With negotiations nearing their conclusion, the final terms of the agreement will have significant implications for not only the nation’s largest banks and millions of homeowners, but the entire housing market and U.S. economy.
Given these stakes, it is not surprising that Attorney General Tom Miller—who has coordinated the national investigation and is currently at the center of the final negotiations—received large campaign donations from a variety of contributors with a vested interest in the final terms of the settlement.
Nearly half of the money Miller raised in 2010—$338,223 of $785,103—was donated after the October 13 announcement that he would be coordinating the 50-state attorneys general investigation.
Contributions To Tom Miller
A detailed look at the campaign contributions made to Iowa Attorney General Tom Miller reveals several interesting giving patterns.
First, however, these contributions have to be put into the larger context of Tom Miller’s involvement in last fall’s foreclosure moratorium, which began when Ally Financial (formerly GMAC), JPMorgan Chase, and Bank of America halted their foreclosure proceedings in dozens of states between September 20 and October 1, 2010.
On September 24, Miller announced that his office was opening a civil investigation of Ally Financial’s foreclosure processes in Iowa.
Two weeks later, on October 7, Miller’s office issued a press release stating that Miller had spoken to representatives of JPMorgan Chase, Ally Financial, and Bank of America regarding their foreclosure proceedings; as well as “assigned staff to convene a separate group of bipartisan state attorneys general and state banking regulators to coordinate states’ reviews and responses to the troubling disclosures by mortgage companies.”
Almost a week later, on October 13, Miller’s office made the official announcement that his office was coordinating a 50-state effort to examine foreclosure practices by major financial lenders.
Miller’s major contributions from out-of-state lawyers and firms closely tracks these developments. Between September 30 and Election Day, Miller received $170,300 from lawyers outside of Iowa, which is two-thirds of all the money he raised from them during the entire two-year election cycle. (For a more detailed, day-by-day timeline of Miller’s contributions from lawyers and lobbyists, see his contributions timeline).
Although it is typical for candidates to raise large sums of money in the month immediately preceding the election, Miller’s out-of-state donations in 2010 were a significant departure from his two previous campaigns, in terms of the amount of money he raised, where it came from, and when. •Miller raised $785,000 in 2010, more than double the $327,196 he raised for his 2006 and 2002 campaigns combined. •Miller’s 2010 campaign was unprecedented in the amount of contributions received from outside of Iowa: $497,000, or 63 percent of his 2010 total, came from out-of-state donors. This is a significant break from his previous two reelection campaigns, when less than one-tenth of his campaign funds came from outside of Iowa.
TABLE 1: Miller’s Out-of-State Contributions Election Out-of-state Contributions Percent of Total: 2010 $497,357 63% 2006 $10,508 10% 2002 $19,498 9%
Even more interesting is that it was the lawyers and donors from the finance, insurance, and real estate (FIRE) sector from outside of Iowa who were largely responsible for this reversal. Out-of-state lawyers and lobbyists gave Miller $261,445 in 2010, which is 88 times more than they gave over the previous decade. Out-of-state donors from the FIRE sector gave Miller $56,150 in 2010, compared to $3,500 in 2006 and $1,000 in 2002.
The out-of-state lawyers who suddenly took a strong interest in Miller’s reelection last fall are among the most prominent litigators and partners from some of the largest and most famous corporate and class action firms in the country, which is not surprising given the numerous high-stakes court cases filed in the wake of the financial collapse of 2008 that could be impacted by the pending settlement. TABLE 2: Major Out-of-State Contributions from Lawyers Firm Total from Firm Total from Firm's Employees Grand Total Boies, Schiller & Flexner 0 $63,450 $63,450 Kirby McInerney $25,000 0 $25,000 Simpson Thacher & Bartlet 0 $12,500 $12,500 Williams & Connolly 0 $10,500 $10,500 Kaplan, Fox & Kilsheimer $11,000 0 $11,000 Hanly, Conroy, Bierstein, Sheridan, Fisher & Hayes $10,000 0 $10,000 Total $46,000 $86,450 $132,450
“Total from Firm” are donations made directly by the law firm. “Total from Firm’s Employees” are the sum of personal contributions made by employees of each firm. Below are detailed explanations of the out-of-state lawyers and firms that gave Tom Miller significant contributions.
David Boies, Donald Flexner, and Robert Silver—all partners in the New York firm Boies, Schiller & Flexner—gave Miller $60,000, or 7.6 percent of his total, making the firm the largest contributor to Miller’s campaign.12 The firm is one of the most prominent in the country, best known for representing the U.S. government in U.S. vs. Microsoft, and Vice-President Al Gore during the 2000 presidential election recount.
The firm also has a long record of defending corporate clients and dealing with complex financial litigation. Goldman Sachs hired the firm in June of 2010 to defend itself from a hedge fund seeking $1 billion over subprime mortgage-linked securities sold to them by Goldman, as well as several other suits brought against Goldman involving other investments backed by subprime mortgage-linked securities.
Kirby McInerney—which is litigating Wachovia, Moody’s Corporation, National City, and Citigroup on behalf of state pension funds and shareholders who claim these firms misled them about their subprime mortgage investments—gave Miller $25,000.
Kevin Arquit, a partner at Simpson Thacher & Bartlett, gave Miller $12,500. Arquit, according to his official Simpson Thacher & Bartlett biography, is “regularly recognized as one of the world’s top antitrust attorneys.”20 Simpson Thacher & Bartlett has recently been linked to several major players in the housing market. Most notably, the firm has worked with the Treasury Department’s Troubled Asset Relief Program (TARP), as well as listing JP Morgan Chase, Wachovia, and Lehman Brothers as clients.
Eight partners from Williams & Connolly, another Washington, D.C. firm, combined to give Miller $10,500. The firm has experience defending high-profile clients—including representing President Clinton during his impeachment trial. The firm has been retained by Fannie Mae’s former CEO, Franklin Raines; its former CFO, J. Timothy Howard; and an ex-controller, Leanne Spencer, who all resigned in 2004 over allegations about Fannie Mae’s accounting practices.
One of these partners, Gregory Craig, also deserves mention, as he was one of the first lawyers retained by Goldman Sachs in response to the SEC lawsuit.
Kaplan, Fox & Kilsheimer gave Miller $11,000. The firm is suing Countrywide Financial and Fannie Mae over their use of subprime mortgage lending. Hanly Conroy Bierstein Sheridan Fisher & Hayes, another prominent New York-based class action firm, gave $10,000. Milberg LLP, a prominent class action firm that is suing Citigroup over its mortgage modification practices, gave Miller $7,500.28. Meyer Koplow, a partner at the New York firm Wachtell, Lipton, Rosen & Katz, gave Miller $5,000. Koplow is most famous for negotiating Philip Morris’ $206 billion class action settlement with state attorneys general in 1998.
Frederick Kuykendall III, of both the Murphy Firm and Kuykendall & Associates, is currently involved in the class action suit against British Petroleum over the Deepwater Horizon oil spill.30 Kuykendall gave Miller $5,000.
Robert Sherman coordinates with state attorneys general for Greenberg Traurig, a global, 1,800-lawyer corporate litigation firm.31 32 Sherman gave $1,500 to Miller, and Greenberg Traurig's PAC contributed an additional $2,000.
Bernard Nash of the firm Dickstein Shapiro gave $2,500. Nash is a prominent corporate litigator, and advertises his own experience dealing with state attorneys general. According to the firm’s own website— “under Mr. Nash’s leadership, the State Attorneys General Practice has become the country’s largest and premier practice devoted to resolving State Attorney General disputes.”
Stephen Houck is a prominent antitrust lawyer at Menaker & Herrmann, as well as the executive director of The Center for State Enforcement of Antitrust and Consumer Protection Laws, which supports antitrust and consumer protection enforcement across the country. Houck gave Miller’s campaign $1,000.
Notable FIRE Contributors
Miller received contributions from two notable FIRE contributors.
Elizabeth McCaul gave Miller $10,000. McCaul is the Partner-in-Charge of Promontory Financial—a large New York City-based consulting firm—and the former Superintendent of Banks for the State of New York Banking Department, the regulatory agency that oversees the banking industry in New York state, including Wall Street firms.
Linda Killinger, the wife of Washington Mutual’s former CEO Kerry Killinger, gave Miller $10,000. Washington Mutual did not survive the credit crisis of 2008, largely because of its subprime lending, and Mr. Killinger is being sued by the FDIC over the firm’s collapse.
Democratic Attorneys General Association
Miller also received $50,000 from the Democratic Attorneys General Association (DAGA), a political organization that supports Democratic candidates across the country who run for attorney general. OpenSecrets.org lists DAGA’s top 2010 contributors, summarized below.
Notable contributions made to DAGA by lawyers and law firms include: •$125,000 from the consumer protection firm Bernstein Litowitz Berger & Grossmann, which is suing Citigroup, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and many other financial institutions over their mortgage practices •$115,000 from Labaton Sucharow, a firm that is bringing multiple suits related to subprime mortgages •$77,500 from Kaplan, Fox & Kilsheimer, another national consumer firm with pending subprime mortgage litigation Also among DAGA’s top contributors were the same financial firms being sued by the above firms: •Bank of America contributed $80,029 •JPMorgan Chase contributed $75,000 •Citigroup Global Markets, a subsidiary arm of Citigroup, contributed $65,000
An agreement between 14 major mortgage lenders and the Justice Department was reached on April 13, and the state attorneys general hope to reach a separate agreement in the next several months. It will be worth comparing the final terms of the agreement with the contributions listed above.
These contributions are both remarkable and altogether expected—remarkable for their size, their extreme deviation from Miller’s historical fundraising patterns, and the combined legal talent and experience accrued between the contributors themselves. Expected because the negotiation process has moved between the federal and state level.
It should not be surprising that those most concerned with the outcome gave money to the man serving as the central broker between millions of underwater homeowners and national and multinational financial institutions, with billions of dollars hanging in the balance. 1. Streitfeld, David. “From a Maine House, a National Foreclosure Freeze,” The New York Times, October 14, 2010, available from http://www.nytimes.com/2010/10/15/business/15maine.html, accessed April 13, 2011. 2. Fontevecchia, Agustino, “Legal Heat On Robo-Signing Stokes Foreclosure Fiasco,” Forbes, October 13, 2010, available at http://www.forbes.com/2010/10/13/foreclosure-investigation-freeze-housing-markets-mortgage.html, accessed April 13, 2010. 3. “Attorney General Tom Miller Leads 50 State Mortgage Foreclosure Group,” October 13, 2010, Iowa Department of Justice, Office of Attorney General Tom Miller, available from http://www.state.ia.us/government/ag/latest_news/releases/oct_2010/robo_signing.html, accessed April 13, 2011. 4. The actual document can be accessed here: Salmon, Felix, “The attorney generals’ proposed bank settlement,” Reuters, March 7, 2011, available from http://blogs.reuters.com/felix-salmon/2011/03/07/the-attorney-generals-proposed-bank-settlement/, accessed April 13, 2011. 5. Attorney General Tom Miller Leads 50 State Mortgage Foreclosure Group,” October 13, 2010, Iowa Department of Justice, Office of Attorney General Tom Miller, available from http://www.state.ia.us/government/ag/latest_news/releases/oct_2010/robo_signing.html, accessed April 13, 2011. 6. Zibel, Alan and Choi, Candice, “Questions and Answers About the Foreclosure Freeze,” Associated Press, October 19, 2010, available from http://www.lasvegassun.com/news/2010/oct/19/questions-and-answers-about-the-foreclosure-freeze/, accessed April 15, 2010. 7. Fontevecchia, Agustino, “Legal Heat on Robo-Signing Stokes Foreclosure Fiasco,” Forbes, http://www.forbes.com/2010/10/13/foreclosure-investigation-freeze-housing-markets-mortgage. 8. “Miller Launches Ally/GMAC Foreclosure Probe,” Iowa Department of Justice, September 24, 2010, Office of Attorney General Tom Miller, available from http://www.state.ia.us/government/ag/latest_news/releases/sept_2010/Ally.html, accessed April 13, 2011. 9. “Miller Requests Mortgage Companies to Halt Iowa Foreclosures,” October 7, 2010, Iowa Department of Justice, Office of Attorney General Tom Miller, available from http://www.state.ia.us/government/ag/latest_news/releases/oct_2010/halt_foreclosures.html, accessed April 13, 2011. 10. Attorney General Tom Miller Leads 50 State Mortgage Foreclosure Group,” October 13, 2010, Iowa Department of Justice, Office of Attorney General Tom Miller, available from http://www.state.ia.us/government/ag/latest_news/releases/oct_2010/robo_signing.html, accessed April 13, 2011. 11. For a full list of cases as of March 29, 2011, see: LaCroix, Kevin, “The List: Subprime Lawsuit Dismissals and Denials,” The D & O Diary, available from http://www.dandodiary.com/2008/06/articles/subprime-litigation/the-list-subprime-lawsuit-dismissals-and-denials/index.html, accessed March 29, 2011. 12. Six other Boies, Schiller, and Flexner lawyers gave Miller an additional $3,450 in 2010. 13. Kaplan, David A., “David Boies: Corporate America’s No. 1 Hired Gun,” CNN Money, October 20, 2010, available from http://money.cnn.com/2010/10/19/news/companies/david_boies_profile_full.fortune/index.htm, accessed April 13, 2011. 14. Most notably, Jonathan Schiller, the firm’s co-founder, represented Barclay’s Capital in the Lehman Brothers bankruptcy, the event that precipitated the financial collapse. Goldstein, Matthew and Eder, Steve, “Goldman's CDO Woes Mean Dollar Signs for Lawyers,” Reuters, June 11, 2010, available from http://in.reuters.com/article/2010/06/11/goldman-lawyers-idINN1113631020100611?feedType=RSS&feedName=everything&virtualBrandChannel=11709, accessed April 13, 2011. 15. Mortgage-linked securities are financial instruments created from mortgages. The collapse in housing prices beginning in 2007 was itself a major economic problem, made much worse by the fact that many subprime mortgages were also the basis for various mortgage-linked securities sold to investors all over the world. Since their value depends on the value of the underlying mortgages, many of these mortgage-linked securities built from subprime mortgages became known as “toxic assets” in the fall of 2008. For more information, see: “The Wall Street Money Machine,” ProPublica, available from http://www.propublica.org/series/the-wall-street-money-machine, accessed April 13, 2011. 16. “Wachovia,” Kirby McInernery LLP, available from http://www.kmslaw.com/news.asp?type=cases&id=107, accessed April 19, 2011. 17. “Moody’s Corporation,” Kirby McInernery LLP, available from http://www.kmslaw.com/news.asp?type=cases&id=106, accessed April 19, 2011. 18. “National City,” Kirby McInernery LLP, available from http://www.kmslaw.com/news.asp?type=cases&id=91, accessed April 19, 2011. 19. “Citigroup Inc.,” Kirby McInernery LLP, available from http://www.kmslaw.com/news.asp?type=cases&id=108, accessed April 19, 2011. 20. “Lawyer Profile,” Simpson Thacher, available from http://www.stblaw.com/bios/KArquit.htm, accessed April 13, 2011. 21. “Financial Times Recognizes Simpson Thacher for Innovation in its Inaugural US Report,” Simpson Thacher, December 2, 2010, available from http://www.stblaw.com/siteContent.cfm?contentID=3&itemID=75&focusID=2515, accessed April 14, 2011. 22. “Banking and Credit,” Simpson Thacher, available from http://www.stblaw.com/practice_banking.htm, accessed April 14, 2011. 23. “Firm Overview,” Williams & Connolly, available from http://www.wc.com/about.html, accessed April 13, 2011. 24. Baxter, Brian, “Congressional Spotlight Falls on Fannie and Freddie Legal Fees,” The American Lawyer Daily, February 1, 2011, available from http://amlawdaily.typepad.com/amlawdaily/2011/02/fees.html, accessed April 15, 2011. 25. It was recently revealed that these former executives were using taxpayer money to cover the tens of millions of dollars in legal fees. Morgenson, Gretchen, “Mortgage Giants Leave Legal Bills to the Taxpayers,” The New York Times, January 24, 2011, available from http://www.nytimes.com/2011/01/24/business/24fees.html?_r=1, accessed April 13, 2011. 26. “Goldman’s CDO Woes Mean Dollar Signs for Lawyers,” Reuters, June 11, 2010, available from http://in.reuters.com/article/2010/06/11/goldman-lawyers-idINN1113631020100611?pageNumber=2, accessed April 14, 2011. 27. “Current Cases,” Kaplan Fox, available from http://www.kaplanfox.com/cases/currentcases.html, accessed April 15, 2011. 28. “CitiMortgage Loan Modification Class Action,” Milberg LLP, available from http://cases.milberg.com/citimortgage/, accessed April 13, 2011. 29. “Why is This Guy Smiling?,”American Lawyer, January/Feburary 2011, available from http://www.kirkland.com/sitecontent.cfm?contentID=230&itemId=7702, accessed April 15, 2011. 30. Sentementes, Gus G., “Lawyer with Baltimore Firm Taps Gulf Coast Roots in BP Oil Leak,” Baltimore Sun, July 2, 2010, available from http://articles.baltimoresun.com/2010-07-02/business/bs-bz-interview-frederick-kuykendall-20100625_1_oil-leak-bp-oil-rig, accessed April 15, 2011. 31. “Robert A. Sherman,” Greenberg Traurig, available from http://www.gtlaw.com/People/RobertASherman, accessed on April 14, 2011. 32. “Greenberg Traurig, LLP,” Chambers and Partners, available from http://www.chambersandpartners.com/USA/Firms/3579-36457, accessed April 14, 2011. 33. “Bernard Nash,” Dickstein Shapiro, available from http://www.dicksteinshapiro.com/people/detail.aspx?attorney=75ca9c84-a083-4f5d-aae0-94a18b810bd7, accessed April 13, 2011. 34. “An Institutional History of Banks Operating in New York State,” State of New York Banking Department, available from http://www.banking.state.ny.us/auhistory.htm, accessed April 15, 2011. 35. 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