Did the Senator Benefit From Foreclosure Properties?

by on General

Senator Dianne Feinstein of California has been linked by The Washington Times to a possible conflict of interest case involving foreclosure property for sale.

The Washington Times cited documents showing that Senator Feinstein volunteered in 2008 to help the Federal Deposit Insurance Corp. obtain federal money to help solve the foreclosure crisis. The documents showed that the senator sent her letter to the FDIC a few days before the FDIC chose CB Richard Ellis Group, headed by the senator’s husband Richard Blum, to sell foreclosure properties acquired by the FDIC from bankrupt banks.

In January this year, Senator Feinstein also introduced a bill that would allocate $25 billion to the FDIC to fund its foreclosure prevention programs.

The Washington Times contend that the senator’s support for the FDIC’s finances was unusual. The publication mentioned that Senator Feinstein is not involved with the Senate Committee on Banking, Housing and Urban Affairs, which has jurisdiction over FDIC.

A former federal official, Kent Cooper, who specialized in political ethics, said that legislators should be careful in introducing bills that cause people to see conflicts of interest.

Similarly, Melanie Sloan, head of the Citizens for Responsibility and Ethics, said the FDIC documents highlight the conflict-of-interest problems of a legislator with links to a business that gets contracts from the government.

Real estate specialists like Colorado agent Cynthia Kenner whose specialty is in bank owned foreclosed properties said that CBRE got above average incentives and that CBRE’s specialty is not in foreclosure properties.

Meanwhile, the FDIC argued that the contract was given to CBRE after a fair competition. FDIC said it gave CBRE above-average incentives to hasten the sale of the foreclosure properties it held.

Gil Duran, spokesman of Senator Feinstein, said the senator did not know about the CBRE contract with the FDIC when she introduced her bill. He also said the senator’s husband does not manage the daily operations of the firm, including the firm’s contracting activities.

In addition, CBRE spokesperson Robert McGrath argued that CBRE’s position as the largest real estate business in the country makes the firm the most qualified to sell FDIC’s foreclosure properties.

Based on Senator Feinstein’s financial disclosure statements, the position of her husband as board chairman is part-time. Blum became CBRE chairman in 2001 and owns an investment company that controls 14.4 percent of CBRE.

In March, FDIC officials said they allotted 507 foreclosure properties worth $221.7 million for sale to CBRE. The real estate company said it is already working on purchase contracts for 23 foreclosure properties worth $11 million.