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.