Kelly Loeffler’s Letter Helped Set Stage for Husband’s $10 Billion Deal
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When Senator Kelly Loeffler (R-GA) added her name to a letter to financial regulators in May asking them not to change consumer credit reporting requirements during the pandemic, it initially seemed like a good case for home state politics -year-old senator.
The Democrats had urged the suspension of reporting on negative credit scores following the economic impact of COVID-19. However, this was resolutely rejected by the so-called Big Three credit bureaus: Equifax, Experian and TransUnion. And one of those three, Equifax, is headquartered in Atlanta, Loeffler's hometown.
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However, shortly after she signed the letter, its purpose coincided with her personal financial interests. In August, Intercontinental Exchange - the company run by Loeffler's husband, Jeffrey Spokesman - announced a $ 10 billion acquisition of home loan data giant Ellie Mae that was hurt by the proposed moratorium on credit reporting.
Loeffler was a former executive at ICE and has $ 9 million worth of shares. By signing this letter, she added another chapter to an already intricate web of financial interests and official policies that marked her brief tenure. Like some of these earlier chapters, this one almost never went public.
When Loeffler signed the letter to Treasury Secretary Steven Mnuchin, the Bureau of Consumer Financial Protection and the Federal Housing Finance Agency, she did not make him known. She also didn't send a press release or tweet about it. It was received by The Daily Beast in December.
Loeffler's involvement in the credit report wasn't just remarkable for its secrecy, however. Financial regulation is not in the Senator's portfolio. Of the eleven GOP senators who signed the May letter, she was one of two not on the Senate Banking Committee. Your Georgian Republican, Senator David Perdue, also signed the letter but is a member of the committee.
Loeffler's campaign declined to comment on her reasons for participating in the credit report or whether she knew of ICE's acquisition of Ellie Mae before it was announced. But good government groups say the dots are connecting in a harmful direction.
"We don't know why she signed this letter," said Jordan Libowitz of the impartial ethics watchdog group CREW, "but we shouldn't have to wonder if it could have been an example of her selling constituents' interests who were there. " economic hardship to maintain the value of their stock portfolio. "
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Efforts to end a moratorium on credit score reporting have been successful despite strong pressure from Democrats to implement such a proposal.
Calls to protect consumers from COVID-related deterioration in their creditworthiness began almost as soon as the outbreak broke itself in March. This month, 70 House Democrats urged the three credit bureaus to stop reporting missed hospital bills, mortgage payments and credit card payments as the country went into quarantine and millions of people lost their jobs.
On March 18, Sens. Sherrod Brown (D-OH) and Brian Schatz (D-HI) passed legislation to implement a four-month moratorium on negative credit reporting. Their bill did not make it into March's Coronavirus Control Act, the CARES Act. However, this bill contained provisions aimed at allowing some consumers to protect their creditworthiness. In some situations, lenders were required by law to report some accounts as current, but borrowers had to contact their creditor and get them to agree first.
Democrats wanted another bite of the apple, arguing that without a moratorium, millions of Americans would see their creditworthiness through no fault of their own due to financial troubles related to the coronavirus crisis. And their efforts to push the Fed into action were persistent enough to warrant a knockdown from Loeffler and ten other GOP senators.
In their May letter to financial regulators, they were urged to reject these proposals, fearing that "changing credit data will hurt the most vulnerable consumers and make credit less available and more expensive for those affected by the pandemic". There were also concerns that due to a lack of data, the moratorium would make lenders overly cautious about lending to consumers and business owners across the board. In theory, that would have dried up people's access to much-needed capital in a difficult economic time.
In June, the Federal Housing Agency, which oversees federal lending policy, responded to Loeffler and her colleagues with a supportive message.
"The Federal Housing Finance Agency (FHFA) supports accurate credit reporting during the national COVID-19 emergency," wrote Mark Calabria, the agency's director, in a letter from The Daily Beast. "It is important that a consumer's credit report accurately reflects his or her mortgage and commercial history in order to properly assess a consumer's ability and willingness to repay during the underwriting process."
The lack of a full moratorium was beneficial to companies like Equifax, which would have been violated by such a move. The company spent more than $ 1 million lobbying Congress in the first six months of 2020. This emerges from federal files on subjects such as the CARES Act and “Reporting on Consumer Credit”. However, the PAC donated $ 1,000 to Rep. Doug Collins (R-GA), Loeffler's rival for a spot in the Senate runoff elections.
Around the same time, spokesman Ellie Mae bought with a vow to put this company's data under the umbrella of ICE in order to make it, he said, the "de facto source of information for the US mortgage market". A credit moratorium would have been detrimental to ICE as well, as it would have rendered much of this data unusable for potential customers until such a moratorium was lifted.
"If you know the March 2020 through March 2021 data doesn't have negative reporting data, all you have to do is throw it away," said Adam Levitin, a professor at Georgetown University Law Center who specializes in finance regulation. That wouldn't be useful to ICE, which is hoping to be a "giant vacuum cleaner and suck up all the consumer data they can," Levitin said.
It's unclear when spokesman would have targeted the Ellie Mae acquisition, but his company had been overturing the broader credit data sector for years, and ICE had been doing business with the company when COVID struck. Spokesman for Fortune later announced that he and his business associates boarded planes to get Ellie Mae to sell during the COVID-19 lockdown.
Sen. Kelly Loeffler's campaign says she had no idea what she was posing with neo-Nazi
Loeffler seemed to realize that the perception of not helping consumers with creditworthiness during the pandemic came with some political costs. Not only did she keep her signature on the letter a secret, but she also tabled a bill in June that would have prevented credit reporting agencies from adding medical debts to a person's credit report for "incomprehensibly inflated" medical costs. However, this proposal would have left it up to the Secretary of the Department of Health and Human Services to define what it was and not provide specific guidance on the threshold.
The letter Loeffler signed wasn't the first time that her financial interest in ICE clashed with her public duties. In October, she used a bill to remove Chinese companies from the US stock exchanges - which ICE operates - as a beating against Collins as they battled each other to advance to the runoff election. But she never voted for or supported the bill, and ICE publicly warned about the legislation, The Daily Beast reported.
Loeffler's extensive financial dealings were first scrutinized after The Daily Beast reported in March that it sold multi-million dollar holdings of stocks following private briefings on the coronavirus. The Senator has stressed time and time again that she has found no wrongdoing by federal law enforcement or other members of Congress. But those who advocate good governance say the long web of financial entanglements that has created them and their families has created a myriad of problems and potential conflicts of interest.
Meredith McGehee, executive director of the bipartisan group for good governments, Issue One, said that an official must be concerned about the reality and the occurrence of conflict above all in order to avoid significant conflicts of interest.
"It seems the conflicts never end," McGehee said in an email. “Undoubtedly, many of these conflicts arise because of the enormous wealth of Sen. Loeffler and her husband. It is noteworthy, however, that other wealthy senators have treated these subjects with greater care and finesse. "
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