Summary
In a Senate race chock full of attack ads, the Florida Democratic primary pits Rep. Kendrick Meek against billionaire investor Jeff Greene. Both men carry heavy political baggage; Meek did favors for a developer who is now under indictment, and Greene made hundreds of millions of dollars when homeowners defaulted on their mortgages. And now each is attacking the other with false or misleading claims.
- Greene claims Meek “lobbied for Big Tobacco against children’s health care.” That’s misleading. Meek voted for the Children’s Health Insurance Program on all occasions, even when the legislation included higher cigar taxes that he opposed.
- Greene also claims Meek “lobbied against seniors,” a claim that rests on Meek’s support for a single bill that died quietly. The fact is, Meek voted with AARP on key legislation in the past two years.
- Greene’s ad also says Meek “pushed … subprime loans.” That’s a stretch. It’s based on Meek’s sponsorship of a homeownership fair in 2004.
- A response ad from Meek claims: “Warren Buffett called [Greene’s] scheme ‘financial weapons of mass destruction.’ “ That’s false. Buffett wasn’t referring specifically to Greene, or his trading of credit default swaps. He was talking about derivatives in general.
- Meek says that several news organizations reported that he “is not part of a fraud case.” Not so. They reported only that he hadn’t been charged. In fact, one news outlet said it was “true” that he was “tied to a criminal fraud case."
Analysis
National coverage of the Florida Senate race has focused on Republican-turned-Independent Gov. Charlie Crist and presumed GOP nominee Marco Rubio. But the Democratic primary has been just as heated. Rep. Kendrick Meek and wealthy real estate investor Jeff Greene have been lobbing false and questionable charges at one another. Here we look at an ad from each campaign. Both parties’ primaries are Aug. 24.
Lobbying for the Truth
In an ad titled "Crooked," Greene misrepresents Meek’s congressional record in saying Meek "lobbied for Big Tobacco against children’s health care” and “lobbied against seniors.” And he misleadingly says Meek "pushed subprime loans."
[TET ]
Jeff Greene for U.S. Senate Ad: "Crooked"
Announcer: How corrupt is Kendrick Meek? Meek’s been tied to a criminal fraud case. Meek took Wall Street’s money and pushed the subprime loans that wrecked our economy. Meek lobbied for big tobacco against children’s health care. Lobbied against seniors. No wonder an independent ethics organization rated Meek one of the most crooked candidates. Isn’t there a better choice? Jeff Greene. A true outsider who will shake up Washington. No special interest money, just results for Florida.
Jeff Greene: I’m Jeff Greene and I approve this message. [/TET]
Let’s tackle children’s health care first. The ad refers to the Children’s Health Insurance Program, a federal program that provides matching funds to states to provide health insurance to children in low-income families. The program was initially scheduled to expire in 2007, and three different pieces of legislation to extend it have subsequently reached a vote. Meek has never been "against" it, as the ad claims. Instead, he voted in favor of the program on all occasions.
So how does Greene claim that Meek "lobbied for Big Tobacco against children’s health care"? The Greene camp cites a Miami Herald article about Meek’s opposition to higher cigar taxes that were included in a 2007 version of SCHIP legislation. Meek set up a meeting between Miami-based Padron Cigars and House Speaker Nancy Pelosi, so that Padron executives could argue against the $3 cigar tax that was part of the funding for the bill. Meek also told Cigar Aficionado magazine that "the tax increase on the handmade cigar industry … went too far." It’s fair to say that Meek lobbied against higher cigar taxes, but the phrase "Big Tobacco" is more often associated with cigarette giants like Philip Morris than handmade cigar companies, such as Padron. Plus, when the bill came to a vote in 2007, Meek voted for it, supporting children’s health care — despite the higher cigar taxes. That bill was vetoed by President Bush. When similar legislation came up for a vote in 2009, Meek again voted for it, and the 40-cent cigar tax it included.
It’s also misleading to claim that Meek “lobbied against seniors.” The Greene ad cherry-picks one bill from Meek’s four terms in Congress as back-up for the claim, citing a bipartisan bill Meek sponsored in October 2009 to eliminate the competitive bidding process for Medicare equipment. The bill was referred to committee and hasn’t been taken up by the House since. It is true that AARP did oppose Meek’s bill, saying that it would drive up medical costs. But Meek has voted with AARP in 2009 and 2010 on all five of the “key votes” the organization has identified as important to those over age 50.
Housing Fairs and the Housing Crisis
The ad goes beyond the facts when it implicates Meek in the housing crisis, claiming that Meek was guilty of doing the bidding of companies selling subprime loans: "Meek took Wall Street’s money …and pushed the subprime loans that wrecked our economy." The quid-pro-quo charge is unfounded, and Meek’s involvement with subprime loans is limited to his sponsorship of a housing fair.
Let’s take the easy question first — did Meek take "Wall Street’s money"? The Greene ad shows the logos of Fannie Mae and Freddie Mac as the announcer makes the claim, and Meek did accept contributions from those companies. But these supposed "Wall Street" contributions totaled $5,951, accounting for just six one-hundredth of 1 percent (0.06 percent) of the total amount Meek has raised over his eight years in Congress ($10,236,839).
It’s a stretch to claim that Meek "pushed" subprime loans. In January 2004, Meek sponsored a homeownership fair designed to educate people on the home-buying process. Several of these fairs had been set up by the Congressional Black Caucus.
A Meek spokesman told us: “The event brought together prospective homeowners with over 50 financial institutions, community-based organizations, credit counseling agencies, mortgage companies, realtors, and homebuilders to offer assistance to our constituents and make sure they left as educated consumers.” And the Miami Herald wrote this description of the 2004 fair: “Topics will include ‘How to save money buying a home,’ ‘Everything you need to know about down payments,’ ‘How Realtors can help you find a good home’ and ‘Signing the papers: Understaning the fine print and what it means.’ "
It’s true that companies that participated, including Fannie Mae and Freddie Mac, were involved with subprime loans. And the Greene campaign cites a USA Today article that says the fairs in general contributed to the problem of these loans.
USA Today: The nation’s top subprime lenders, including New Century Financial, which has filed for Chapter 11, have lavished generous donations on homeownership programs sponsored by black or Hispanic members of Congress.
But the Greene camp goes too far in implying Meek played a prominent role in the spread of subprime loans.
Possible Corruption
"Crooked" is correct when it points out that the watchdog group Citizens for Responsibility and Ethics in Washington "rated Meek one of the most ‘crooked’ candidates." CREW did put Meek on its list of "Crooked Candidates" for 2010. But a few days after Greene’s ad was released, CREW added another "crooked candidate" to its list: Jeff Greene.
Even before Greene made the list, CREW’s executive director called him "just a sort-of sleazy guy — as opposed to someone who had actually abused his office, like the other Senate candidates." The list also includes GOP candidate Marco Rubio and independent Charlie Crist. It’s not much of a distinction to be named a "crooked candidate" in the Florida Senate race.
CREW takes issue with Meek’s relationship with an indicted developer, and Greene’s ad correctly says Meek has been "tied to a criminal fraud case." Meek secured one earmark in 2004 and requested another for a biopharmaceutical complex spearheaded by developer Dennis Stackhouse. The project was never built, and Stackhouse is accused of pocketing about $1 million from it. Stackhouse, who paid Meek’s mother as a consultant and lent money to a Meek staffer for a downpayment on a house, is awaiting trial for grand theft and organizing a scheme to defraud.
Meek has not been charged in the case, and he has said that he didn’t talk to his mother about the project and that he didn’t know about the loan to his staffer. Meek has said he had supported the project because it was important for community development in a poor neighborhood in his district.
Meek Strikes Back
In response to Greene’s ad, Meek launched a TV spot that says Greene’s attacks have been called "false." Meek then goes after Greene — and goes overboard — in making claims about Greene’s very profitable work trading credit default swaps. Meek falsely charges that “Warren Buffett called [Greene’s] scheme ‘financial weapons of mass destruction.’ " Buffett didn’t say that about Greene.
[TET ]
Kendrick Meek for U.S. Senate Ad: "Can Buy Anything"
Meek: I am Kendrick Meek and I approved this message.
Announcer: Jeff Greene can buy anything … except the truth. His attacks have been called "false." "Completely untrue." All of these news organizations reported Kendrick Meek is not part of a fraud case. And to say he voted against children’s health care is "ridiculous." Jeff Greene bet middle-class homeowners would lose their homes. Warren Buffett called his scheme "financial weapons of mass destruction." Jeff Greene profited on suffering. [/TET]
The ad, which was launched July 30, shows an image of Greene’s "Corruption" ad as an announcer says: "His attacks have been called ‘false.’ ‘Completely untrue.’ " As we said above, a few of the charges in Greene’s ad are false and misleading. The Meek campaign cites a statement by the executive director of the Alliance of Retired Americans, who said the claim that Meek didn’t support seniors "would have to be completely untrue." He added that Meek "earned a 100% on the Alliance for Retired Americans’ voting record for his votes on retiree issues in 2009." The group has endorsed Meek in the Senate race. The Meek camp also refers to statements from the Florida Fraternal Order of Police and the Florida Service Employees International Union, both of which support Meek.
The ad then criticizes Greene for profiting from the subprime loan crisis. Greene, an already wealthy real estate investor, made hundreds of millions trading credit default swaps, a type of derivative, as homeowners defaulted on their mortgages and foreclosures skyrocketed. A credit default swap is protection or insurance for a credit risk, such as a mortgage. Greene is believed to be the first to start trading these swaps, and he made about $800 million, according to Forbes magazine, as the housing market collapsed. Those millions bumped up Greene’s net worth to $1.4 billion, earning him a spot on Forbes’ 400 Richest People in America list.
Meek’s ad says Greene "bet middle class homeowners would lose their homes." Greene did make a fortune as homeowners defaulted. A recent St. Petersburg Times profile of Greene says he was "essentially betting the subprime mortgage market would implode." But Meek’s assertion implies that Greene wanted people to lose their homes. Greene says he didn’t think trading the credit default swaps would be anywhere near as profitable as it turned out to be, and he says he simply wanted to ensure his own business didn’t suffer if the real estate bubble burst.
We won’t make any moral judgments here; we’ll leave it to readers to form their own views on the way Greene made his money. The Meek ad charges that Greene "profited on suffering." Others see Greene’s actions as savvy business moves. Forbes wrote in October 2008: "Greene’s winning trade says a lot about him. It was brilliant, brash and, in running counter to everything he’d spent his life doing, infused with insecurity, opportunism and contradiction." And Greene himself says: "I went to work to find a way to protect and insure my business and the jobs I’ve created from the very real possibility of a popping real estate bubble."
Greene: I invested in credit-default swaps – instruments that provided insurance on bonds that contained a portfolio of home mortgages. … If the foreclosure rate on those mortgages ticked upward just a few points, any drop in my real estate assets would be protected by the small gain in these new investments. Never did I imagine that the subprime mortgage market would implode, and I would make hundreds of millions of dollars.
As support for the ad, the Meek campaign cites the book "The Greatest Trade Ever" by Wall Street Journal writer Gregory Zuckerman, who chronicled the credit default swap trade. Zuckerman writes about an associate of Greene who did feel he was, in Meek’s words, "profiting on suffering." That trader told Zuckerman he felt "guilty" that he was "cheering for people to lose their homes." But Greene didn’t share that view. Zuckerman quotes Greene as saying: “I didn’t even think about it. If more people had been [shorting mortgages] early on, then the pricing of debt would have been higher and things wouldn’t have become so crazy. … We had nothing to do with what happened to home owners.”
Campaign spokesman Luis Vizcaino told us that trading the swaps "was not a ploy to make money, because he was already wealthy," adding that "it was a … strategic move to protect his investment."
Spinning Buffett’s Words
Meek’s ad ends with a false claim. It says: "Warren Buffett called [Greene’s] scheme ‘financial weapons of mass destruction.’ " But Buffett said no such thing about Greene’s actions. Instead, the Berkshire Hathaway CEO was talking about derivatives in general, not just credit default swaps, and he made the comment in 2003, several years before Greene even started thinking about engaging in such trading. Buffett didn’t even use the words "credit default swaps."
Buffett, letter to shareholders, Feb. 21, 2003: The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. … In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.
The Meek campaign told us that the claim refers to Greene’s business dealings and not Greene directly; a spokesman concedes that "we don’t have any evidence" that Buffett mentioned Greene directly. Exactly. It’s true that credit default swaps played a role in the financial crisis, as did many factors, and it’s true Buffett predicted that derivatives in general would turn out to be dangerous. But it’s false to imply that Buffett called out Greene personally.
Meek ‘Not Part of a Fraud Case’
The ad also misquotes news reports in an attempt to play down Meek’s role in the fraud case against the Miami developer.
Meek’s ad claims several news outlets reported that Meek "is not part of a fraud case." The ad shows images of the Miami Herald, Palm Beach Post, Associated Press and NBC affiliate WESH-TV. But WESH never said Meek wasn’t "part of a fraud case." On the contrary, the station said the claim that he’s "tied to a criminal fraud case" is "true." WESH did report: "Meek has not been charged with a crime."
Similarly, Miami Herald and Palm Beach Post articles said that Meek hadn’t been charged in the case — but the Herald wrote that Meek has "ties to a developer accused of fraud." And the Associated Press article the ad cites simply lays out the facts of the case and Meek’s association with it. Meek’s ad implies that these news organizations have defended him against charges that he acted improperly. That’s not the case.
— by Michael Morse and Lori Robertson
Sources
U.S. Senate. “H.R. 976, Children’s Health Insurance Program Re-Authorization Act of 2007.” (as passed by the House 16 Feb 2007).
U.S. Senate. “H.R. 2, Children’s Health Insurance Program Re-Authorization Act of 2009.” (as passed by the House 14 Jan 2009).
U.S. House. H.R. 976, roll call vote #102. 16 Feb 2007.
U.S. House. H.R. 976, roll call vote #906. 25 Sep 2007.
U.S. House H.R. 976, roll call vote #982. 18 Oct 2007.
U.S. House. H.R. 3963, roll call vote #1009. 25 Oct 2009.
U.S. House. H.R. 3963, roll call vote #2. 23 Jan 2008.
U.S. House. H.R. 2, roll call vote #16. 14 Jan 2009.
U.S. House. H.R. 2, roll call vote #50. 4 Feb 2009.
“Homeownership Fair Targets Minorities.” Miami Herald. 11 Jan 2004.
Clark, Lesley and Beth Reinhard. “Meek’s ties to health care bill, cigar maker in question.” Miami Herald. 24 Mar 2008.
“Meek Bashed for Pushing to Kill Competitive Bidding on Medicare Contracts.” St. Petersburg Times. 10 Jul 2010.
Allen, David, AARP spokesman. Interview with FactCheck.org. 27 Jul 2010.
AARP. Government and Elections, Key Votes 2009. www.aarp.org. Accessed 3 Aug 2010.
AARP. Government and Elections, Key Votes 2010. www.aarp.org. Accessed 3 Aug 2010.
Citizens for Responsibility and Ethics in Washington. Crooked Candidates. www.citizensforethics.org. Accessed 3 Aug 2010.
Bender, Michael. “Debate ends, as it began, with heated exchange between Meek, Greene.” Palm Beach Post article published in The Miami Herald. 22 Jun 2010.
Coyle, Edward F. Executive director, Alliance for Retired Americans. Statement on Kendrick Meek. 27 Jul 2010.
Pinsent, Wayne. “Credit Default Swaps: An Introduction.” Investopedia. Accessed 3 Aug 2010.
Kitchens, Susan. “The Reluctant Billionaire.” Forbes Magazine. 6 Oct 2008.
Smith, Adam C. “Jeff Greene’s path to Senate campaign shows he is uncompromising, sometimes to a fault.” St. Petersburg Times. 1 Aug 2010.
Greene, Jeff. “The Facts About Jeff Greene.” Jeffgreene.com. accessed 3 Aug 2010.
Zuckerman, Gregory. “The Greatest Trade Ever: The Behind-the-scenes Story of How John Paulson Defied Wall Street and Made Financial History.” Knopf Doubleday Publishing Group, 2009.
Vizcaino, Luis, spokesman, Jeff Greene campaign. Interview with FactCheck.org. 28 Jul 2010.
Buffett, Warren E. Letter to shareholders. BerkshireHathaway.com, 21 Feb 2003.
Varchaver, Nicholas and Katie Benner. “The $55 trillion question.” Fortune magazine, 30 Sept 2008.
“Greene Campaign Ad Put to Truth Test.” WESH-TV. 26 Jul 2010.
Reinhard, Beth. “Greene calls Meek ‘crooked’ and ‘corrupt’ in new ads.” Miami Herald Naked Politics blog. 27 Jul 2010.
Associated Press. “Report: Ex Meek aide received money from developer.” 15 May 2010.