Rick Cohen

Predatory Philanthropists

It’s no coincidence that the Texas Rangers play their home games at a stadium named Ameriquest Field. The Rangers were once owned by George W. Bush. Ameriquest’s founder, Roland Arnall (along with his wife Dawn), has long been one of Bush’s “Super-Ranger” level campaign contribution bundlers, contributing through his own wealth (he’s in the nation’s top 100 wealthiest Americans) and through Ameriquest’s political machines. In return, Bush named Arnall the ambassador to the Netherlands, an action acclaimed by Republicans and Democrats, because Arnall ambidextrously lavished political contributions on Democrats as well, including California’s Bill Lockyer, Phil Angelides, and Gray Davis, the latter even while he also contributed to Arnold Schwarzenegger.

Ambassador Arnall has been feted, lauded, applauded, and honored, while his Ameriquest Mortgage Company found itself the target of a massive predatory lending suit by 49 states (initiated by a task force of 30 attorneys general), finally settled this year to the tune of a $325 million penalty. That is the largest fine of a mortgage broker next to the more than $400 million hit that Household Finance Company took in 2004.

All well and good, Ameriquest is paying $325 million, case settled, right? Hardly. Ameriquest is a serial predatory lender, having had to pay up on individual cases before this, with penalties added to this class action that take the company into the $400 million range.

If Ameriquest were what the press calls a “common criminal”, it would be behind bars. This latest settlement simply follows Ameriquest’s 2004 settlement with ACORN, its 2005 settlement with the state of Connecticut, settlements with county governments in California, and numerous other instances of corporate greed.

But like many corporate miscreants, the corporate Ameriquest entity has been able to use settlements with various consumer groups plus strategic philanthropic grantmaking by the corporation and by Arnall himself to fashion a good-guy image warranting testimonials from nonprofit and religious leaders, not to mention the ambassadorship awarded by President Bush. Despite its position as the nation’s largest subprime lender, Ameriquest distributes charitable goodies along the lines of toy drives, food bank donations, support for CDCs such as Neighborhood Housing Services in Chicago and TELACU in Los Angeles, and a “soaring dreams” Ameriquest blimp, serving according to Ameriquest as “the airborne ambassador of the hopes and dreams of children everywhere” (and to remind consumers about the importance of financial literacy).

Ameriquest’s philanthropy takes Arnall and associates close to President Bush. In conjunction with the Texas Rangers Foundation, Ameriquest has pledged to help Habitat for Humanity build 3 houses a year for the next 30 years. Nothing wrong there. But Arnall was also as of 2004 the largest donor to the Laura Bush Foundation for America’s Libraries, having donated $1.8 million. Arnall’s charitable instincts made Ameriquest the largest corporate donor (along with Marriott) to the Bush Administration’s 2004 inaugual ceremonies. It also kicked in $5,000,000 of charitable giving targeted to Katrina-related assistance, much to the relief of the Bush Administration which has had to rely on philanthropic giving to compensate for the disgraceful government response to the hurricane’s devastation along the Gulf Coast.

An attempt by one nonprofit watchdog to return a $100,000 grant from Ameriquest was not replicated by others who cashed their Ameriquest philanthropic support. Critics have charged that some organizations that have taken Ameriquest settlement funds in the past have accepted deals that sold the consumers short.

Arnall’s and Ameriquest’s huge bipartisan political donations plus loads of giving to nonprofits, including an occasional settlement with a consumer rights advocacy organization, suggests that Ameriquest has one ideology, not conservative, not liberal, not Republican, not Democrat. It is to pursue its subprime lending agenda, years of settlements notwithstanding, while distributing political and charitable goodies to buy access, favors, and friends. The charitable giving, the political contributions, it’s all the same thing in the Ameriquest business model, basically walking around money to purchase access to people in power and support from nonprofits that otherwise would have nothing good to say about the nation’s number 2 ranking convicted predatory lender.

A multi-state, $325 million conviction notwithstanding, and despite settlements with watchdogs, Ameriquest’s subprime business model persists. Just read Alyssa Katz’s article in Mother Jones to see how Argent Mortgage is continuing dubious subprime lending in Cleveland. Argent, ostensibly spun off from Ameriquest in 2003, is owned by the same parent company that owns Ameriquest, but is insulated somehow from the Ameriquest settlement.

The Ameriquest webpage describes the company’s philanthropic pledge as a commitment to “do the right thing.” When Ameriquest financed one of Arnold Schwarzenegger’s campaign ploys with tickets to the Rolling Stones concert in Fenway Park (contributors had to pay $10,000 for a private pre-performance reception with Schwarzenegger, $100,000 to watch Mick’s concert from the Schwarzenegger’s box), one critic suggested that Ameriquest’s intention might be described as “Sympathy for the Devil.” Hopefully, if the state AGs continue to investigate Ameriquest and its predatory lending partners, homeowners won’t have to sing that they “can’t get no satisfaction”.

Posted at 9:46 AM, Nov 01, 2006 in Permalink | Comments (1) | TrackBack (0)