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Did David Harmer accept a bailout of his own?

Original post made by Warner on May 26, 2010

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By Michael Fitzgerald
Record Columnist

Republican congressional candidate David Harmer denounces bailouts, the stimulus package and Obamacare. But did he accept a bailout of his own?

Harmer, a small-government conservative, is vying for the Republican nomination to run against Rep. Jerry McNerney, D-Pleasanton, in the 11th congressional district.

At his Stockton breakfast, as most campaign stops, Harmer blasted "the so-called stimulus that has not stimulated anything but government spending and federal debt."

Declared Harmer, "We're disgusted by it."

Harmer's brush with the bailout was more than ideological. Before flipping his hat into the ring for the 11th District seat, he worked for Washington Mutual.

An attorney, Harmer worked ensuring WaMu complied with federal credit regulations.

WaMu went belly-up in the mortgage meltdown. The bank was acquired by JPMorgan Chase.

JPMorgan Chase received $25 billion in federal bailout money from the Troubled Asset Relief Program, or TARP.

JPMorgan Chase laid Harmer off.

Harmer received a $75,406 bonus.

He also received $84,586 in severance, according to his federal financial disclosure forms.

Harmer's foes interpret events this way: Harmer, who denounces bailouts, received a hefty severance - of bailout money. Harmer is guilty of hypocrisy.

Harmer's camp says this interpretation is wrong.

WaMu never took a penny of bailout money, said Harmer's spokesman, Tim Clark.

JPMorgan Chase took it, Clark said. But the financial giant didn't need it. Witness the fact JPMorgan was one of the first to repay the U.S. Treasury in full, Clark said.

"JPMorgan Chase is one of the healthiest, financially sound institutions on the planet," Clark said. "They did not need nor did they want TARP bailout money."

U.S. leaders, striving to calm the financial markets, lavished TARP money over needy and not-needy institutions alike, Clark said.

"The whole bailout process was flawed, and it was bad government, and it should have never happened," Clark said.

As for Harmer's bonus and severance, "Whatever David was paid by JPMorgan came from JPMorgan," and not taxpayers, "because it was a very healthy financial institution."

JPMorgan Chase had a credit regulation compliance division of its own. Harmer's division became redundant.

As far as the bonus, "It's compensation for work done - for a good job done ensuring the banks comply with the consumer protection," Clark said.

"We are conservatives," Clark said. "We believe in rewarding those who excel and get the job done."

Harmer, who earned $485,779 over the previous five quarters, and who lists hundreds of thousands of dollars in assets, then applied for unemployment compensation.

He took $2,395 in unemployment, his records say.

"He's paid into the system," Clark said.

To my mind, the critics who raised the issues about Harmer's compensation are missing the bigger point.

Whether or not Harmer was wrong to take the money, WaMu's failure also was the failure of unrestrained free-market capitalism.

Washington Mutual undid itself by reckless and predatory lending. Seeking to become "the Walmart of lenders," the bank went after lower-income borrowers, buying Providian and other subprime lenders.

It plunged greedily into a dubious market with products such as high-fee Adjustable Rate Mortgages. The result was the biggest bank failure in U.S. history. Legions of borrowers lost their homes. Shareholders were wiped out. The whole country was sucked into recession.

A good question for the four Republican candidates for the 11th District seat is whether they believe government has a role to play in regulating financial markets.

Harmer supports regulatory reform, but contends Democrats are perpetuating the problem by continuing to hold that some banks and big companies are "too big to fail."

Harmer would not only let private companies suffer the consequences of bad decisions, he wants to abolish Fannie Mae and Freddie Mac, federal mortgage corporations that buy and securitize mortgages.

"He says we need to get taxpayers off the hook," Clark said.

That's all very well - unless you believe Harmer himself was bailed out.

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