Barrett: Did Bill Thompson Get Ethics Clearance for His Bad Loans?


In 2008, 3797 city employees called the New York City Conflicts of Interest Board and asked for a legal opinion about a transaction–or other action–they were thinking about doing that might be inconsistent with the city ethics rules. Another 624 wrote the board.

Apparently Bill Thompson, the comptroller who wants to be Mayor, wasn’t one of them.

Thompson aide Gayle Horwitz sent me a three-page email yesterday answering a series of questions about Thompson’s mortgages on a new Harlem home, which he obtained from a bank that does billions in business with his office. “In anticipation of public scrutiny regarding each of these transactions,” Horwitz wrote that Thompson and his wife Elsie McCabe “received letters from GMAC and Amalgamated that confirm that the rates they received were the normal going rates and that the required underwriting guidelines and standards for these types of loans is the same criteria that the banks generally apply.”

Horwitz did not say that Thompson asked the COIB to review the loans, though the pension fund he oversees was depositing $3.6 billion in Amalgamated and he was participating in decisions to put $50 million of city funds in its branches. Instead, aware no doubt that he was involved in a dicey situation, Thompson got a letter clearing him, says Horwitz, from the very people involved in the possible conflict with him (GMAC is just Amalgamated’s agent in these transactions). I left a message on Horwitz’s cell phone today asking if I’d misunderstood her, and if in fact Thompson had sought a COIB opinion, and she did not return it (which she certainly did before yesterday’s blog). Similar inquiries with other campaign officials went unanswered.

Since Thompson sought and obtained three advisory opinions from the COIB between 1997 and 2000, when he was at the Board of Education, he certainly knew where to go if he wanted a conflict clarified. He even got one when he became a consultant to a managed care company that was providing below-cost health care at a single school in a 1000-school system, and when Thompson himself was a $20,000-a-year part-time board member. Wayne Hawley of the COIB says it has issued no public advisory opinions to Thompson since he’s been comptroller.

If Thompson had gone on the COIB website, he would have found the appropriate instructions:

“Say you want to work part-time for a hi-tech firm, but you are the person responsible for the technology in your city agency. Or maybe you have been offered the opportunity to teach at a university that you suspect does business with the city, and you are not sure if there is a conflict of interest with your city job. Who do you turn to?

“There is an easy way to resolve each and every one of these ethical dilemmas. Just call the Conflicts of Interest Board and ask to speak to a lawyer. One call is often all that it takes to get an opinion. Sometimes you may be required to provide information in writing.”

The “Getting Advice” section on the site adds that you can get an oral answer, an attorney staff letter, an advisory opinion, order of the board, or a waiver letter. Mike Bloomberg has done this several times with the board, even making sure it was okay if his publisher re-issued his book, Bloomberg by Bloomberg, shortly after he became mayor.

Of course, if Thompson had done that, he would’ve had to submit the proposed mortgage documents, as well as records about Amalgamated’s business with his office, to the COIB. They would have weighed whether the loan was made on the standard terms that Horwitz contends they were.

My review certainly indicated that the $729,000 mortgage wasn’t. Horwitz contended that the interest rate was 7.1 percent and I have records that indicate the interest rate was 6.05 percent. Horwitz offered to provide proof that it was 7.1 percent but she sent an October 16 monthly bill that was blacked out in most places but did contain an indication that the rate was 7.1 percent. She did not explain why a mortgage for the sitting comptroller running for mayor needed to be blacked out at all, or why she wasn’t willing to provide the original mortgage itself, which is barely 13 months old and must still be lying around the house. Mortgages and interest rates were routinely public record until lenders decided to make them secret some years ago. Is there some reason why the man who wants to be mayor won’t make his mortgage public, but instead only provides a redacted snippet of his financing history? Especially when the bank is a billion-dollar public pal?

The Thompson rate is strange. It doesn’t appear to be constant. I asked Horwitz for any records of monthly payments and she declined to provide it. The monthly payments–which Horwitz acknowledged Thompson has frequently already missed–vary from month to month. They were $5644 in June and $5700 in October, for example. That suggests that the rate might have changed.

In any event, even 7.1 percent is lower than the average of 7.29 percent that Thompson would’ve had to pay if his mortgage and $400,000 credit line had been merged into a single $1.2 million mortgage. Instead, friendly Amalgamated broke it up in two. It gave him the mortgage at precisely the new maximum allowed under law. If it had been for another thousand dollars, he would’ve had to pay at least the 7.29 rate, which was averaging up to 7.39 in New York at the time. So, anyway you cut it, Thompson got a bargain.

The COIB would surely have noticed.

Research credits: Steve P. Ercolani, Aaron Howell, L.C.E. Jordan, Kate Rose, Amanda Sakuma, Grace Smith