When I wrote a post back in March, laying out Dino Rossi’s shady business dealings with accused swindler Michael Mastro, Rossi’s defenders depicted the maybe-senatorial candidate as one of Mastro’s victims. When a real estate investment firm Rossi co-owns was found to owe over $20,000 in unpaid property taxes, Rossi’s business partners downplayed his culpability, saying “It definitely is nothing Dino is involved in.”
And Monday, when Politico reported that a failing bank Rossi co-founded and co-owns runs the risk of being shut down by the feds at taxpayer expense, a Washington State Republican Party spokesperson laughed off Rossi’s involvement, repeating the Rossi-as-victim meme by saying of his investment, “It’s not worth as much as it used to be.”
All of which raises a question: If Rossi — who frequently touts his business acumen and experience as one of his prime qualifications for higher office — is so hands off his investments, so easily swindled by his associates and so frequently on the wrong end of a deal gone bad, can we taxpayers really afford to have Rossi run government like he runs his business?
Or, is Rossi really much more involved with his business dealings than he lets on?
He’s allegedly a millionaire after all, so it’s hard to believe that Rossi is as clueless and detached as his surrogates consistently make him out be. Take, for example, the foundering Eastside Commercial Bank at the center of the latest expose. Rossi was one of 35 founding stakeholders who put in a minimum of $10,000 each to start up the venture, and it was Rossi who recruited Dick Ducharme, “a friend, lobbyist and business partner” to both invest in the bank and serve as its CEO.
So, when the federal Comptroller of the Currency declares that Eastside has “engaged in unsafe and unsound banking practices relating to its strategic and capital planning, credit underwriting, credit administration, concentration risk management, and liquidity management,” doesn’t that even somewhat reflect on Rossi’s judgement, if not his business ethics and management skills?
Rossi’s defenders insist “no,” dismissing this latest revelation as just another skid-mark in a Democratic smear campaign, but one can’t help but wonder if Rossi’s refusal to take any personal responsibility for the negative consequences of his own business ventures might have contributed to their failure? No doubt Rossi helped start the Eastside Commercial Bank with the intent of getting in on the huge profits that were being made during the recent real estate bubble, but now that it is collapsing under the weight of the same kind of “unsafe and unsound banking practices” that were widespread in the industry at the time, Rossi expects to be held blameless for his own co-creation.
This is exactly the sort of moral hazard that led to the Wall Street disaster and subsequent bailout, for when there are no consequences for one’s actions, or when the consequences are always the responsibility, perceived or otherwise, of some third party, then there is little disincentive to reckless behavior or benign neglect. And while the term has most recently been applied to the machinations of Wall Street, it is just as applicable to the way Rossi routinely leverages his political capital for both political and personal gain, apparently without fear of ever being held publicly responsible for his actions.
Rossi could have accepted at least a little responsibility for the unsound practices of the bank he co-founded, just like he could have accepted responsibility for not seeing through the fraudulent practices of his mentor Mel Heide or his investment partner Michael Mastro. He could have accepted responsibility for being a partner in a business that failed to pay its taxes, or for his gubernatorial campaign’s misuse of the Everett AquaSox mailing list, a team he part-owned. But in all these situations he allowed the blame to fall on others, painting himself the innocent victim of a Democratic smear campaign.
The thing is, it’s not a smear when it’s the truth. Rossi’s mentor was convicted of fraud, and Mastro is accused likewise. Rossi did misuse the AquaSox mailing list, his business did fail to pay its taxes, and his bank is on the verge of collapse. I suppose you could argue that it is unfair of me to imply guilt by association, but it is not unreasonable to attempt to infer a pattern by connecting the dots.
More troubling though for Rossi and his boosters at the NRSC is that the dots keep coming, and it is important to note that despite the vetting he received during his two gubernatorial runs, these latest revelations involve post-2008 timelines. This is the way Rossi conducts his business, and if he truly is as hands-off a manager as his defenders insist, or as morally hazardous as critics like me suspect, then dollars to donuts there are plenty more dots to come.
This might be interesting if and when it becomes relevant. Are you just tying to scare Dino out of entering another race?
The guy is a two time gubernatorial loser whose political career is done. He has three political options: 1) Lose to Murray 2) come in third in a top two gubernatorial primary behind Inslee and McKenna, or 3) run for lower office.
The guy is irrelevant. If and when he gets into a race he will merit this kind of attention.
Meanwhile, there is a SCOTUS nominee, a dying Gulf of Mexico, and actual political races like DelBene vs. Reichert, Gordon vs. Litzow, etc..
I hate to play the devil’s advocate on behalf of Rossi, but here goes….
I don’t know the extent of Rossi’s involvement with this bank, but so far I don’t see much in this investment as political scandal.
For years, one of the strategies in local banking was to start a small bank, give personal service – especially directed at small businesses, and after a few years sell the bank to a much larger national entitity. The people who started the bank make a huge profit in the sale, the customers have to settle for doing business with a big faceless bank, or switching to another local bank (and going through the process all over again a few years down the road). Nothing illegal about that business plan, nor is it particularly immoral.
The $10 grand initial investment (minimum) isn’t much. Of course, Rossi’s investment could have been considerably higher.
And the failure of smaller banks due to the fallout of the economy doesn’t necessarily indicate foul play or particularly bad business judgement. A smaller bank could have been pretty carefull, yet still run into trouble simply because it’s customer base is in trouble (smaller buisinesses trying to survive through a long recession).
That was one of the problems with Ken Starr & the Whitewater investigations – it was opened with the presumption that if the bank failed and Hillary came within ten miles of it at any given point, then she must have been related to the failure, and have committed a crime to boot. Of course, after seven years of millions of dollars in investigations, they couldn’t prove a thing – other than the fact that Hillary’s husband couldn’t keep his pants zipped and tell the truth about it afterwards.
So unless something considerably more serious raises it’s head here, the bank isn’t among the smoking guns I’d like to see Rossi holding. His other associations, however, might yield more fruit.
(golf clap for Goldy)
Caveat: considering Rossi’s propensities to use his business connections for political advantage (i.e., the AquaSox mailing list), perhaps they should be looking at whether the bank’s lending practices amounted to a quid-pro-quo for some political benefit to Rossi.
“HAR-HAR-HAR-HAR-HAR-HAR-HAR-HAR-HAR-HAR-HAR”
(fair use)
“Dino Rossi Moral Hazard” what a stretch…
Democrats should clean up their own house.
You know, throwing stones, glass house kinda thing….Geitner, Emanuel etc etc etc.
Gee, Goldy, when did Dino join this firm?
is it Dino’s firm, as in, he owns it?
Or is this an issue, ongoing, that occured years before he joined said firm?
rhp @2,
I think you’re missing the broader picture. It’s not a question of whether anything illegal occurred at the bank (although the feds have accused it of engaging in “unsafe and unsound banking practices”) or whether Rossi was engaged in the day to day operations. It’s the way he denies any culpability whatsoever. He co-founded the bank. He personally recruited a close friend and business associate as its CEO. Is he not even remotely responsible for the institution’s corporate culture?
Had he made a fortune off this bank, he and his surrogates would have touted his business prowess as further evidence of his qualification for higher office, but when it collapses under its own mismanagement, he apparently had nothing to do with it. He can’t have it both ways.
It is Rossi’s refusal to accept personal responsibility for anything that is the issue here, and how the lack of political consequences for his actions might influence his behavior.
Also, don’t lose sight of the forest for the trees. It is reasonable to look for a pattern, even amongst missteps that on their own might be easily dismissed as relatively minor.
@5 ““Dino Rossi Moral Hazard” what a stretch … Democrats should clean up their own house.”
You’ve gotta be kidding. Republicans own the patent on greed, corruption, and dishonesty.
I’ll conceed that point, he can’t have it both ways.
But I do think it’s appropriate to check into the details, rather than assigning blame or credit for business success or failure. The news media in general is only too willing to repeat political claims to that effect and ignoring the facts behind the claims.
For example, I had argued earlier that Mike! McGavick hadn’t really deserved any credit (or the huge bonuses he was given) for saving Safeco. All insurance companies have losses when the stock market is down, because most of their money is made on their investment portfolios. Once the stock market recovers, they make big profits. So McGavick laying off a bunch of people and waiting a year or so for the stock market to go back up wasn’t exactly evidence he was a genius at business management. Just about any of us could have done the same thing, as long as we resisted the urge to make more new mistakes by fidling around with the business model too much.
If Mike!Saved!Safeco!…..where the hell is it?
In general, it’s becoming steadily more ludicrous to give any credence to the crowd that hollers about the supposed need to “run government like a business”…because it would seem that same group can’t run a business like a business for sour owl shit.
The other “investment” Rossi may have made to the bank that would not show up on any disclosures are deposits, which could then be turned into loans. Granting loans to developers or people who buy houses would certainly help his past benefactors. In an era were credit was drying up, having access to an “easy” bank would be very much appreciated.
Making money off the initial investment may not have been the ultimate purpose. If you are selling real estate and your buyer needs credit it helps to have a loyal place to which you can send them.
Do we know if Rossi or any of his other businesses have significant deposits at the bank? Another way to benefit, although a little more far fetched, is for the bank to have a higher interest bearing product, like a cd, tied to their mortgage lending. Since it’s still technically only a deposit if Rossi or others chose this way to support the bank it wouldn’t show on any disclosures.
If you liked the fiscal results of the Bush years you’ll loooooove Rossi.
Hell, even Rossi ran from the Republican brand. Remember when he ran as GOP?
Loser.
Even if the Teabaggers come out enmasse for Rossi it won’t be enough to win any state wide election.
Funny how the conservatives always get all wound up about the way America was formed by Liberals and then form radical splinter groups to try and rewrite American history.
Here’s an interesting photo essay that I found.
Spoiler altert for conservatives!!! NONE of the conservative movements end well. Tea Party will be no different because it cannot compete with the ideals of LIBERTY and FREEDOM created by LIBERALS.
Conservative Failures in History
obviously Goldy et al are scared of Rossi running. Otherwise this obsession with him makes no sense. There are plenty of other candidates you guys could “investigate”, but it’s Rossi you are scared of.
There is no other reason, unless Goldstein is having a crush on him :-)
I’m sorry to butt in here with an irrelevant question but who is Alexi Giannoulias and why is he having so much trubbs?
Heh.
Didn’t read the previous posts, but note also the Rossi is something of an expert in real estate, so if he was “unaware” of shoddy, deceptive, and/or criminal practices regarding their mortgage loan practice, he is doubly irresponsible and clueless, and even more so does not deserve our trust.
14 d
No one is scared of Rossi. He’d have to win an election to scare anyone.
We just don’t like crooks and/or incompetents to be leading candidates.
Responsibility, according to Leona Helmsley, is “for the little people”. You know, the unemployed who, evidenced by their lack of a job, are morally defective.
@17…you mean like our current “we have an $800 million surplus” governor?
hmmm…going from $800 million surplus to multi billion dollar deficit in just a scant few months…..incompetence or liar? you tell me.
Goldy,
It’s Don, I’m a tenther, Benton that you need to be writing about.
loL…..shame on Benton for abiding by the constitution…
with that said – people should be supporting I-1058 this year
Just more privatizing of profits and socializing of losses.
If Rossi’s bank had thrived and had been acquired, he would have made hundreds of thousands – if not millions – on his $10,000 investment.
As things stand now, when his bank fails, he’ll brush the dirt off his hands and stick the taxpayers, via the FDIC, with the bill for cleaning up the mess. He’ll suffer no personal or economic consequences whatsoever.
Your comment might have some traction if there really were “plenty of other candidates” from the GOP. But statewide other than Rossi, whaddya got?
He ran to a statistical dead heat in 2004, came close enough in 2008, and he polls pretty well in the years that he isn’t (officially) campaigning. But I don’t think “scared” is necessarily the right word. How “scared” should Democrats be when the one guy the GOPers can put forward has already lost twice? Who else should Democrats focus on? McKenna still has a long way to go to gain a toe hold with statewide voters. Who’s left?
David Irons?
Pam Roach?
Some guy named Clint something?
Bueller?
Bueller??
Anyone?
@21 tenther’s wouldn’t know the constution if it bit them in the ass.
Dino’s only real success is to have become well-connected to rightwingers with money. They support his business ventures and pay for his campaigns. In the meantime, Dino does their bidding. He’s really not a very impressive person.
23: What I’,m saying is: There are plenty of candidates who actually have declared they ARE candidates and are running. Rossi hasn’t even declared he would run and you guys are scared.
dutch @26,
“Rossi hasn’t even declared he would run and you guys are scared.”
That’s an idiotic suggestion. I don’t think anyone gives Rossi any serious odds at pulling off an upset (and, apparently, neither does Rossi). But Rossi is at least interesting because he would force more money to be spent on the race, and would crank up the media volume on the race.
The other candidates simply aren’t worth the effort it takes to type out their names. Maybe later, but not now.
how come nobody is extolling the virtues of how well murray has done?
oh…maybe because there arent any to discuss….maybe that is why goldy spends his time cowering and fretting about a dino run….
“how come nobody is extolling the virtues of how well murray has done?”
Because we typically decline to respond to pointless rhetorical questions….but do tell us about the great job Dave Reichert has done, or Hastings, or McMorris. Why, it appears they have not done a fucking thing, even under Bush II when they certainly had their chance.
They couldn’t even bring home the pork. Utter. Failures. Worthless. Carbuncles. On. The. Body. Politic.
time for my nightly fix….this is really funny stuff Goldy. When you utter moral hazard…hmmm who do i think of?
norm rice
franklin raines
barney frank
Chris Dodd.
pls tell me why Raines especially got so much money, oh yeah, he’s a dem fav, so its ok. same for the other 3. Barney didn’t get rich, but he sure stuck it to us.
26: Rossi doesn’t scare anybody. It’s just that he tries to run as a “moderate” who “prefers GOP”, when clearly he’s a lot more right-wing than he wants voters to believe. Rossi polls okay when it’s just a name-recognition contest and he can run in a tightly controlled environment in front of friendly audiences and a handful of friendly reports. But shine a light on him, and the majority of the voters are appalled, and he goes scurrying back to find the hole from whence he came.
That’s our role – simply to keep shinning a light on him.
@29…but the subject at hand is a potential dino vs murray battle….please try and keep up.
Goldy has about 23 threads about Dino, who hasnt even declared he will run…yet ZERO threads about THE PERSON HE SUPPORTS…..how telling is that?
Dino looks like a pud wearing a toupe’.
[Deleted — see HA Comment Policy]
Goldy,
You’re a fucking idiot.