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Bob Corker: Mixing Public Service with Personal Profit

Following months of speculation, Bob Corker was passed over as Donald


Trumps running mate amid at least one federal investigation and a series of
reports on several additional controversies. The negative press on Corker
shares a common theme that has followed him throughout his political
career: That he uses his public posts for his own personal benefit and that
of his closest allies and donors.

In May 2016, the Wall Street Journal reported that the FBI and the
SEC were investigating Bob Corker and CBL & Associates, a REIT
based in Corkers hometown of Chattanooga owned by Corkers
former employers turned major donors. According to the report,
federal officials were examining CBLs billing practices and Corkers
dozens of lucrative stock trades over a period of several years,
collectively worth tens of millions of dollars. While they have not
commented publicly on the case, investigators appear to be looking
into whether Corkers trades may have been based on inside
information.

Interest in Corkers personal finances first emerged in late 2015,


when the Journal reported on a series of contradictions and apparent
omissions in Corkers personal financial disclosures over the course of
nearly a decade. Often, he failed to declare income that he appeared
to derive. In other cases, he failed to indicate when he had acquired
or sold certain assets. Ultimately, Corker filed amended disclosures
with the Senate Ethics Committee, which revealed millions of dollars
in previously undeclared assets.

Some of the transactions in question involved CBL, but they were not
the only firm with long ties to Corker where he appears to have
hidden the degree of his involvement. Corker also invested in two
Chattanooga hedge funds called Pointer Management and TSWII,
which like CBL were founded by longtime donors and friends of
Corker. As with CBL, there is concernand at least some
circumstantial evidencethat privileged information that Corker
obtains as a Senator could be used to influence the funds investment
positions.

Corkers investments in Pointer were the subject of a recent Yahoo


Finance article, which revealed that the fund had made tens of
millions of dollars in profit, if not more, shorting the housing market
in 2007. Corker was joined in his Pointer investment by fellow Senator
Mark Warner. Beyond the unseemliness of Senators making exorbitant
profits off of the collapse of the US financial system, the article also

noted that Corker and Warner sought to radically reshape the housing
finance market in a landmark bill they proposed in 2013. The CorkerWarner bill did not pass, but it has become a blueprint for subsequent
proposals to eliminate Fannie Mae and Freddie Mac.

Corkers controversial relationships with business leaders from his


hometown include another key example: Henry Luken. Best known as
a communications magnate, Luken acquired the lions share of
Corkers failing real estate empire from him in 2006, while Corker
was running for Congress and just before the credit crunch sparked
by the financial crisis. As a result of the sale of the highly leveraged
assets, Corker not only avoided the subsequent calamity, but he was
given the liquidity he urgently needed to fund his own campaign: He
subsequently let himself approximately $4.2 million, which accounted
for nearly a quarter of all his spending, in the weeks before his
primary and his general election win, enough to secure him a narrow
margin of victory against Democratic opponent Harold Ford.
While one can only speculate about what might have been, it is not a
stretch to say that without Lukens bailout, Corker might not have
won his race.

While in the Senate, Corker has pursued a series of agenda items that
have advanced Lukens business interests. He sent letters to the FCC
urging regulatory changes that would protect the profits of Lukens
scores of low-power TV stations and broadcast networks. Corker cosponsored multiple bills that would benefit Lukens telecom
businesses. Corker also spent years as mayor and senator
encouraging Volkswagen to build a massive plant in Chattanooga,
which inflated the value of several of Lukens nearby properties.

After Luken took control of Corkers struggling properties, he was


initially unable to find a bank that would refinance their subprime
mortgages, which had originally been taken out by Corker. When the
loans on properties now owned by Luken were called in, he was only
able to secure two six-month extensions, until Wells Fargo agreed to
refinance more than $28 million of the debt in March 2010.

Wells Fargos new lending agreement with Luken, which came at a


time when other banks would not extend new financing because of the
post-crisis credit crunch, was a huge boon to Corker and Luken alike.
Thanks to the loan, Luken avoided insolvency. As the original
borrower, Corker likely maintained a contingent liability on the
properties, meaning inability to roll over the loans was a threat to his
financial well-being as well.

This was not the only favorable treatment Corker has received from
Wells Fargo, which he also oversees as a member of the Senate
Banking Committee. Days after Corker sank between $2 and $10
million in a proposed Mobile, Alabama shopping center, the bank
announced it would finance the project. Wells Fargo has long been the
primary financier of CBL, and the firms owners credited the banks for
allowing them to weather the financial crisis, which also allowed
Corker to retain value in his multi-million-dollar investments. Corker
invests hundreds of thousands, if not millions, of dollars in his
campaign war chest with a fund owned by a former Wells executive
named Aon Miller.

Corkers unusual pattern of highly lucrative foreign stock trades has


also raised eyebrows, and raises questions about whether he might be
exploiting his work on the Senate Foreign Relations Committee.
Corker made 92 trades (which were cumulatively worth up to
$945,000) in the stocks of 29 foreign companies from January 2014 to
April 2014. While some of these firms are well known, many would be
anonymous to American investors, such as a French REIT called
Unibail-Radamco and an Oslo chemical firm known as Yara
International.

Corkers hold time was extremely short in every case. He sold the
stocks after an average of slightly more than three months, and held
onto none for even five months. The trades were also extraordinarily
profitablenearly 80% were winners. Corker travelled to many of the
countries where these companies are located, and as chair of Senate
Foreign Relations Committee, he often received detailed breakdowns
of their economic issues, include material non-public information that
would be high interest for investors.

This willingness to use public office for his own personal benefit has
been a theme of Corkers career dating back to his first elected
position, as mayor of Chattanooga from 2001 to 2006. Critics
complained that he changed city zoning and environmental rules to
boost the value of multiple properties he owed. Corker also appears to
have directed city business to his friends; for instance, under his
watch Pointer Management began to manage investments for city
pension funds.

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