Former Obama Officials Are Riding Out The Trump Years By Cashing In
The revolving door takes a spin.
By Zach Carter and Paul Blumenthal 07/11/2018 06:53 AM ET Updated 23 hours ago The last 18 months have been difficult for former members of the Obama administration. They’ve been replaced by a regime, which, in the words of former Domestic Policy Council director Melody Barnes, “shows virtually no respect for constitutional principles, or often, basic human decency.” And now they can do little more than complain about their successors’ parade of outrages.
“Our democracy is under attack,” warned former Attorney General Eric Holder. Former Assistant AG Lanny Breuer called the Trump administration’s immigration agenda, “contrary to the core values of this nation.” Conscientious public servants “cannot stay silent,” wrote former Department of Homeland Security Secretary Jeh Johnson, who also said President Donald Trump’s separation of migrant children from their asylum-seeking parents is “immoral and un-American.” Former White House spokesman Jay Carney worried about “the country’s credibility” under Trump. “Donald Trump is sort of to politics what Bernie Madoff was to investment,” according to ex-Agriculture Secretary Tom Vilsack. His birth control policy, said Obama campaign manager David Plouffe, is “unconscionable.”
And yet for all the damage the Trump administration is doing to American democracy, several prominent Obama alums seem to have quietly made their peace with a subtler attack on the legitimacy of U.S. institutions. Today, many are lending the prestige of their White House resumes to scandal-fraught organizations in return for large sums of money. Some are even doing business with the Trump administration.
Plenty of former Obama officials are leading scholarly lives as academics, working with nonprofits or in sectors of the corporate world far from the purview of their previous duties in Washington. Obama spokesperson Eric Schultz told HuffPost that Obama “implemented unprecedented ethics rules, including cracking down on the revolving door by prohibiting former lobbyists from working on issues on which they lobbied, and by preventing appointees from lobbying the White House after working there.”
Schultz added that “President Obama’s White House was the first in modern history to not have a major scandal.”
None of the officials named in this article would comment on the record.
These days, Johnson receives $290,000 a year to serve on the board of directors at Lockheed Martin, the largest American defense contractor and the world’s biggest weapons manufacturer. It has been fined over $767 million for various forms of misconduct since forming in 1995, according to the Project on Government Oversight.
Directors of large corporations are nominally responsible for pretty important stuff: setting executive compensation, managing risk and generally ensuring that a company’s management acts in the best interest of its shareholders. But American corporate governance has been weak for decades. In practice, serving on a board means attending a few meetings a year and collecting paychecks. The Lockheed Martin board met nine times last year.
Lockheed Martin sells rockets, missiles, bombs, “guided projectiles,” “laser weapon systems,” “integrated surface warfare,” fighter jets, attack helicopters and drones, along with tech support, systems operation and various training programs. All told, the company does $35 billion a year in business with the federal government, much of it contracted with the very department Johnson recently headed. The company’s sales are rising along with Trump’s defense budgets.
Johnson has been publishing opinion pieces in The Washington Post on DHS policy of late, presenting his cachet as Obama’s DHS Secretary as a relevant credential. The pieces have not disclosed the fact that he works for a defense contractor that stands to profit from DHS business.
All told, Lockheed Martin does $35 billion a year in business with the federal government, much of it contracted with the very department Johnson recently headed. Barnes is also working at a defense contractor, earning upwards of $210,000 a year serving on the board at Booz Allen Hamilton, which held eight meetings in 2017. Barnes, who recently penned an op-ed for The Hill calling “to build an inclusive, multicultural democracy that provides opportunity, community and security for all” through “community wealth building,” has been working for the firm since 2015. Last year, the company announced it was the subject of a Department of Justice criminal investigation over irregularities in its government billing and accounting. According to the Center for Responsive Politics, in 2016 and 2017 alone, the company received $63 million in contracts to work with Immigration and Customs Enforcement ― the militarized deportation agency at the heart of the Trump administration’s family separation scandal. Booz Allen Hamilton revenues are up almost 15 percent since Trump came to town.
Ride-sharing titan Uber also hired Barnes in May 2016 in an apparent effort to clean up its image as a stream of Uber scandals began to dominate headlines. Roughly eight months after she joined a new policy advisory board at the company, a major sexual harassment scandal broke, and Barnes has remained at the company as it has weathered a barrage of subsequent debacles far removed from her role, including the improper seizing of an alleged rape survivor’s medical records in an apparent attempt to discredit her accusations.
Uber seems to have been a preferred landing pad for Obama officials. Former Transportation Secretary Ray LaHood joined Barnes on the policy advisory board, and Obama’s 2008 campaign manager David Plouffe worked as a senior vice president at the company from August 2014 until January 2017. He was fined $90,000 by the city of Chicago for illegally lobbying the city’s mayor, Rahm Emanuel, while working for Uber. Emanuel, who served as Obama’s first White House Chief of Staff, has distinguished himself as mayor by covering up the police shooting of Laquan McDonald.
Uber has also paid Holder for various legal work. After the sexual harassment story became front-page news, Uber commissioned Holder to conduct a study and issue a report detailing problems with the company’s workplace culture and management approach.
As attorney general, Holder refused to prosecute Wall Street crime related to the 2008 financial crisis, even as banks agreed to pay billions upon billions of dollars in settlement after settlement with the federal government. Even in cases where major banking institutions pleaded guilty to felony charges, Holder and the DOJ declined to prosecute any actual bankers for crimes.
So it makes a perverse kind of sense that Holder is now a partner at the law firm of Covington and Burling, a D.C.-based outfit that specializes in work on behalf of the banking industry. In a remarkable interview with MSNBC’s Chris Hayes this April, Holder downplayed the significance of financial misconduct, suggesting that law enforcement agencies have more important things to deal with.
“There’s a lot of crime that happens I think generally that doesn’t get reported ― people are stealing things out of grocery stores, people are doing things in banks that they shouldn’t be doing,” Holder said. “But when it comes to the things that are truly consequential that are truly important, I think that law enforcement ... generally holds people to account.”
Former Assistant Attorney General of the U.S. Justice Department's Criminal Division Lanny A. Breuer Former Assistant Attorney General of the U.S. Justice Department’s Criminal Division Lanny A. Breuer (Joshua Lott / Reuters)
Breuer, who was in charge of DOJ’s criminal division during the Obama years, is also a partner at Covington and Burling. He currently spends his time “helping clients navigate financial fraud investigations, anti-corruption matters, money laundering investigations, securities enforcement actions, cybercrime incidents, Congressional investigations, and other criminal and civil matters presenting complex regulatory, political, and public relations risks,” according to the firm’s website.
Obama’s first Securities and Exchange Commission Chair Mary Schapiro has also found her way into Wall Street’s good graces. She now advises financial firms for the consulting firm Promontory Financial Group, and serves on the board of Morgan Stanley ― an investment banking behemoth that has settled 24 separate allegations of misconduct with the federal government since her departure from the SEC. This includes a multibillion-dollar case for defrauding investors with toxic securities during the financial crisis. Schapiro just started at Morgan Stanley and her compensation hasn’t been disclosed, but according to a recent SEC filing, the bank’s directors receive between $338,333 and $378,333 a year. The Morgan Stanley board met a total of 16 times last year.
Former Treasury Secretary Timothy Geithner, meanwhile, is now president of the private equity firm Warburg Pincus, which owns Mariner Finance, an installment lender that targets poor families with high-interest loans. A devastating Washington Post story published last week detailed the case of one Mariner customer who borrowed $2,000 from the firm, only to find himself owing over $3,200 in less than a year, even after making a few payments on the loan. Mariner initially got in touch with the man by mailing him a check for $1,200 “out of the blue,” labeled as loan with a 33 percent interest rate.
Former Agriculture Secretary Tom Vilsack is now advocating for some of the country’s biggest dairy interests, including Schreiber Foods, Sargento, Hershey and YUM! Restaurants (better known as KFC, Taco Bell and Pizza Hut), as president of the U.S. Dairy Export Council.
Elite Washington is comfortable with what it calls ‘the revolving door’ Ex-White House Chief of Staff Pete Rouse is now chair of the Public and Strategic Affairs Group at the law firm of Perkins Coie, where he, “provides policy analysis and offers strategic advice on navigating Congress and the executive branch” and “counsels senior level executives on federal and state policy issues and related public communication challenges.” Such activity is known to the general public as “lobbying,” but ― conveniently ― does not need to be described as such for legal purposes.
And then there’s Carney. Prior to Trump’s election, perhaps no American in the 21st century had displayed greater ingenuity when attempting to discredit legitimate journalism than the former White House spokesman. Carney worked for Time magazine as a political editor before joining the White House, and he joined Amazon as a senior vice president in March 2015 after leaving the administration in the summer of 2014. When the New York Times ran a story detailing a host of problems with Amazon’s harsh workplace culture, Carney authored a lengthy reply on Medium publicly challenging the company employees quoted in the story (why Amazon thought this would contribute to an image as a supportive employer was not clear) and accusing the Times of journalistic malpractice.
Big, prestigious corporations just didn’t do this sort of thing at the time. Read Carney’s piece and ask yourself if the final paragraph doesn’t read like a memo from Sarah Huckabee Sanders. It’s a masterpiece of innuendo and half-truth, of molehills presented as mountains and unsubstantiated accusations. Carney even attacked lead reporter Jodi Kantor by name, devoting nearly 400 words to a narrative suggesting that her months of communication with the company for the story were really just an underhanded campaign of deception.
The Times stood by their story, and a month after Carney published his piece, Amazon spontaneously announced it would be implementing a more generous maternity leave policy. Kantor went on to share the 2018 Pulitzer Prize for National Reporting for breaking the Harvey Weinstein sexual misconduct story.
In a statement provided to HuffPost, an Amazon spokesperson noted that the paper’s public editor had called the Times story “unbalanced.” “The Medium article outlined the facts about the individuals mentioned in the New York Times story, and the information in it is all correct,” the spokesperson said.
This isn’t a full accounting of everything everyone in the administration has done since leaving office. Holder is chairing a the National Democratic Redistricting Committee to combat gerrymandering, for instance, while Barnes is vice chair of the Thomas Jefferson Foundation that oversees Monticello.
And elite Washington is comfortable with what it calls “the revolving door” ― the movement of government officials into lobbying, contracting or consulting jobs where they can exploit government connections for profit. It’s not considered a particularly admirable career path, but it is nevertheless accepted as a normal part of life in the nation’s capital.
But much of what passes for normal in Washington is considered grotesque in the rest of the country. If the Trump administration weren’t bumbling between different crimes against humanity, it’s hard to imagine anyone getting nostalgic for the era when these folks ran the free world.
By Peter Whoriskey July 1 Email the author The check arrived out of the blue, issued in his name for $1,200, a mailing from a consumer finance company. Stephen Huggins eyed it carefully.
A loan, it said. Smaller type said the interest rate would be 33 percent.
Way too high, Huggins thought. He put it aside.
A week later, though, his 2005 Chevy pickup was in the shop, and he didn’t have enough to pay for the repairs. He needed the truck to get to work, to get the kids to school. So Huggins, a 56-year-old heavy equipment operator in Nashville, fished the check out that day in April 2017 and cashed it.
Within a year, the company, Mariner Finance, sued Huggins for $3,221.27. That included the original $1,200, plus an additional $800 a company representative later persuaded him to take, plus hundreds of dollars in processing fees, insurance and other items, plus interest. It didn’t matter that he’d made a few payments already.
“It would have been cheaper for me to go out and borrow money from the mob,” Huggins said before his first court hearing in April.
As treasury secretary in the Obama administration, Timothy F. Geithner condemned predatory lenders. Now he is president of Warburg Pincus, a New York firm that controls a private equity fund that owns Mariner Finance. (Andrew Harrer/Bloomberg News) Most galling, Huggins couldn’t afford a lawyer but was obliged by the loan contract to pay for the company’s. That had added 20 percent — $536.88 — to the size of his bill.
“They really got me,” Huggins said.
A growing market Mass-mailing checks to strangers might seem like risky business, but Mariner Finance occupies a fertile niche in the U.S. economy. The company enables some of the nation’s wealthiest investors and investment funds to make money offering high-interest loans to cash-strapped Americans.
Mariner Finance is owned and managed by a $11.2 billion private equity fund controlled by Warburg Pincus, a storied New York firm. The president of Warburg Pincus is Timothy F. Geithner, who, as treasury secretary in the Obama administration, condemned predatory lenders. The firm’s co-chief executives, Charles R. Kaye and Joseph P. Landy, are established figures in New York’s financial world. The minimum investment in the fund is $20 million.
Mariner Finance operates more than 450 branches in 22 states, according to company filings. It is especially active in Virginia, Maryland, Tennessee, Pennsylvania and Florida. Above, a store in District Heights, Md. (Salwan Georges/The Washington Post) Dozens of other investment firms bought Mariner bonds last year, allowing the company to raise an additional $550 million. That allowed the lender to make more loans to people like Huggins.
“It’s basically a way of monetizing poor people,” said John Lafferty, who was a manager trainee at a Mariner Finance branch for four months in 2015 in Nashville. His misgivings about the business echoed those of other former employees contacted by The Washington Post. “Maybe at the beginning, people thought these loans could help people pay their electric bill. But it has become a cash cow.”
The market for “consumer installment loans,” which Mariner and its competitors serve, has grown rapidly in recent years, particularly as new federal regulations have curtailed payday lending, according to the Center for Financial Services Innovation, a nonprofit research group. Private equity firms, with billions to invest, have taken significant stakes in the growing field.
Among its rivals, Mariner stands out for the frequent use of mass-mailed checks, which allows customers to accept a high-interest loan on an impulse — just sign the check. It has become a key marketing method.
The company’s other tactics include borrowing money for as little as 4 or 5 percent — thanks to the bond market — and lending at rates as high as 36 percent, a rate that some states consider usurious; making millions of dollars by charging borrowers for insurance policies of questionable value; operating an insurance company in the Turks and Caicos, where regulations are notably lax, to profit further from the insurance policies; and aggressive collection practices that include calling delinquent customers once a day and embarrassing them by calling their friends and relatives, customers said.
Finally, Mariner enforces its collections with a busy legal operation, funded in part by the customers themselves: The fine print in the loan contracts obliges customers to pay as much as an extra 20 percent of the amount owed to cover Mariner’s attorney fees, and this has helped fund legal proceedings that are both voluminous and swift. Last year, in Baltimore alone, Mariner filed nearly 300 lawsuits. In some cases, Mariner has sued customers within five months of the check being cashed.
The company’s pace of growth is brisk — the number of Mariner branches has risen eightfold since 2013. A financial statement obtained by The Post for a portion of the loan portfolio indicated substantial returns.
Mariner Finance officials declined to grant interview requests or provide financial statements, but they offered written responses to questions.
Company representatives described Mariner as a business that yields reasonable profits while fulfilling an important social need. In states where usury laws cap interest rates, the company lowers its highest rate — 36 percent — to comply.
“The installment lending industry provides an important service to tens of millions of Americans who might otherwise not have safe, responsible access to credit,” John C. Morton, the company’s general counsel, wrote. “We operate in a competitive environment on narrow margins, and are driven by that competition to offer exceptional service to our customers. . . . A responsible story on our industry would focus on this reality.”
Regarding the money that borrowers pay for Mariner’s attorneys, the company representatives noted that those payments go only toward the attorneys it hires, not to Mariner itself.
The company declined to discuss the affiliated offshore company that handles insurance, citing competitive reasons. Mariner sells insurance policies that are supposed to cover a borrower’s loan payments in case of various mishaps — death, accident, unemployment and the like.
“It is not our duty to explain to reporters . . . why companies make decisions to locate entities in different jurisdictions,” Morton wrote.
Through a Warburg Pincus spokesman, Geithner, the company president, declined to comment. So did other Warburg Pincus officials. Instead, through spokeswoman Mary Armstrong, the firm issued a statement:
“Mariner Finance delivers a valuable service to hundreds of thousands of Americans who have limited access to consumer credit,” it says. “Mariner is licensed, regulated, and in good standing, in all states in which it operates and its operations are subject to frequent examination by state regulators. Mariner’s products are transparent with clear disclosure and Mariner proactively educates its customers in every step of the process.”
Equity firms' stakes Over the past decade or so, private equity firms, which pool money from investment funds and wealthy individuals to buy up and manage companies for eventual resale, have taken stakes in companies that offer loans to people who lack access to banks and traditional credit cards.
Some private equity firms have bought up payday lenders. Today, prominent brands in that field, such as Money Mart, Speedy Cash, ACE Cash Express and the Check Cashing Store, are owned by private equity funds.
Other private equity firms have taken stakes in “consumer installment” lenders, such as Mariner, and these offer slightly larger loans — from about $1,000 to more than $25,000 — for longer periods of time.
Today, three of the largest companies in consumer installment lending are owned to a significant extent by private equity funds — Mariner is owned by Warburg Pincus; Lendmark Financial Services is held by the Blackstone Group, which is led by billionaire Stephen Schwarzman; and a portion of OneMain Financial is slated to be purchased by Apollo Global, led by billionaire Leon Black, and Varde Partners.
These lending companies have undergone significant growth in recent years. To raise more money to lend, they have sold bonds on Wall Street.
“Some of the largest private equity firms today are supercharging the payday and subprime lending industries,” said Jim Baker of the Private Equity Stakeholder Project, a nonprofit organization that has criticized the industry. In some cases, “you’ve got billionaires extracting wealth from working people.”
Exactly how much Mariner Finance and Warburg Pincus are making is difficult to know.
Mariner Finance said that the company earns a 2.6 percent rate of “return on assets,” a performance measure commonly used for lenders that measures profits as a percentage of total assets. Officials declined to share financial statements that would provide context for that number, however. Banks typically earn about a 1 percent return on assets, but other consumer installment lenders have earned more.
The financial statements obtained by The Post for “Mariner Finance LLC” indicate ample profits. Those financial statements have limitations: “Mariner Finance LLC” is one of several Mariner entities; the statements cover only the first nine months of 2017; and they don’t include the Mariner insurance affiliate in Turks and Caicos. Mariner Finance objected to The Post citing the figures, saying they offered only a partial view of the company.
The “Mariner Finance LLC” documents show a net profit before income taxes of $34 million; retained earnings, which include those of past years, of $145 million; and assets totaling $561 million. Two independent accountants who reviewed the documents said the figures suggest a strong financial performance.
“They are not hurting at least in terms of their profits,” said Kurt Schulzke, a professor of accounting and business law at Kennesaw State University, who reviewed the documents. “They’ve probably been doing pretty well.”
New management As treasury secretary, Geithner excoriated predatory lenders and their role in the Wall Street meltdown of 2007. Bonds based on subprime mortgages, he noted at the time, had a role in precipitating the panic.
“The financial crisis exposed our system of consumer protection as a dysfunctional mess, leaving ordinary Americans way too vulnerable to fraud and other malfeasance,” Geithner wrote in his memoir, “Stress Test.” “Many borrowers, especially in subprime markets, bit off more than they could chew because they didn’t understand the absurdly complex and opaque terms of their financial arrangements, or were actively channeled into the riskiest deals.”
In November 2013, it was announced that Geithner would join Warburg Pincus as president. Months earlier, one of the firm’s funds had purchased Mariner Finance for $234 million.
Under the management of Warburg Pincus, Mariner Finance has expanded briskly.
When it was purchased, the company operated 57 branches in seven states. It has since acquired competitors and opened dozens of branches. It now operates more than 450 branches in 22 states, according to company filings.
Twice last year, Mariner Finance raised more money by issuing bonds based on its loans to “subprime” borrowers — that is, people with imperfect credit.
Ex-workers share qualms To get a better idea of business practices at this private company, The Post reviewed documents filed for state licensing, insurance company documents, scores of court cases, and analyses of Mariner bond issues by Kroll Bond Rating Agency and S&P Global Ratings; obtained the income statement and balance sheet covering most of last year from a state regulator; and interviewed customers and a dozen people who have worked for the company in its branch locations.
Mariner Finance has about 500,000 active customers, who borrow money to cover medical bills, car and home repairs, and vacations. Their average income is about $50,000. As a group, Mariner’s target customers are risky: They generally rank in the “fair” range of credit scores. About 8 percent of Mariner loans were written off last year, according to a report by S&P Global Ratings, with losses on the mailed loans even higher. By comparison, commercial banks typically have suffered losses of between 1 and 3 percent on consumer loans.
Despite the risks, however, Mariner Finance is eager to gain new customers. The company declined to say how many unsolicited checks it mails out, but because only about 1 percent of recipients cash them, the number is probably in the millions. The “loans-by-mail” program accounted for 28 percent of Mariner’s loans issued in the third quarter of 2017, according to Kroll. Mariner’s two largest competitors, by contrast, rarely use the tactic.
Mariner generally targets people who have imperfect credit scores, according to the bond rating agencies. After a mailed check is cashed by a recipient, a Mariner rep follows up and solicits more information about the borrower — this helps in collections — and sometimes proposes additional lending. About half of the loans that begin with an unsolicited check are later converted into conventional loans.
“Our customer satisfaction rates with this product are exceptional,” wrote Morton, the company’s general counsel. He said that only about .02 percent of the mailed loan accounts lead to complaints.
Ten of the 12 former employees whom The Post contacted, however, expressed qualms about the company’s sales practices, describing an environment where meeting monthly goals seemed at times to rely on customer ignorance or distress. Those interviewed worked in branches across five states where Mariner is especially active: Virginia, Maryland, Tennessee, Pennsylvania and Florida.
“I didn’t like the idea of dragging people down into debt — they really make it a big deal to call and collect and not take no for an answer,” said Asha Kabirou, 28, a former customer service representative in two Maryland locations in 2014. “If someone started to fall behind on their payments — which happened a lot — they would say, ‘Why don’t we offer you another $200?’ But they wouldn’t have the money the next month, either.”
“Were there a few loans that actually helped people? Yes. Were 80 percent of them predatory? Probably,” said one former branch manager who was at the company in 2016. He spoke on the condition of anonymity, saying he did not want to antagonize his former employer. “I’m still embarrassed by some of the things I did there.”
“The company is here to make money — I understand that,” said Mauricio Posso, 28, who worked at a Northern Virginia location in 2016 and said he viewed it as valuable work experience. “At the same time, it’s taking advantage of customers. Most customers do not read what they get in the mail. It’s just little tiny type. They just see the $1,200 for you. . . . It can be a win-win. In some situations, it was just a win for us.”
While Mariner and industry advocates note that consumers can simply decline a loan if the terms are onerous, at least some of them may lack the time, English skills or other knowledge to shop around. Some are acutely in need of cash.
“I wanted to go to my mother’s funeral — I needed to go to Laos,” Keo Thepmany, a 67-year-old from Laos who is a housekeeper in Northern Virginia, said through an interpreter. To cover costs, she took out a loan from Mariner Finance and then refinanced and took out an additional $1,000. The new loan was at a rate of 33 percent and cost her $390 for insurance and processing fees.
She fell behind, and Mariner filed suit against her last year for $4,200, including $703 for attorney fees. The company also sought a court order to take out money from her wages.
Barbara Williams, 72, a retired school custodian from Prince William County, in Northern Virginia, said she cashed a Mariner loan check for $2,539 because “I wanted to get my teeth fixed. And I wanted to pay my hospital bills.”
She’d been in the hospital with three mini-strokes and pneumonia, she said. Within a few months, Mariner suggested she borrow another $500, and she did. She paid more than $350 for fees and insurance on the loan, according to the loan documents. The interest rate was 30 percent.
“It was kind of like I was in a trance,” she said of her decision to borrow from Mariner. She paid back some of the money but then fell behind, and Mariner sued. The company won court judgment against her in April for $3,852, including $632 in fees for Mariner’s attorney.
A lucrative addition The other pool of Mariner Finance revenue comes from selling insurance polices.
Mariner pitches the insurance policies to customers as a way of paying off a loan in case of mishaps: There is a life insurance policy that promises to make the loan payments if you die, an unemployment policy that makes the payments if you lose your job, and an accident and disability policy in case of those possibilities.
Mariner also sells a car club membership that covers the cost of repairs.
These can add several hundred dollars to a loan.
The insurance policies provide “tangible benefits” for customers whose financial arrangements are vulnerable to life’s interruptions, the company said.
Customers are supposed to be informed that the insurance policies are optional. Several former employees alleged that some salesmen tacked on these products and waited for customers to object. They likened it to the add-ons that pad the bill when buying a car.
“If you sold a car club membership, you were like a god,” said a former assistant branch manager in Pennsylvania.
When Mariner salesmen were closing a loan and “went to print out the loan contract, they would just automatically add the insurance on there — every time,” Kabirou, the customer service representative said. “Clients would say, ‘Do I really need it?’ And the person would say, ‘Yes, you need to be covered.’ ”
In response, the company said steps are taken to make sure that customers understand that the insurance is optional.
The company has “numerous safeguards in place to make sure that all of our products are sold in a responsible manner. . . . Our audit teams regularly visit branch locations and monitor loan closings to ensure that our employees are explaining all products correctly. And we call a randomly selected subset of new customers every day to make sure they understand the terms of the loans.”
Mariner makes money from the insurance sales in two ways.
First, Mariner gets a commission from the insurance companies for selling the policies.
Mariner sells insurance policies issued by Lyndon Southern and Life of the South, and these two companies often give sales commissions of as much as 50 percent of the premium price, according to statistics filed with the National Association of Insurance Commissioners.
Mariner Finance officials declined to say how much of a commission Mariner receives on insurance policies it sells.
The second way that Mariner profits from the insurance sales is through its insurance company registered in Turks and Caicos. That company, too, earns money on policies issued by Life of the South and Lyndon Southern.
Essentially, it works like this: Mariner sells the insurance policies written by the two companies. Those two insurance companies, in turn, buy reinsurance from Mariner’s offshore affiliate, called MFI Insurance. Last year, those two insurance companies ceded $20 million in premiums back to MFI, according to documents filed in Delaware, where Lyndon Southern is based, and from Georgia, where Life of the South is.
Mariner declined to discuss its offshore insurance company. According to a Turks and Caicos financial regulator, it is the ease of doing business there — not laxity of regulation — that attracts companies to set up shop there.
“We have a risk-appropriate regulatory framework,” said Niguel Streete, managing director of the Turks and Caicos Islands Financial Services Commission.
But numerous business experts have advised U.S. insurers to set up shop in Turks and Caicos to avoid regulation.
“Much of the appeal of an offshore reinsurer is the modest regulatory climate,” according to a guidebook published by an insurance consulting agency known as CreditRe. Many such reinsurers “were developed as a legal mechanism to generate potential total income in excess of the commission caps.”
The trouble with the insurance policies like the ones that Mariner sells to borrowers is that they devote so little money to covering claims, said Birny Birnbaum, executive director of the consumer advocacy organization Center for Economic Justice, which has issued reports on the credit insurance industry. He formerly served as the Texas Department of Insurance’s chief economist.
“At the end of the day, these lenders take far more in profit from the insurance premium than the amount paid in benefits for the consumer,” Birnbaum said.
Some regulators call for insurers to allocate at least 60 percent of premiums collected for covering customer claims; by contrast, some of the policies from Life of the South return as little as 20 percent to consumers; the policies from Lyndon Southern offer as little as 9 percent on average, according to the NAIC statistics.
Take, for example, the unemployment policy that Huggins bought from Lyndon Southern. The insurance cost Huggins a total of $172.
The average Lyndon Southern unemployment policy gives half of the premium back to the seller as a commission, according to the NAIC statistics. Less than 9 percent of premiums goes to covering customer claims, an extraordinarily low number, insurance experts said.
Life of the South and Lyndon Southern did not respond to requests for comment. Neither did the parent company of the insurers, known as Fortegra.
So far, Huggins’s unemployment policy hasn’t done him much good. He thought he was covered when he became unemployed last year and informed Mariner Finance. Instead, Mariner Finance summoned him to court.
Huggins said he’s worried about how disruptive the court case may be. He’s lost a day or two from work. More ominously, while he had hoped to raise his credit score enough to buy a house, a legal judgment against him could undo those plans. He and his stepkids are renting a place from a friend for now.
“Who sends someone $1,200 in the mail that they don’t know nothing about except maybe their credit score?” he said. “It was postdated, good for a month. I guess they give you a month to sit around and look at it and everything else until you just convince yourself you really need that money. . . .
“You think they’re helping you out — and what they’re doing is they’re sinking you further down,” he said. “They’re actually digging the hole deeper and pushing you further down.”
2. "surprised HuffPo let this one fly, but they're right" In response to Reply # 0 Thu Jul-12-18 01:42 PM by Dr Claw
there is no check on corporate power, specifically in the Ouroburos of defense-related corporations that eats their own asses to keep the Washington subterfuge going.
the Democratic Party exists to stifle left-leaning policy outside of those that keep the capitalism subterfuge going.
the Republican Party exists to stifle proper political discourse by dangling the carrot of racism over the heads of an heavily entitled populace while they rob the country blind.
why the "scandal-less" Obama Admin was called as such is because American political discourse classifies "scandals" as the type that got Bill Clinton impeached, rather than the ones that the GOP made of Hillary Clinton (on bad faith -- they ain't really give a fuck about Libya). or the ones that were exposed from the left of both (and Obama). if it's something that actually would move America away from corporate corruption and "cashing in" over proper functional policy that fundamentally changes it from a prison/slave colony at heart.... the media (and populace) don't want it
I am pessimistic that American political parties can be overcome to break the status quo within my lifetime.
4. "we're meant to think 'this is ok' or 'everyone does it' cuz at least " In response to Reply # 0
they're better than republicans... which is true. But it still speaks to the increasing power that money has in our political system. I'd say it was a conflict of interests for politicians, but there's very little conflict. The interest lies in $$$$$$ and less and less with voters and the working class.
Backed by Obama Alums, a Law-and-Order Candidate Aims to Topple Progressive Leaders in Baltimore
The Intercept · by Rachel M. Cohen · June 20, 2018
Robbyn Lewis’s appointment to the Maryland General Assembly in late 2016 was met with excitement. The first black woman to ever hold office in Maryland’s 46th Legislative District, she said her life’s work in public health and transit advocacy prepared her to meet the needs of those in south and southeast Baltimore.
Her appointment was recommended by the Baltimore City Democratic Central Committee, but now she is running in her first election. On Tuesday, Maryland voters will head to the polls for the Democratic primary (early voting began on June 14), and Lewis, 54, is facing a formidable challenge from Nate Loewentheil, an alumnus of the Obama administration whose campaign has been fueled largely by donors outside the city. Loewentheil has centered his campaign on Baltimore’s high levels of crime, even though state delegates have little control over implementing crime prevention programs.
Lewis is running to hold her seat on a slate with the two other incumbents from District 46 — Brooke Lierman and Luke Clippinger — as well as the district’s state senator, Bill Ferguson, who is running for re-election unopposed. Lierman and Clippinger are running for their second and third times, respectively, and Lewis — who has served the shortest stint in office — is considered the most vulnerable candidate on “Team46.” (There are six candidates running for House delegate seats, three of whom will be elected to represent the district.) On Wednesday, the Baltimore Sun endorsed the Team46 candidates.
Lewis founded a grassroots political PAC to mobilize infrastructure investment in Baltimore. Lewis was born in Gary, Indiana, at the height of the civil rights movement, and she says her experiences since then have shaped her path toward public office. Her parents were among the first beneficiaries of the Fair Housing Act; the landmark 1968 legislation that prohibited discrimination in the sale or rental of property enabled them to buy a house in a completely white Chicago neighborhood. She went on to attend the University of Chicago for college and obtained her master’s degree from Columbia University. She later served as a Peace Corps volunteer in Niger and moved to Baltimore in the late 1990s, when she got a job coordinating research at the Johns Hopkins Bloomberg School of Public Health. Over the last two decades, Lewis has led a movement to plant over 100 new trees in her community and founded a grassroots political PAC to mobilize infrastructure investment in Baltimore. She told The Intercept she’s humbled to be able to bring those experiences with her to the state legislature, one of the most progressive in the country.
Join Our Newsletter Original reporting. Fearless journalism. Delivered to you. I’m in Loewentheil, a 32-year-old graduate of Yale University and Yale Law School, has only recently returned to the city. He was born in Baltimore and attended the Park School, a liberal private school in town, but lived in the Baltimore County suburbs for much of his youth. In 1991, Loewentheil’s father told the Baltimore Sun they were moving out of Baltimore due to safety concerns.
After law school, Loewentheil went straight to work for the Obama administration, serving as a policy adviser on the National Economic Council. Later, he took over a federal task force on Baltimore which was formed in the wake of Freddie Gray’s death in police custody. It sought to coordinate and mobilize over a dozen federal agencies to help Baltimore tap new sources of funding and address systemic challenges, such as lead exposure and unemployment.
Loewentheil “spent the last weeks in the administration working closely with political, business, and civic leadership, and it was a reminder of all the great things I loved about the city,” he said of the task force.
He has leaned heavily on his connections to the Obama administration to run his campaign, both as a selling point for his candidacy and as leveraged power through his Obama alumni network. Jeffrey Zients, Obama’s lead economic policy adviser, held a fundraiser in Washington, D.C., for Loewentheil’s campaign and personally wrote him a $6,000 check. The candidate’s Yale alumni network has also stepped in to help him unseat Lewis. Even Bob Borosage, co-director of the progressive Campaign for America’s Future, kicked him some money.
All told, Loewentheil has amassed a remarkable amount of financial support for his campaign: over $430,000 according to the latest campaign finance reports. He spent $109,738 between May 16 and June 10. Lewis, by contrast, has raised a little over $110,000 throughout her campaign and spent $2,546 in that same period.
“The amount he’s raised and the amount he’s spending in a state delegate race is beyond unprecedented.” “I would say the amount he’s raised and the amount he’s spending in a state delegate race is beyond unprecedented,” Ferguson, the state senator running in the 46th District, told The Intercept. “I can’t imagine there has been anything close to this anywhere else in Maryland history.” Ferguson acknowledged that “fundraising is part of politics” but noted “the breadth of non-Maryland dollars that are being funneled into the campaign is striking.” According to campaign finance reports, a majority of Loewentheil’s funds have come from outside the state. More than $9,000 came from Palantir, the San Francisco-based data surveillance which Peter Thiel co-founded and now chairs.
Loewentheil is part of a wave of former Obama appointees who are flooding into the lower levels of politics and reaping praise for doing so. Earlier this month, USA Today ran a story headlined, “Surge of Obama alumni running for office in wake of President Trump’s election.” The piece reported that more than 65 former Obama officials are currently campaigning, aided by the resources and prowess of the Obama Alumni Association. A picture of Loewentheil knocking doors featured prominently in the article.
“Obama was a community organizer, and I think that’s shaped my approach to the campaign,” Loewentheil told The Intercept. “I just spent literally every day knocking doors, you just go out and talk to folks, that’s what politics means. I’ve been influenced by experience and story which really permeated the White House.”
His support from the Obama network is overwhelming, but not absolute. Broderick Johnson, a Baltimore native who served as Obama’s Cabinet secretary, assistant to the president, and chair of the My Brother’s Keeper Task Force, recently endorsed Team46 over Loewentheil. “While serving as President Obama’s Cabinet Secretary, I helped direct much needed attention and resources from across our Administration to Baltimore City,” Johnson said in a statement. “Those efforts were done in collaboration with the city’s great leaders. … Those leaders who are closest to the ground, like the members of Team46, need no introduction to the city or to the State’s leaders in Annapolis. Team46 has created partnerships and leveraged resources necessary to bring equity in Baltimore’s public schools, to support greater job creation, to fund transit to connect citizens to those jobs, and to build a Baltimore where everyone counts.”
Photo: Courtesy of the Nate Loewentheil campaign
Baltimore has indeed struggled to curb crime, which has spiked over the last three years. The city saw 341 homicides in 2017, 318 in 2016, and 344 in 2015. The average rate for the prior four years was 214, and the city hadn’t seen 300-plus murders in one year since the 1990s.
Loewentheil has singled out this issue, accusing his opponents of not doing enough to improve public safety and lamenting how crime prevention programs have historically been run. Many of his proposals involve injecting state funds into Baltimore — which state delegates can indeed help do — but it is local officials (like the mayor, state’s attorney, and police commissioner) who ultimately oversee policy and program implementation. “I think win or lose, I’ve forced our current delegation to take the issue of gun violence more seriously,” he told The Intercept. In reality, the district’s current representatives have worked on a number of public safety initiatives.
“It is incredibly misleading and disingenuous to suggest that state legislators representing the 46th District have been anything but fierce advocates for creating safe communities,” said Ferguson, the state senator.
Throughout the campaign, Team46 has highlighted a series of their own legislative accomplishments on improving public safety. For example, Maryland’s governor signed the Maryland Violence Intervention and Prevention Program into law earlier this year. The new law, which Lierman authored and Clippinger and Lewis co-sponsored, sets aside $5 million for the next fiscal year to fund violence reduction strategies through competitive grants to local governments and nonprofit groups. The Huffington Post reported that only five other states have such a program, which is “designed to give a financial injection to evidence-based services that address the root causes of gun violence.”
Lewis, for her part, said her public health background equips her to address those root challenges. “As an African-American, I will never stop telling the truth about the root causes of our challenges in this city,” she told The Intercept. “The root causes of crime in this city are the long-term policies that drove racial segregation, disinvestment in communities, and criminalization of black skin. A single-minded focus on the outcome of those policies is disingenuous. I’m a public health professional; my training is in identifying sources of illness and addressing them.”
On social media, residents have charged Loewentheil with running a fear-based campaign, pandering to white voters in his district. Nearly half of District 46 is white, making it one of the whitest legislative zones in the city.
One video Loewentheils’s campaign released this past spring featured a white man that the candidate identified as his personal friend, his campaign treasurer, and a lifelong Baltimore resident. The man, Guy Tawney, talked about how he’s “not certain” if he’d be comfortable raising a family in Baltimore, given all the crime and violence he’s witnessed and experienced. “And that’s why I support Nate’s campaign,” Tawney concluded. “I know Nate is going to improve public safety in our city.”
On his campaign website, Loewentheil claims that if elected, he “will fight to get the Baltimore Police Department back to basics, like beat policing that gets more cops walking the streets.” His “” released late last month, outlines a number of other police reform ideas that fall far outside the authority of a House delegate, such as getting the police department to adopt “predictive policing.”
A screenshot from Nate Loewentheil’s campaign Instagram profile.
Loewentheil has also penned a number of op-eds emphasizing the image of Baltimore as an unsafe, crime-ridden city. In the Washington Post, he opened with stark imagery of violence: “Baltimore is experiencing the worst wave of violent crime of any city in the United States. One day last month, in only 24 hours, six people were murdered. It’s as if mortal dice are rolled every day across the city’s streets. Stray bullets have injured a girl as young as 3 and a woman as old as 90.”
“It’s really strange to be a black person and have a white person accuse you of being indifferent to crime.” Lewis told The Intercept that Loewentheil’s campaign affects her personally. “To hear messages that because we don’t have a crime-free city, the people in leadership like it that way, or don’t care, that’s very personal for me,” she said. “It’s really strange to be a black person and have a white person accuse you of being indifferent to crime. It’s a way of saying that you like crime, you tolerate crime. It’s a dog whistle, it’s a way of triggering fear in a certain population of this district, and a way of subliminally suggesting that the first African-American representative won’t keep you safe because she’s African-American.”
Loewentheil has also repeatedly vocalized his support for mandatory minimum sentences, declaring in an op-ed last summer that he supported a newly proposed mandatory minimum in Baltimore that would have imposed jail sentences on first-time offenders caught carrying a gun within 100 yards of places like churches, schools, and parks. The proposed measure, which was vociferously opposed by activists in the community, was eventually weakened after public protest. Loewentheil later lamented that a similar state-level push for a new mandatory minimum “was unfortunately rejected.”
In outlining his support for new minimums, he has broken with a growing bipartisan consensus that has emerged around the idea that such policies are ineffective and expensive crime deterrents, as well as racially discriminatory. He has also praised Maryland’s Republican governor, Larry Hogan, for his “commitment to addressing crime in Baltimore.” Hogan has sponsored legislation that would lengthen mandatory minimum sentences, limit access to parole, and try more juveniles as adults.
Loewentheil praised one of the incumbent delegates, Lierman — calling her “a very talented politician” — but asserted that the current delegation is just unable to get the job done in Annapolis. He pointed to Dea Thomas, another African-American woman running in the race with whom he has allied himself as another alternative. “My plan is for both of us to win,” he said. Thomas has raised just $68,000 dollars, according to campaign finance records. She ran for a city council seat two years ago and lost by a wide margin. Thomas did not return The Intercept’s request for an interview.
The race could go either way, but Lewis hopes that her record of service in Baltimore will bring her over the top.
“No one else has been a community organizer like I have, no one else has started a political action committee in service of bringing mass transit infrastructure but me — I’ve been here long enough to accomplish those things,” she said. “I stand on my record of service, my demonstrated care, and compassion. If the best you can do is throw mud, go for it, and we’ll let the people decide.”
Top photo: Maryland State Delegate Robbyn Lewis canvases her constituents’ neighborhoods during the third Baltimore ceasefire weekend on Feb. 3, 2018.
The Intercept · by Rachel M. Cohen · June 20, 2018
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