BFD Blog!

Laura Richardson represents the 37th District in Southern California, first elected to Congress in a special election in 2007, then returned for a full two year term in 2008.  Prior to that Richardson served in the California Assembly representing the 55th District in 2006/2007 and first held political office as a member of the Long Beach City Council from 2000-2006.  Richardson was also on the payroll of Lieutenant Governor Cruz Bustamente with the title Southern California Director from 2001-2006.  Richardson’s educational background includes a Bachelors, Political Science, University of California, Los Angeles, 1984, and a Masters, Business Administration, University of Southern California, 1996.

It would seem from Representative Richardson’s resume that she has plenty of political “smarts” and useful connections, and the educational and intellectual tools to be very successful in her role representing the constituents in her district in California, however, she has tarnished her own reputation and is likely losing the confidence of her constituents, and is becoming emblematic of the ethical lapses demonstrated by some of her more senior colleagues in the Congress.

The Los Angeles Times reported that Laura Richardson is now under investigation by the Office of Congressional Ethics.  This investigation has come up all  because of a house in Sacramento, California that Richardson owns.  It is not certain if Richardson ever lived in the house, as she acquired it during her brief stint in the California state Assembly, but the house became, arguably, a public nuisance after Richardson let it fall in to disrepair, failed to pay taxes and defaulted on her mortgage. According to one neighbor:

The paint peeled, much of the grass and many plants died from lack of water, and weeds grew 3 to 4 feet high in back. Rats began breeding in the backyard and spread to the house next door.

That neighbor and other neighbors grew so concerned that they paid their own gardeners to mow the grass, and they would take a hose from their yards to water the plant material, trying to mediate a dilapidated eyesore in the middle of an otherwise well kept, middle class neighborhood.  Likely all the while worrying about how their property values would be affected by their absent and apparently disinterested neighbor.

The house was subsequently foreclosed and sold to a third party, who then proceeded to rehabilitate the property, but then Richardson was able to convince the lender to take back the house from the new owner and give it back to Richardson, as outlined in the Los Angeles Times article  by Jeff Gottlieb:

Richardson bought the house in the tree-lined upper-middle-class Curtis Park neighborhood for $535,000 in early 2007 after she was elected to the Assembly. She already owned two houses, one in her Long Beach district and the other in San Pedro. She has defaulted six times on both homes.

After serving briefly in the Assembly, Richardson was elected to Congress in a special election later and moved out of the Sacramento neighborhood nearly two years ago.

The Sacramento house went into foreclosure in early 2008. Richardson also owed about $9,000 in property taxes at the time.

[James] York bought the house in May 2008 for $388,000 and recorded the deed. He sent in a crew and began remodeling, to the joy of neighbors.

It wasn’t long before Washington Mutual took it back and returned it to Richardson. York sued, and the case was settled with each side agreeing to keep details secret. JP Morgan Chase, which bought Washington Mutual last year, said it would be a violation of customer privacy to discuss the case.

In addition to the Sacramento home, Richardson owns a home in Long Beach, California and San Pedro, California, and reports are that she has had loan defaults on all three homes a total of eight times. If nothing else, Richardson has become very adept at using the system.  After her Sacramento home was cited by local code enforcement and they boarded up the garage and sent her a bill for $400, she managed to weasel out of paying the bill. Since joining Congress, Richardson has gone whole hog at the trough of perks by distinguishing herself as being the member of the House with the most expensive auto lease, $1,200 for a Lincoln Town Car, when the norm for all other House members is $400-$800.

Richardson seems to manage her automobiles in a similar manner to how she manages her real estate holdings, as reported in the Los Angeles Times by Jesus Sanchez:

While Richardson has leased the vehicle only since last fall, it already been involved in one traffic accident while being driven by a staff member. In addition, Long Beach police ticketed the car in January for illegal parking, a ticket that has gone unpaid.

The congresswoman has had a spotty record with government-issued autos in the past:

When she was a councilwoman in Long Beach, she crashed her BMW, abandoned it at a body shop, failed to pay a prior repair bill, and then racked up 30,000 miles on a city-owned hybrid in one year — apparently violating a policy against personal use of city cars.

Through her personal financial management Richardson put herself upside down on the Sacramento home, owing more in principal and interest on the loan than she originally paid for the house, not unlike her management of her campaign spending in which she raised $1,039,162 in donations, spent $1,010,267 of her campaign treasury, and still owed, as of December 30, 2008, $357,747 in unpaid campaign related bills.

It is interesting that some of the significant sources of Richardson’s 2008 campaign funds were various union organizations, including building trade unions and the National Association of Realtors.  So it seems that Richardson has an acute ability to leverage the housing industry for her own advantage, but at what cost to the taxpayers and what impact to those of us who do pay our bills on time, and according to all agreed terms.  We the tax payers, who are homeowners and voters, are paying a price (through our taxes and our own mortgage costs) to prop up the home mortgage industry and the mortage backed investment banking industry that tanked because of the individual greed of irresponsible consumers like Laura Richardson and the institutional greed of Wall Street.

The question hanging over Laura Richardson, is, after serving her own interests, who’s interests does she serve, the people who she represents, or the business, industry and lobbying interests who facilitate her financial escapades and political career?   Richardson does seem to have some sensitivity to the ethical trap she has placed herself in, by abstaining from voting on HR 3221 amending federal housing foreclosure assistance and related tax provisions, and abstaining from voting on HR 5818 a bill to provide assitance to states for purchasing foreclosed homes.  But recusing herself from these votes is not enough, Congresswoman Richardson needs to come to terms with her own poor judgement and lack of responsibility, she needs resolve her personal financial issues, and demonstrate that she is not under the shadow of imminent financial disaster and all of the unnecessary pressure that brings to bear upon her ability to function rationally.  Richardson also needs to demonstrate that due to her personal circumstances, she is not susceptible to trading her societal values owed to her individual constituents to the agenda of some deep pocketed special interests.  If not, she will lose the trust of the voters who have placed her in office.

Clean up your act Representative Richardson.