Morning News Digest: February 10, 2010

Lesniak, other insiders got loans at failed bank

State Sen. Raymond G. Lesniak and five other directors of an Elizabeth bank that collapsed last year borrowed more than $2 million in mortgages and commercial loans from the thrift, records show.
Some of those loans came after First BankAmericano was put under a July 2007 federal order to stop what authorities described as unsound banking and loan practices. In a report filed before it collapsed in July 2009, the bank listed $11.4 million in “insider loans,” a term used by regulators to track financing for bank employees, officers and key shareholders. Eight former board members, including Lesniak and several others who got mortgage money from the bank, have also been political contributors to U.S. Sen. Bob Menendez, giving more than $50,000 since 1993, according to campaign-finance data.  (Pillets, The Record)

Webber: Menendez crossed line in bid to help bank run by donors

Republican State Chairman Jay Webber said that U.S. Sen. Bob Menendez’s (D-Hoboken) attempt to help a failing bank run in part by a major donor and a key political ally is part of a pattern of “unprecedented actions by a United States senator to benefit campaign donors.”

”To the extent that a United States senator is directly commenting and trying to affect a regulatory decision, I think it’s highly inappropriate, and Senator Menendez once again crossed the line,” said Webber.

The Wall Street Journal reported today that Menendez sent a letter to Federal Reserve Chairman Ben Bernanke urging him to approve an acquisition of First BancoAmericano, which is chaired by attorney Joseph Ginarte, who has donated $30,000 to Menendez’s political accounts since 1999, and vice-chaired by state Sen. Raymond Lesniak (D-Elizabeth). The paper reported that Ginarte and Lesniak could have seen some of their investments in the institution salvaged had a merger been approved. It was not.

To Webber, the story has a striking similarity to a previous controversy over the Food and Drug Administration’s approval of a medical device for injured knees. After lobbying that the agency described as “intense and extreme” by Menendez, U.S. Sen. Frank Lautenberg (D-Cliffside Park), Reps. Frank Pallone (D-Long Branch) and Steve Rothman (D-Englewood) – all of whom had recently been given significant contributions by the New Jersey-based manufacturer, ReGen Thearpeutics – FDA higher-ups approved the device for sale, despite ruling in previous years that it was unsafe. 

”Nobody would object if he simply wrote a letter touting the merits of the position of his constituents… Both with the FDA and the Fed, he crossed the line from advocating for constituents to trying to affect the outcome of the process,” said Webber. “I’m sure that whoever runs against Senator Menendez in 2012 will not let voters forget about the various pings on his record in this record. There’s a pattern that the senator engaged in and people will be reminded of it.” 

After the bank’s failure, the Federal Deposit Insurance Corporation (FDIC) – which had to spent $15 million when the Fed allowed the bank to fail — wound up auctioning it off to Crown Bank, which is owned by JJR Holding Company, Inc. — the same company that had originally wanted to acquire it. 
(Friedman, PolitickerNJ)

Sweeney removes Codey’s redistricting pick

Senate President Stephen Sweeney (D-West Deptford) has removed Orange Mayor Eldridge Hawkins Jr. from the Congressional Redistricting Commission, The Star-Ledger reports.

Hawkins was appointed to the commission by former Senate President Richard Codey (D-Roseland), who Sweeney ousted. 

The Senate President picks two members of the commission, as does the Senate Minority Leader, Assembly Speaker, Assembly Minority Leader and the chairs of the state’s two major political parties. 

Sweeney told the paper that he received an opinion from the Office of Legislative Services allowing him to remove Hawkins. Codey and Hawkins said they were considering their legal options. 

Former Democratic State Chairman Joseph Cryan appointed Maggie Moran to the commission in one of his last acts as head of the party, a political operative who managed former Gov. Jon Corzine’s re-election campaign and served as his deputy chief of staff. (Friedman, PolitickerNJ) 

Newark in gear for Booker’s election-year state of the city 

A framed portrait of a jet-black haired Augusto Amador in an El Greco pose stands on the wall here in Little City Hall where East Ward Democratic Committee Chairman Angelo DiFederico says they just processed 600 or 700 tax forms and feel confident about Amador’s formal kick-off a little less than two weeks from now. Amador himself isn’t here. That’s because shortly, the little city halls occupied by Booker allies in all the five wards will empty and converge on Symphony Hall as Newarkers – tantalized by the prospect of bridge and tunnel projects, promised but not yet underway, and buffeted in the meantime by an unemployment rate of 17% – will gather to hear incumbent Mayor Cory Booker deliver his fourth State of the City address three months in front of Election Day. “Like any other city we are in midst of a recession,” said Assemblywoman L. Grace Spencer (D-Newark). “We are struggling to rebound from this recession. We have a record number of citizens who are unemployed, but we are trying to be entrepreneurial and to create employment opportunities. We are trying to empower people who have small businesses with small business loans and contracts and encouraging new businesses to open.” “Right now, Newark is a city on the move,” said South Ward Councilman Oscar James II, intently optimistic even while inevitably acknowledging the larger landscape. “My only problem is the economy right now,” James said. “But we are laying the foundation right now for future economic development.” (Pizarro, PolitickerNJ) 

Gov. Chris Christie praises pension, benefit reforms proposed in N.J. Senate 

Gov. Chris Christie today said he is encouraged by a bipartisan package of pension and benefit reforms poised to speed through the state Senate, calling such changes “the best kind of property tax reform you can have.” “The time has come for us to bring fairness to this system,” the Republican governor told reporters today, a day after the four-bill package was introduced. “I want to make sure that if we do reform, we make it real reform and it yields significant savings both in the short term and the long term.” Christie declined to discuss specifics on how he or the state Assembly might tweak the bills, but lawmakers have said the governor wants to require higher employee contributions to health benefits. The current proposal would force active workers and future retirees at all levels of government to pay 1.5 percent of their base salary toward health costs. Senate President Stephen Sweeney, a main architect of the package, said the bills are a “very fair and very reasonable” effort that implements recommendations from a special legislative session in 2006. “This is unfinished business,” Sweeney (D-Gloucester) said in an interview. “If the governor wants to talk about things in the future, we’ll talk about some other things.” Sweeney criticized “overreaction” by public worker and teacher unions, which have come out strongly against the proposals. Today, the New Jersey Fraternal Order of Police became the latest group to stress its commitment to “preserving the collective bargaining process and protecting the hard-earned pension and health care benefits” of its members. “We’re not attacking the workforce. We’re not attacking teachers. We’re just trying to be responsible in fixing these things,” Sweeney said. The reforms were welcomed by the New Jersey School Boards Association and state League of Municipalities. Besides the health care contribution, the proposals would ban part-time workers from participating in the pension system, cap sick leave payouts and constitutionally require the state to fully fund its pension obligations each year. They would also eliminate multiple pensions and change how pensions are calculated. (Heininger, Star Ledger) 

Senate president removes Orange mayor from panel 

In a move that could affect future congressional races, Senate President Stephen Sweeney has removed Orange Mayor Eldridge Hawkins Jr. from a panel that is expected to draw new boundaries for the state’s seats in the U.S. House of Representatives. Sweeney removed Hawkins from the 2010 Census Congressional Redistricting Commission in a letter that was sent to Secretary of State and Lt. Gov. Kim Guadagno on Monday and obtained by the State House Bureau yesterday. Former Senate President Richard Codey (D-Essex) had appointed Hawkins before Sweeney (D-Gloucester) unseated Codey in a party coup. “I don’t think it’s fair to bind me as the incoming Senate president,” Sweeney said yesterday, pointing out that Codey made several other appointments to boards and commissions after it was clear that Sweeney would replace him. Said Codey: “I guess he likes removing Essex guys.” The latest tangle between the two powerful Democrats could influence the makeup of New Jersey’s congressional delegation after the 2010 census, when the state is widely expected to lose one of its 13 House seats because its population growth has not kept pace with that of other states. Whether two incumbents must face off in northern, central or southern New Jersey may hinge on the makeup of the bipartisan redistricting panel, said Joseph Marbach, a political scientist at Seton Hall University. “It really will have an impact on the balance of power in the state,” he said. Hawkins said he was disappointed by Sweeney’s move. “I was in fact looking forward to serving on this commission, in the best interest of the state of New Jersey, and I find it troubling that Senate President Sweeney would attempt to make this removal without giving me the benefit of a sit-down and some dialogue,” Hawkins said. In choosing Hawkins, Codey said he left one appointment on the 12-member commission to Sweeney. “I thought an African-American from Essex, someone like him, young, was who you’d like to see,” Codey said. “It wasn’t about me. It was about the right thing.” (Heininger, The Record)

Senator from NJ urged Fed to aid home state bank

Sen. Robert Menendez wrote to Federal Reserve Chairman Ben Bernanke last summer seeking help for a home state bank operated by campaign contributors, specifically asking for approval of an acquisition that would have rescued the institution. Requests on behalf of constituents , even political donors , are not unusual. But such inquiries typically urge government agencies to expedite an action, not to act in a certain way. What made Menendez’ letter stand out was that it pressed the Fed to take measures to avoid putting the bank , First BankAmericano , in receivership. “I write to ask the Federal Reserve to grant the attached application,” the letter says. Two paragraphs later, it adds: “I urge you to support the proposed acquisition…” The existence of the letter was first reported Tuesday by the Wall Street Journal. Menendez spokesman Afshin Mohamadi says the language in the letter was an unintentional error and that making a specific request for action was a mistake. The Fed ultimately didn’t act on the acquisition request, forcing New Jersey banking regulators to close the bank. The Federal Deposit Insurance Corp. then stepped in as receiver. Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington, said Menendez crossed a line. “It looks like Mr. Menendez’s conduct was inappropriate,” she said. “While it’s fair for a member of Congress to ask federal agencies and quasi agencies to take some action, it can’t ask them to take a specific action.” Menendez, a New Jersey Democrat who is also chairman of the Senate Democrats’ campaign arm, defended his effort to help a struggling financial institution in his home state. “The denial of this sale was a gut punch to communities where New Jerseyans are starving for financial services,” Menendez said in a statement Tuesday. Both banks are minority-owned and serve New Jersey’s Hispanic community. (Kuhnkenn, Inquirer)

Lesniak, other insiders got loans at failed bank

State Sen. Raymond G. Lesniak and five other directors of an Elizabeth bank that collapsed last year borrowed more than $2 million in mortgages and commercial loans from the thrift, records show. Some of those loans came after First BankAmericano was put under a July 2007 federal order to stop what authorities described as unsound banking and loan practices. In a report filed before it collapsed in July 2009, the bank listed $11.4 million in “insider loans,” a term used by regulators to track financing for bank employees, officers and key shareholders. Eight former board members, including Lesniak and several others who got mortgage money from the bank, have also been political contributors to U.S. Sen. Bob Menendez, giving more than $50,000 since 1993, according to campaign-finance data. On Tuesday, Menendez sought to play down a report in The Wall Street Journal that revealed he tried to intervene in the FDIC’s handling of the First BankAmericano crisis as the bank neared collapse in July 2009. Buy this photo The newspaper said a July 21 letter from Menendez to the Federal Reserve asked the agency to approve the sale of First BankAmericano to a holding company based in Brick before it collapsed. The letter from Menendez did not reveal that Lesniak and Joseph Ginarte, the bank’s chairman, were longtime contributors who each had a financial stake in the bank. In an interview with The Record, Menendez said he regretted the insistent wording of his letter to Federal Reserve Chairman Ben Bernanke. But he stood by his decision to intercede in the bank’s behalf, saying that First BankAmericano filled an important need as a lender for Hispanics in Union County. “I don’t think it’s unusual for members of Congress to advocate for entities within their state,” Menendez said. “I don’t think it’s unusual to try to preserve a community bank, especially if at the end of the day it means less lending into those communities.” Menendez denied having any contact with Ginarte or Lesniak regarding his letter, saying that he had first been approached by Holly Bakke, the state’s former Banking and Insurance commissioner, to help the bank. Menendez said he did not know that Lesniak and other political contributors were getting large loans from the bank. He declined to comment on the loans, but stressed that he has clashed with fellow Democrat Lesniak when the state senator sought to expand his influence outside of his Union County base. “We get along very well with each other,” Menendez said of Lesniak. “But the bottom line is we’ve also had conflicts about politics when Ray wanted to play in Hudson County. So it’s not that it’s always been amorous.” Lesniak did not respond to detailed questions submitted through his district office and the Senate Democratic office in Trenton. Report issued warning BankAmericano was one of two New Jersey banks and among 140 nationwide that failed last year amid the ongoing nationwide recession, with risky lending practices blamed for most of the trouble. Bank analysts are now predicting as many as 200 banks could fail in 2010, at a cost of $50 billion to taxpayers. A report prepared last month by Governor Christie’s transition team said two New Jersey banks are likely to fail in the first quarter of this year due to risky commercial lending and 17 others have been put on a “watch list.” “Solvency of banks is currently the No. 1 area of concern for the [state] Division of Banking,” the Christie report said. Disclosure forms filed by Lesniak last year show that he earned less than $10,000 from his investments in First BankAmericano in 2008. As recently as 2005, however, he earned between $25,000 and $50,000 from his stake. (Jackson/Newman/Pillets/Reitmeyer, The Record)

Newark judge gets long-delayed Senate approval

The U.S. Senate unanimously approved a Newark federal judge’s promotion to the nation’s second-highest court Tuesday, five months after the Judiciary Committee decided unanimously to support his nomination. With the 84-0 vote, U.S. District Court Judge Joseph A. Greenaway will fill the seat on the 3rd U.S. Circuit Court of Appeals that was vacated when Samuel Alito was confirmed to the U.S. Supreme Court in 2006. Twice over the past month and again before the vote, Sens. Bob Menendez and Frank Lautenberg, both D-N.J., denounced Republicans for holding up Greenaway’s nomination even though no one questioned his qualifications. “There has never been a question about Judge Greenaway’s ability or character to serve,” Lautenberg said. “The only question is why it took so long.” “It’s been a long process — unnecessarily long for a good man,” said Menendez, who pointed out that Greenaway is just the 15th district or circuit court nominee of President Obama’s to be confirmed even though the federal bench has 100 vacancies. One reason Alito’s seat has been vacant so long, however, is that former President George W. Bush’s nominee to replace him had been blocked by Lautenberg and Menendez, and never came to a vote before Obama took office. Greenaway, 52, has presided over trials involving corrupt politicians, bank robbers and battling corporations, among others, since 1996. Last year, he accepted the guilty plea of a Fort Lauderdale airline executive who admitted to skirting aviation safety rules in connection with a 2005 jet crash at Teterboro Airport. (Jackson, The Record)

Mulshine: Christie targets COAH – A hopeful sign

I attended a press conference in Trenton Tuesday at which Gov. Christie signed an executive order setting up a panel to study how to get rid of the state Council On Affordable Housing. The order also sets a 90-day moratorium on actions by COAH, the Soviet-style bureaucracy that sets quotes for exactly how much housing must be built for the workers and where it should go. So this is a hopeful sign after Christie’s previous failure to “gut COAH” by the end of January as he had promised in the campaign. Christie also stated that he is opposed to both of the decisions in the Mount Laurel cases that led the Legislature to set up this bureaucracy back in the Kean administration. Another hopeful sign. The panel will be headed by Marcia Karrow, a former state senator from Hunterdon County who has been pretty good in standing up for small towns against the Trenton bureaucracy. Christie said a few good things about state Senator Ray Lesniak’s bill that would hand COAH’s power to the state planning people. However, that bill would just continue the silly system of quotas under a different bureaucracy. We’d still have some state official deciding that because Town X got three new businesses it would have to add however many units of housing for the workers. This is idiotic for two reasons: 1. We have 10 percent unemployment. We don’t need housing for new workers. We need jobs for the people already in the houses, and 2. People only rarely live in the same town in which they work. But still, if this panel does its work, the members should be able to come up with a formula that will essentially reverse the damage done by the state Supreme Court in those disco-era decisions. And I wouldn’t be surprised if the current court gave Christie some leeway on this, given the fact that decisions were an embarrassment to the court by all accounts other than those from lawyers and developers who want to break local zoning codes. (Mulshine, Star Ledger)

Las Vegas Observed

Jared Kushner, publisher of the New York Observer, is invading Sin City.  His Observer Media Group is part of the joint venture behind Vegas Seven, a new weekly that debuted yesterday with 60,000 copies distributed across the city.  Vegas Seven is being put out with Wendoh Media, run by former nightclub promoters Ryan Doherty and Justin Weniger. They are also partners in 944 Media, which has monthly magazines in 11 cities including Las Vegas, San Francisco and Miami.  The new weekly has an 11-person editorial staff, headed by former Desert Companion Editor-in-Chief Phil Hagen. (Kelly, New York Post)

Morning News Digest: February 10, 2010