Unstructured Finance

Phil Angelides gives up his “secret formula”

February 13, 2012

By Matthew Goldstein and Jennifer Ablan

Phil Angelides, the former chairman of the commission set up by Congress to look into the causes of the financial crisis, is no longer part of a group seeking to turn a profit by investing in distressed mortgages.

A representative for Angelides emailed a statement to Reuters saying the former California state treasurer stepped down as executive chairman of the upstart firm, Mortgage Resolution Partners, on Jan. 27. Angelides, as we reported today, stepped down about two weeks after our exclusive story about his role with the firm was published by Reuters.

Angelides’ role sparked controversy because the firm touted its political connections as part of its “secret formula” for negotiating deals to buy distressed mortgages.

We only found out that Angelides left Mortgage Resolution Partners when we asked him to comment on a recent letter from a U.S. Congressman criticizing the firm’s marketing strategy.

On Feb. 10, Rep. Patrick McHenry, chairman of a House Oversight and Government Reform subcommittee on TARP program, sent a letter to Shaun Donovan, the Obama administration’s secretary of Housing and Urban Development, asking him for details about steps that are being taken to guard against “cronyism or conflicts” in the recently announced $26 billion mortgage settlement with the nation’s big banks.

McHenry, a Republican from North Carolina, took note of our Reuters story and the firm’s claim that it would use  “legal and political leverage” to acquire the loans of distressed homeowners.

Angelides is gone from Mortgage Resolution Partners, but a staffer for McHenry says the subcomittee will continue to make sure the settlement is carried out with any political influence.

Here is a copy of the congressman’s letter.

Here is the full statement from Angelides:

“As of January 27, 2012, Mr. Angelides is no longer involved with Mortgage Resolution Partners (MRP).  As the initial research and development work for MRP nears completion and as the venture transitions to the next phase, Mr. Angelides has returned to his business and civic commitments.  He continues to support the mission of stemming the tidal wave of foreclosures and any efforts, including those of MRP, which help homeowners.”

And here’s what Angelides said when he was interviewed by Bloomberg TV on Mortgage Resolutions Partners. He went on Bloomberg on Jan. 18, some five days after we broke the story on Reuters. A little over a week after this TV appearance, Angelides quietly stepped down from the firm.

 

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