Yesterday, the Washington Times revealed that Senator Diane Feinstein (D-CA) offered on October 30th, 2008 to secure funds for the Federal Deposit Insurance Corporation (FDIC) directly on the heels of the agency awarding a three-year contract to CB Richard Ellis (CBRE), a company run by Feinstein’s husband, Richard Blum.
Now, it is up to the Senate Ethics Committee to investigate whether the government contract was not awarded in return for the Senator introducing legislation favored by FDIC Chairman Sheila Bair.
The Feinstein bill provided the FDIC with a direct grant to expand its mortgage modification and loan guarantee programs. Mr. Blum’s contract with the FDIC could net him hundreds of millions of dollars in sale of foreclosed properties held by the FDIC. According to the Times story, “The proposal was a pet project of FDIC Chairman Sheila C. Bair.”
Ms. Feinstein ultimately introduced the legislation on January 6th, 2009, totaling $25 billion in an unusual direct allocation to the FDIC, which usually operates by raising money from bank-paid insurance payments. Ostensibly, the rationale for the direct grants is to help homeowners, but was there a quid pro quo to get it brought to the Senate floor? The only way to find out for sure is if the Senate Ethics Committee investigates this apparent conflict of interest of Senate Feinstein immediately.
Feinstein’s unusual move came just days before her husband receiving a highly lucrative FDIC contract. By March, the FDIC had assigned Mr. Blum’s company 507 foreclosed properties to be sold, worth $221.7 million. CBRE already has under contract to be sold more than $11 million worth of properties.
Democrats took power in 2006 largely on the promise to bring an end to the “culture of corruption” in Washing. That culture, however, epitomized by what appears to be a pay-to-play conflict of interest, will only be brought under control when the legislators involved are brought to account. The American people have been bilked for too long. And they are tired of it.
Ultimately, the Ethics Committee must investigate Ms. Feinstein, Ms. Bair, and the FDIC to ensure that government contracts are not being awarded as part of a sleight-of-hand pay-to-play scheme using taxpayer money. While the Senate considers legislation offered by Senator Feinstein to funnel money to the FDIC, what it should be considering is whether she did so because her husband was doing profitable business with the FDIC.
Both Ms. Feinstein and the FDIC have denied there was any pay-to-play corruption involved, but only the Committee will be able to determine that for certain. It is their sole responsibility to investigate “even the appearance of a conflict of interest” of Senate members. Assurance from either party are not sufficient to rule out wrongdoing. The whole point of the Committee, according to its website is to “investigate allegations of misconduct by members, and recommend disciplinary action to the full Senate.”
Considering the allegations, and the very serious appearance of a conflict of interests, the Committee has no choice but to move forward with an investigation. If it does not, the American people will only be left to assume that it was to provide further cover for Ms. Feinstein’s and the FDIC’s apparent wrongdoing.
