Archive for May, 2011

LOD: New Loan Costs Reward Donors

Tuesday, May 31st, 2011

Consumers will likely see the cost of small loans go up in North Carolina, thanks to a bill in the NC General Assembly that will hike interest rates and add new fees. According to a detailed report by Democracy North Carolina, the bill is the reward for finance company owners suddenly shifting allegiance and pumping more than $100,000 into the 2010 campaigns of 15 Republican challengers and the top 3 Republican leaders in the General Assembly. Most of the industry donors have never given so generously to legislative candidates, but they responded to a call by their lobbyists to give to a list of Republicans in hot contests, beginning in August 2010. Military leaders in North Carolina, the state’s banking commissioner and consumer groups are all against the bill, but the House Banking Committee approved it last week. It fits into a series of legislation that helps advance narrow business interests over the public interest, an imbalance that is fast becoming a major achievement of the 2011 General Assembly.


Merger Would Cripple Campaign Finance Disclosure

Tuesday, May 31st, 2011

IMPORTANT UPDATE: We are pleased to confirm that the newest version of the Senate budget DOES NOT include a provision to combine the State Board of Elections, State Ethics Commission and the lobbying regulation division of the Secretary of State’s office as described below. We are hopeful that this bad idea will be permanently shelved in favor of preserving disclosure and transparency.

For Release Monday, May 30, 2011

Contact: Bob Hall, 919-489-1931

Shotgun Merger of Agencies Shields Officials from Scrutiny, Hundreds of Campaign Reports Are Already Not Audited

A nonpartisan watchdog group is sharply criticizing a proposal in the state Senate’s budget bill to merge and cut the funding for three agencies that now oversee the ethical conduct and campaign activities of state legislators, thousands of other public officials, and hundreds of lobbyists.

The proposal would combine the State Board of Elections, State Ethics Commission and the lobbying regulation division of the Secretary of State’s office into a new agency by January 1, 2012, and put it under the control of General Assembly leaders. The newly created State Board of Elections and Ethics would have a smaller staff, less money and a nine-member board with six members appointed by legislative leaders and three by the governor.

“These are the agencies that guard the public’s trust in government. They hold officials accountable for the honest performance of their duties, and they’re already straining to do their jobs right with limited resources,” said Bob Hall, executive director of the Democracy North Carolina. “The way this merger is being pushed so rapidly, crammed inside a budget bill without a thorough study, is completely irresponsible and highly suspicious. You have to wonder if the Republicans are trying to cripple these agencies and throw them into a state of confusion during the upcoming election.”

The new agency would have 20 fewer positions (15 currently filled) and $1.4 million less a year* to register voters, administer elections, oversee the conduct of public officials and political appointees, regulate lobbying and campaign financing, and enforce more than a thousand pages of state law.

Hall said his concern over the merger was heightened after discovering one area where funding cuts are already blocking public accountability and transparency. A review by Democracy North Carolina of files at the State Board of Elections found that hundreds of campaign finance reports for candidates to the General Assembly in 2010 have not yet been audited, in violation of state law.

“The public has a right to know how money is moving through our election system, who’s cheating and who wants to buy influence,” said Hall. “More cutbacks and this shotgun merger will just shield politicians from scrutiny and reduce transparency, just the opposite of what Republicans promised.”

NC General Statute 163-278.24 says campaign reports must be examined “within four months after the date of each election” to “determine whether the statement conforms to law and to the truth.” Candidates file up to six reports during an election cycle to disclose details about their contributions and campaign spending. But due to budget cutbacks, the State Board of Elections has been forced to lay off clerical and other staff, leading to a large backlog of reports to analyze.

Democracy North Carolina discovered that 651 (44%) of the 1,492 reports filed by the winning and losing legislative candidates in the 2010 general election have not even been entered into a database for preliminary analysis by the Board of Elections staff, much less been audited for errors, missing information, and possible criminal violations.

Paper copies can be viewed through the Board’s website, but some are illegible and it’s impossible to perform the required audit until the information is keyed into the Board’s database. Getting the information from the disclosure reports into the Board’s database is the first step of the auditing process and also makes campaign contributions accessible in a searchable format on the Board’s website.

Hall noted that the Board’s database still does not contain any of the campaign reports for 2009 or 2010 for 49 of the 170 General Assembly winners, including Senate Majority Leader Harry Brown and House Majority Leader Paul Stam. Paper copies of the reports were submitted but they remain unprocessed.

Altogether, 405 of the 960 reports filed by the 170 legislative winners in 2010, or 42% of the reports, have not been entered into the database for processing and have not been audited.

In addition, hundreds of reports for political action committees (PACs) and local and state political parties have also not been entered into the Board’s electronic files for processing.

(You can view a committee’s report at http://www.app.sboe.state.nc.us/webapps/cf_rpt_search/ and see if the report is only an Image of the paper report or if the Data has been entered into the Board’s data file.)

“There’s a perception that record amounts of money flooded the General Assembly elections in 2010, but we still don’t have a handle on where it all came from, who deserves kudos for reporting accurately, and who’s violating the law by withholding information,” said Hall.

“The 2012 election will be unbelievably expensive, with hot national and state contests and more spending by secretive groups, corporations and unions following the Supreme Court’s decision in the Citizens United case,” he said. “Some politicians, but not all, are just as happy to keep us in the dark.”

Hall noted that many freshmen Republicans were elected on a promise to increase transparency in government, but they submitted their disclosures report in paper form only, rather than expedite the audit process by filing them electronically.

“Instead of crippling agencies charged with protecting honest government, more candidates should be required to file reports electronically to expedite the auditing process,” he said.

*The Senate’s proposed state budget would make the following cuts:

AGENCY                                           FUNDS CUT        STAFF POSITIONS CUT

State Board of Elections                   $1,002,408    14 positions (10 currently filled)

State Ethics Commission                  $   219,519      2 positions (1 currently filled)

Sec. of State Lobbying Division        $   200,791      4 positions (4 currently filled)

Totals                                                  $1,422,718    20 positions (15 currently filled)

A List of Legislators and the Status of Reports Entered into Database as of May 15, 2011 is included  in this downloadable  file.


Consumer Finance Bill Linked to Campaign Donations

Tuesday, May 31st, 2011

For Release Thursday, May 26, 2011

Contact: Bob Hall, 919-489-1931

Legislation to Increase Charges on Small Loans Follows Surge in Contributions from Consumer Finance Industry

A campaign finance watchdog organization is raising questions about whether an unusual pattern of contributions given by donors in the consumer loan business is connected to a bill now moving through the North Carolina General Assembly that will benefit their industry.

During the last election, donors with consumer finance companies gave most of their campaign contributions to Democratic legislators until late August 2010, when they suddenly switched and began pouring more than $100,000 into the campaigns of 15 Republican newcomers challenging Democrats in hot races, as well as the top three Republican leaders in the General Assembly.

“The industry made a substantial gamble in 2010 by shifting its money from incumbent Democrats to Republican challengers and now it appears to be reaping the benefits of that investment with a bill to enrich the industry,” said Bob Hall, director of Democracy North Carolina, a nonpartisan watchdog organization that has filed campaign finance complaints against both parties in the past.

Click here for the industry’s top donors and recipients. Click here to see all its 2010 donations.

Harry Melton, president of Amity Finance in Gastonia, told Hall that his industry’s trade group, the Resident Lenders of NC, gets recommendations from its lobbyists in Raleigh about who to support with donations. “We have lobbyists that make recommendations to us,” said Melton. “On an individual basis, they let us know who would be favorable to our industry.”

Melton has served on the Resident Lenders PAC committee, but like many industry leaders, he gave more personal donations to legislative candidates in the two months after August 15, 2010, than in the past decade – including to candidates far from his home – with the goal of electing “friendly” state legislators. He is now following progress on a bill in the state House to help his industry.

The bill, H-810, would allow consumer finance companies to raise interest rates to 36% on small loans and increase other fees. The companies say they need to earn more from their loans, but the head of the state North Carolina Banking Commission says the industry is profitable and the legislation is not needed. Representatives of military bases in North Carolina and a coalition of consumer groups also oppose the legislation.

Hall said Republican leaders have kept the bill moving forward despite the formidable opposition. In April, House Republican leaders changed plans and decided to skip routing the bill through the Finance Committee, where its fate seemed in question because of bipartisan opposition.

“It’s hard to explain what’s driving this legislation without following the money,” said Hall.

The new Republican House Speaker Thom Tillis and Majority Leader Paul Stam received $27,200 from consumer finance company donors, including $2,000 after the election was over from Security Finance Corporation PAC, the political action committee of a South Carolina loan business.

In the spring of 2010, Security Finance PAC gave 100% of its money to incumbents, with 75%

going to Democrats, but in late August it changed strategies and began giving all its money to Republicans, with 75% going to 14 challengers of incumbent Democrats.

“That’s very unusual,” said Hall. “More than 90 percent of PAC money goes to incumbents in North Carolina, because those officials are in a position to deliver benefits immediately and when they run for reelection, they have better than a four-to-one chance of winning.”

The Residents Lenders PAC, which represents commercial loan companies, also began giving to Republicans challenging Democrats in September 2010. Six Republican challengers received a total of $4,000 from the PAC, plus $3,500 from Security Finance PAC and more than $25,000 from individuals associated with finance companies in North and South Carolina.

Altogether, 19 Republican legislative candidates – and no Democrats – received five or more donations from finance company PACs and executives, many living hundreds of miles from the candidate’s district. Many donors had not given in a legislative contest in the previous 10 years.

According to the analysis by Democracy North Carolina:

● Consumer finance executives and their PACs donated $65,600 to 15 Republican legislative candidates in highly contested races, including 12 held by Democrats and three open seats. Only 3 of the 134 donations to these 15 candidates were made before the middle of August 2010.

● In addition, these donors made 47 contributions totaling $45,450 to the soon-to-be Senate President Pro Tem Phil Berger, House Speaker Thom Tillis and House Majority Leader Paul Stam. All but 2 of the contributions were made after mid-August.

● By contrast, incumbent Senate President Marc Basnight, Speaker Joe Hackney and Majority Leaders Martin Nesbitt and Hugh Holliman received a total of only $3,600 after mid-August – four  donations from the Resident Lenders PAC and nothing from consumer loan executives.

● Before mid-August 2010, the consumer finance donors and their PACs gave more money to Democratic legislative candidates and committees than to Republicans – $15,550 versus $12,300.

After August 15, the donors gave $126,670 to Republican legislative candidates – more than seven times the $17,400 they gave to Democratic candidates in the final months of 2010.

● Altogether, these consumer finance donors and their PACs gave $172,320 to legislative campaigns in the 2010 election cycle, compared to $30,250 in 2008 and $77,500 in 2006.

● House Speaker Thom Tillis and Republican Majority Leader Paul Stam received nothing from consumer finance donors for the 2010 election until late August. After that, they received nearly three dozen industry-related contributions – a total of $13,950 for Stam and $13,250 for Tillis.

● Of the 17 finance company executives who gave four or more donations to different legislative candidates in 2010, 8 had not made a reported donation to a legislative candidate in the past decade (L. Elmer Britt, David S. Hicks, R. A. “Pete” James, Harry R. Melton, Larry W. Shive, Thomas D. Payne, Daniel L. Thompson, and R. Wayne Smith ) and 6 gave at least 4 times as much as they had given to legislative candidates in any previous election cycle this decade (Gail N. Blanton, Priscilla D. Butler, Glen H. Hall, Royce E. Everette Jr., Al J. Pridgen Jr., and R. David Reese).

● In addition to 3 Republican candidates who won open Senate seats (Thom Goolsby, Brent Jackson, and Bill Rabon), 12 Republicans running against incumbents received multiple donations from finance company donors, often from individuals many miles away; all 12 won: For House – Jeff Collins, Ralph Hise, Stephen LaRoque, Tim Moffitt, Tom Murry, Norman Sanderson, and Mike Stone; for Senate – Jim Davis, Rick Gunn, Wesley Meredith, Louis Pate, and Dan Soucek.


LOD: Don’t Connect the Drops

Friday, May 27th, 2011

The Koch brothers, Art Pope’s Locke Foundation, Americans for Prosperity, the U.S. Chamber of Commerce, Exxon, BP, Massey Coal and many others understand that if people took global warming seriously as a condition that will kill their children, then government regulation (or just regulating CO2 production) would gain new popularity – and the freedom of business to ignore its social costs would be impaired. Hence the mega-millions spent to discredit the notion that global warming is happening, is caused by human activity, or is something for paid-off politicians to worry about. Read this op-ed in the Washington Post and see if you agree.  After that, read Facing South’s post about the efforts of U.S. Sen. Richard Burr (R-NC) to gut EPA in order to help his energy industry patrons.


LOD: Pit Bull or Lap Dog?

Thursday, May 26th, 2011

U.S. Rep. Patrick McHenry (R-Cherryville) lived up to his reputation as the pit bull for ultra-conservatives during a Congressional hearing yesterday. He went after Elizabeth Warren, acting head of the Consumer Financial Protection Bureau, ending up basically calling her a liar, which set her back in her chair, aghast. McHenry’s animosity to consumer finance protection is rooted in his ideological commitment to wealth-holders’ rights over human rights. He’s happy to protect banks from what he sees as excessive public accountability, and the banks are happy to protect him from election defeat by providing generous campaign contributions. Bank of America and the American Bankers Association are among McHenry’s top 5 career donors, and Wachovia is number 9. Bank of American and Wachovia are also tied for first place as the top donors to McHenry’s 2008 leadership PAC called More Conservatives PAC. By raising and dispensing money for GOP colleagues, McHenry’s leadership PAC helps increase his clout inside the Republican Caucus, which helps when he seeks positions like his chairmanship of the House Subcommittee on TARP, Financial Services and Bailouts. After McHenry’s performance at the subcommittee yesterday, a contributing editor of Fortune magazine wondered if he “may have just lost his next election for so obviously being in the pocket of someone other than the people he is supposed to represents.”


LOD: She Knows the Evil They Do

Tuesday, May 24th, 2011

Donna Clark gives a first-person account of what it means to be without health insurance in North Carolina. She expresses the hope of millions for a better system – and the outrage of seeing insurance companies overtake and rig the new system against her. She recognizes the unethical behavior of NC legislators colluding with the industry for their personal benefit at her expense. To her, Democracy NC’s research about money-in-politics is not abstract. Read her story and if you’re anywhere as incensed as she is, let your state legislators know you agree with Donna Clark.


LOD: State of Emergency

Monday, May 23rd, 2011

The NC Senate is rolling out its version of the 2011-2013 state budget this week – and it cuts many vital programs even more than the House version. Legislative leaders say there’s not enough money, but that’s because they won’t close tax loopholes for wealthy special interests that are protected by big campaign donations and that cheat the rest of us out of $1 billion in tax revenues a year. Instead of even just keeping existing tax rates and loopholes, the state Senate wants to cut taxes and lay off teachers, close libraries and parks, stop safety regulations, and give corporations more license to run society for private investors, not the public interest. The H K on J coalition and NAACP are calling a “State of Emergency” Peaceful Hearing and Speak-out at the General Assembly on Tuesday, May 24 at 4 pm in the Third Floor Auditorium, 16 W. Jones Street, Raleigh. Come and voice your concerns about what legislative leaders are doing to voting rights, criminal justice, jobs, women’s rights, the environment, education, healthcare and more.



LOD: Special Interests’ Idea Factory

Thursday, May 19th, 2011

Where do the conservatives and right-wingers in the General Assembly get their worst ideas for legislation? Some of the nutty ideas come from their own heads and a fair number from right-wing outfits inside North Carolina, like Art Pope’s Civitas Institute and John Locke Foundation. But many of them come from the American Legislative Exchange Council, especially those designed to harm the environment, slam workers, and protect businesses from accountability. ALEC is a national broker for collaboration between corporate special interests, rightwing think tanks and conservative state legislators – e.g., Koch Industries, Glaxo, AT&T, and Rep. Harold Brubaker, a former ALEC national chair. People for the American Way has a new report analyzing ALEC’s operations, agenda and impact. Says one business member: “The organization is supported by money from the corporate sector, and, by paying to be members, corporations are allowed the opportunity to sit down at the table and discuss the issues that they have an interest in.” An ideas gets turned into model legislation, gains traction in one state and spreads across the nation. The report says ALEC has moved it’s pay-to-play ideology into efforts to turn education and voting into commodities where access is governed by your wealth; basic human rights are non-cent.


Little Governor Sent to Prison

Tuesday, May 17th, 2011

5/17/2011 – Ruffin Poole earned the nickname “Little Governor” because he was former Gov. Mike Easley’s patronage gatekeeper and often seemed to act on his behalf. Federal investigators targeting Easley eventually flipped some campaign donors in the patronage orbit, but the donors had more damning evidence against Poole than Easley – and Poole would not, in turn, bring down his boss, even when he was indicted on tax fraud and other charges. Now he’s paying the price for his crime. Says the News & Observer: “Ruffin Poole, a top aide to former Gov. Mike Easley, will spend the next year in prison for attempting to hide a $30,000 profit he made using his political position to boost a high-end coastal community [development] that was a key part of the federal investigation into his boss. . . . Lanny Wilson, a major fundraiser and former state Board of Transportation member who was a financial backer for the development, told authorities that he cut Poole in on the project as an investment opportunity to curry favor with him.”  As you read and watch the coverage, note that Lanny Wilson and other developer/donors in the corrupt scheme escaped prosecution – which, without adequate explanation, troubled the federal judge.


Advocacy Award

Monday, May 16th, 2011

5/16/2011 – The NC Justice Center holds its annual “Defenders of Justice” awards dinner this Thursday in Durham. Democracy North Carolina is honored to receive the award this year for Policy Advocacy – for “fighting to protect voting rights, increase voter participation and reduce the influence of big money in politics.” It’s a wonderful tribute to all of you who make our work have an impact, and you’ll see you’re in stellar company. Sign up, come out and enjoy the fun.


Oil Guzzlers, Early Voting

Friday, May 13th, 2011

5/13/2011 – The Raleigh-Durham-Chapel Hill Triangle has gained a new distinction: Biggest gas guzzling metro area in the nation, according to Forbes. The Triad and Charlotte metro areas are also in the top 10. As Big Oil profits soar and gas prices approach $4 at the pump, more people and politicians are wondering how the industry can justify receiving a $4.4 billion annual tax subsidy from the rest of us. The industry says the money is needed to help domestic exploration and energy independence, but business experts say the industry would explore as much without the subsidy because of other favorable business conditions in the U.S. The subsidy is better understood as a return on investing in political protection: To protect its loopholes and other special favors, the oil and gas industry spent $30 million on campaign contributions and $145 million on lobbying federal policymakers in 2010. To put that in simpler math, imagine if you could invest $175 and get back $4,400 in one year! The investment also diverts Congress from adopting sensible regulations to prevent the next BP explosion and helps elect more legislators willing to be puppets. The more Big Oil and Big Bizness can control elections, the better off they are, which is one reason their puppets also champion measures to make voting more difficult. The Big Biz/Art Pope puppets in the NC House took a swipe at working-class voters yesterday by deciding to cut a week off the Early Voting period. NC Policy Watch has a short summary and video clip of the debate.


IRS, Donors and Faculty for Sale?

Wednesday, May 11th, 2011

5/11/2011 – After Citizens United, big donors have poured money into a growing number of nonprofit Section 501(c)(4) organizations to finance political attack ads while remaining anonymous (e.g., Karl Rove’s Crossroads conduit). Now comes this irony: The anti-tax, anti-government donors may eventually get hit with a tax bill, courtesy of the IRS applying its gift tax rules to these contributions. Such a bold move will no doubt be challenged through the courts, but it represents a healthy perspective: Tax-exempt groups should not be used as a conduit for secret contributions designed to elect the favorite candidate of a wealthy donor, whether it’s the Koch brothers, Exxon or George Soros.  Speaking of the Kochs and conduits, here’s a fascinating story from Florida that begins: “A conservative billionaire who opposes government meddling in business has bought a rare commodity: the right to interfere in faculty hiring at a publicly funded university.” In the Koch world, everything is for sale or should be for sale.


Take action to protect voting rights:

Wednesday, May 11th, 2011

We are writing to alert you to a new attack against basic voting rights in North Carolina. A new bill in the NC Senate would eliminate Same-Day Registration and youth pre-registration, slice a week off Early Voting, end Sunday voting, and require other changes that will make it much harder for millions of NC citizens to vote. We will fight this bill (S-657) and keep you updated about what you can do to help.

Right now, we are asking you to:

  • Sign up for our special action alerts on voting rights issues if you are interested in getting more involved. Visit http://bit.ly/l7GF8g to sign up.
  • Learn more about this bill and similar bills at our on-line Take Action Center: http://bit.ly/ilytg1. You’ll find information on the bills, flyers, action ideas and resources for both individuals and groups.

Also, please be aware that NC’s nationally-acclaimed public campaign programs for statewide judicial and Council of State candidates are under attack. Last week, Republican legislators attempted to eliminate them during the budget debate. Fortunately, Reps. Rick Glazier, Joe Hackney, Grier Martin and Deborah Ross courageously defended the programs and the attempt was withdrawn — for now. View video coverage of the debate at http://bit.ly/lJ4tsU.

We urge you to forward this email to others and to encourage them to visit our on-line Voting Rights Action Center at http://bit.ly/ilytg1.

We remain committed to “of, by and for the people,”
Your Democracy NC Team

P.S.: As we’ve documented often in our Link-of-the-Day reports, these bills are being pushed by NC House and Senate members who were elected thanks to millions in campaign contributions from ultra-conservative groups funded by NC retail millionaire, Art Pope. Learn more about his influence over NC politics at http://bit.ly/hDG9mX.


Examining Citizens United Fall-Out

Tuesday, May 10th, 2011

Here are two insightful columns related to the fallout from the Supreme Court’s Citizen United decision in January 2010. One by Nick Nyhart and Tova Wang points out that the decision became a green light for a beefed-up assault on democratic values, particularly the right to self-organize, the right to vote, and the right to elections free from corruption. The second column, by Norm Ornstein of the conservative American Enterprise Institute, traces the remarkable turnaround in support among conservatives for a fourth right they once held dear – the right to know. The turnaround came immediately after the Supremes in Citizens United said that robust disclosure is the best way to hold corporations, unions, politicians, and others accountable for how they use political money. Sadly, some (not all) conservatives now think being held responsible for your actions is no longer a good conservative value when it comes to private money in public elections.


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