Financial crisis chair Angelides quits mortgage firm

NEW YORK Mon Feb 13, 2012 5:15pm EST

Financial Crisis Inquiry Commission Chairman Phil Angelides speaks at the Reuters Global Financial Regulation Summit in Washington, April 29, 2010.  REUTERS/Jason Reed

Financial Crisis Inquiry Commission Chairman Phil Angelides speaks at the Reuters Global Financial Regulation Summit in Washington, April 29, 2010.

Credit: Reuters/Jason Reed

NEW YORK (Reuters) - Phil Angelides, the former chairman of a federal commission set up to look into the causes of the financial crisis, has stepped down from a group seeking to turn a profit by investing in distressed mortgages.

Reuters reported a month ago that Angelides was heading a firm called Mortgage Resolution Partners, which had touted its political connections as part of its "secret formula" for negotiating deals to buy distressed mortgages. (link.reuters.com/vyx56s)

Angelides' involvement with the firm had drawn scrutiny on Capitol Hill, where one congressman recently sent a letter warning about potential political influence peddling.

A representative for Angelides told Reuters on Monday the former California state treasurer stepped down as executive chairman of the upstart firm on January 27. The representative did not give any reason for the move.

In a fundraising letter sent earlier this year to prospective investors, Mortgage Resolution Partners talked about the political connections of Angelides and several other members of the firm. The start-up was focused on buying distressed mortgages in California and was seeking to raise about $6 million to study the feasibility of its plan.

In an emailed statement, the representative for Angelides said the former chairman of the Financial Crisis Inquiry Commission "has returned to his business and civic commitments."

Angelides, according to the statement, "continues to support the mission of stemming the tidal wave of foreclosures and any efforts, including those of MRP, which help homeowners."

Shortly after Reuters reported on Mortgage Resolution Partners, an official with the House Oversight and Government Reform Committee began seeking a copy of the fundraising letter, a source familiar with the situation told Reuters.

On February 10, Representative Patrick McHenry, chairman of a House Oversight and Government Reform subcommittee on the Troubled Asset Relief Program, sent a letter to Shaun Donovan, the Obama administration's secretary of Housing and Urban Development on the subject. McHenry asked him for details about steps that are being taken to guard against "cronyism or conflicts" in the recently announced $26 billion mortgage settlement with the nation's biggest banks.

In the letter, McHenry, a Republican from North Carolina, noted the investor letter sent by Mortgage Resolution Partners. (here)

"It is essential that the distribution of Settlement funds be free from the sort of political influence peddling that Mr. Angelides and his colleagues are apparently planning," McHenry wrote, giving Donovan until February 24 to provide information about steps being taken to make sure the settlement is "well managed."

A spokesman for McHenry said the subcommittee's request for information has not changed even though Angelides is no longer involved with Mortgage Resolution Partners.

Angelides had tried to follow the lead of other hedge funds, private equity firms and other deep-pocketed investors, which are looking to scoop up foreclosed homes and earn money by renting them out. The Federal Housing Finance Agency recently received proposals from hundreds of investment groups interested in acquiring and renting out single-family homes federal agencies have foreclosed on.

(Reporting By Matthew Goldstein and Jennifer Ablan; Editing by Claudia Parsons)

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Comments (4)
Harry079 wrote:
I’d like to think that maybe, just maybe, this man has a conscience.

Feb 13, 2012 6:31pm EST  --  Report as abuse
WeWereWallSt wrote:
“In a fundraising letter sent earlier this year to prospective investors… The start-up was focused on buying distressed mortgages in California and was seeking to raise about $6 million to study the feasibility of its plan.”

What’s wrong with this picture?

Who in their right mind would part with $6mm to study the “feasibility” of a plan to buy distressed mortgages? $6mm buys 60 CPAs for a year, or 120 of them for six months, or 240 of them for three months… You get the picture. You can get a lot of “feasibility” studied for $6mm.

Sounds more like the $6mm bought a place at the trough.

Feb 13, 2012 9:57pm EST  --  Report as abuse
breezinthru wrote:
Probably like most readers, I had a knee jerk reaction to this article… anger over well-heeled and well-connected investors like Mortgage Resolution Partners angling to skim the fat from the recent $26 billion legal settlement obtained from the five large Wall Street mortgage servicers who were taking illegal advantage of their customers.

I almost missed the key to this article, the two blue highlighted links.

The first link to another Reuters article made me wonder why Congress is going to hire out administering this settlement at all. The accused mortgage servicers should be required to administer this program at their own expense and under very close scrutiny.

You can be sure that any corporation or investors who manage to sink their teeth into the $26 billion hunk of fresh meat will rip away the biggest piece they can, making this pathetically small settlement even smaller. I wonder how much of that money will actually ever find its way to the victims after corporate America is done feeding on it and tossing some obligatory juicy scraps to Congress.

Then I clicked on the second blue highlighted link. My middle-aged eyes almost missed it… a parenthetical (here) in the fourth paragraph from the end of the article.

Now I’d like to know how Mortgage Resolution Partners managed to get their man, Phil Angelides, appointed by Congress to be the chairman of the Financial Crisis Inquiry Commission. Dumb luck? I doubt it.

Kudos to Congressman McHenry, a Republican from North Carolina, for writing that letter to HUD Secretary Shaun Donovan. He isn’t just concerned about possible improprieties, he’s even concerned about the appearance of improprieties…

Could it be? A member of Congress with integrity who actually intends to see that settlement distributed as fairly as possible to those to whom it was intended to go? I’m impressed. There are plenty of bottom feeders on both sides of the aisle, but looking out for the best interest of ordinary citizens is not something I normally associate with the Republican party.

One more comment… click on the link to the other Reuters article again and carefully read what Phil Angelides said. Clearly, his primary allegiance is to the profits that his associates, Mortgage Resolution Partners, are about to make with their not-so-secret formula. It’s just the day to day cultivation of Congressional favor and exploitation of those favors. Doing a good thing for the American people is inadvertent, an afterthought.

To a cynic like me, that means every time there is a choice to be made that will benefit either Mortgage Resolution Partners or a citizen… the citizen is going to lose out. Most likely, the citizen will never even be aware that it happened.

I’d like to see Congressman McHenry appointed to oversee this $26 billion settlement. Maybe Congressman McHenry will even consider running for president in four years. It would be nice to have a Republican presidential candidate for whom I could actually cast a vote.

Feb 14, 2012 3:58am EST  --  Report as abuse
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