FDIC’s award, making CBRE stock more valuable. Blum’s investment made a $14 million profit for Blum and Feinstein and their partners.
But of course, that’s all just a coincidence.
The contract award to CBRE should raise a few eyebrows:
The firm, known for its commercial real estate services, is to be paid monthly maintenance fees for each foreclosed property it handles, as well as commissions and incentives. The total compensation can range from 8 percent of the sales price on many residential properties to 30 percent for properties worth $25,000 or less. A smaller firm also won a slice of the work with similar terms, records show.
Most real estate agents earn no more than 6 percent on residential, even on foreclosed properties, and CBRE doesn’t have as much experience in foreclosure sales as other firms, the experts said.
FDIC awarded this contract to CBRE even though it’s more known as a commercial real estate property management firm, and it gave them more commission than agents usually get. Why would the FDIC deliberately award a contract at relatively unfavorable terms to a company with a weak track record in this industry? Perhaps they knew that the contract award would net them a lot more cash than they would have to pay out, thanks to the political connections at CBRE … and they were right.
Now Feinstein wants people to believe that she and Blum had no idea that the FDIC would give CBRE this contract at the time she gave the FDIC $25 billion. How did CBRE get the contract — a lottery? They had to bid for the FDIC contract. Blum obviously knew that the bid was under consideration, or he’s the most incompetent board chairman in history. Feinstein expects us to believe that the board chairman would have no idea that his own company had a major bid under consideration for handling foreclosures at a time when foreclosures were exploding? Is that really going to be her final answer?
At the very least, this shows a clear conflict of interest, especially with Feinstein suddenly jumping into the banking arena and FDIC at a time when her husband was doing business with them. It looks a lot more like a payoff and a shell game to allow her family to cash in on taxpayer-funded bailout money. (via Instapundit)