Tuesday, May 22, 2018
Politics

Kriseman questions Baker’s management of St. Pete’s investments

ST. PETERSBURG — Rick Baker makes no bones about it: he’s a hands-on mayor.

In nearly every interview and every candidate forum over the past six months, St. Petersburg’s mayor from 2001-10 has presented himself as someone who sweats the details.

But in the final days of the city’s combustible mayoral race, Mayor Rick Kriseman’s latest attack ad questions whether Baker really kept his eye on the ball when the city lost $11 million in investments after its former Wall Street advisor was wiped out by the 2008 financial crisis.

PREVIOUS COVERAGE: Read more about St. Petersburg politics from Tampa Bay Times reporter Charlie Frago.

"That’s just sleepy, sloppy management," read a recent post on Kriseman’s Facebook page, alongside a photo of Baker with his eyes closed.

Did the city really lose millions under Baker’s watch? At first, yes.

But the story doesn’t end there.

• • •

In 2012, the city sued Wells Fargo to recover about $11 million lost when city investments overseen by Lehman Brothers that evaporated along with the firm itself during the Great Recession.

The city was hardly Lehman’s only victim, of course. The storied investment bank had $639 billion in assets but $619 billion in debt. It disappeared after making the largest bankruptcy filing in history on Sept. 15, 2008.

Wachovia Global Securities managed the city’s Lehman investment portfolio, before being acquired by Wells Fargo in 2009. So when St. Petersburg filed suit in federal court to recover its Lehman losses, it sued Wells Fargo. The trial started in federal court in Tampa in March 2012.

TAMPA BAY TIMES 2012 ARCHIVES: ST. PETERSBURG VS. WALL STREET

Trial begins in city of St. Petersburg’s lawsuit against Wachovia (March 27, 2012)

Former St. Petersburg Mayor Rick Baker takes stand in Wells Fargo trial (March 30, 2012)

City of St. Petersburg wins $10.4 million verdict against big bank (April 3, 2012)

City attorneys argued that Wachovia officials were too heavily invested in Lehman to warn the city about the firm’s impending collapse.

Wells Fargo attorneys argued that city officials weren’t reviewing Wachovia’s reports, which would have alerted them to Lehman’s problems.

A Tampa Bay Times reporter covered the trial, and Baker was called as the city’s last witness. The former mayor testified for 15 minutes. He told jurors that when he took office in 2001, he signed a contract allowing the city to invest in securities lending, a riskier form of investments.

Baker testified that he didn’t know specific details of the city’s investments. He said that he delegated to his staff the responsibility of monitoring the Lehman portfolio.

That dovetailed with the city’s argument, that officials didn’t really understand what its investment advisor was doing.

• • •

Kriseman has now seized on that episode — Baker telling the jury he wasn’t much involved in managing the city’s investments — as belying the image Baker has projected as a hands-on leader.

"He took the stand and testified that he was decidedly more detached in the management of our investment portfolio," Kriseman told the Times. "He left responsibility for follow up to staff, that certainly doesn’t quite jibe with his hands-on image."

In the end, the city won. A federal jury ordered Wells Fargo to pay $10.5 million, meaning the city recovered all but about $600,000 from its original investment.

Add about $1.2 million in legal costs and the city ended up losing about $1.8 million.

But the Kriseman campaign’s ad said Baker’s inattention "lost the city millions."

Though the city’s argument that Wachocia was responsible for the losses prevailed, afterward one juror told the Times that the city was also negligent.

Baker points to that payout and the city’s overall financial returns during his tenure, which ranged from 2.3 percent to 5.7 percent as evidence he didn’t drop the ball.

"I would say in terms of overall investment financial response to the Great Recession, I think we did a very good job in preserving city’s assets," Baker said this week. "Nothing went south. We got our money back and had a positive return on our investments."

But the city had to go to court to get most of its money back, Kriseman said.

"He put the city in a position that the only way to get the money back was to litigate it," Kriseman said. "It’s an issue of mismanagement, really. If you’re going to tell the public you’re a great manager and you have your eye on the ball all the time, this clearly shows he didn’t."

Baker dismissed the mayor’s assertions as desperate, last-minute attack to counter Kriseman’s own recent bad publicity in regards to continued fallout from the 2015-16 sewage crisis and Hillsborough County identifying a baseball stadium site for the Tampa Bay Rays.

"The mayor has had a really, really bad 10 days," Baker said Wednesday. "They are just trying to find anything they can throw up against the wall at this point."

Contact Charlie Frago at [email protected] or (727)893-8459. [email protected]

TAMPA BAY TIMES: RICK VS. RICK, COMPARING THE TWO MAYORS

Rick vs. Rick: Closing Albert Whitted sewage plant could impact St. Petersburg mayor’s race (May 29, 2017)

Rick vs. Rick: Which St. Petersburg mayor paid the highest salaries at City Hall? (June 12, 2017)

Next big fight in St. Petersburg’s mayoral race: the science and politics of climate change (June 16, 2017)

Only one Rick will march in St. Pete Pride (June 22, 2017)

Rick vs. Rick: St. Petersburg sewage crisis edition (June 24, 2017)

Baker fought recycling in St. Pete, Kriseman embraced it. Will it matter in mayor’s race? (July 29, 2017)

Rick vs. Rick vs. Irma: How to run for mayor during a hurricane (Sept. 19, 2017)

Rick v. Rick: How have they handled St. Pete’s homeless problem? (Oct. 14, 2017)

Which Rick is worse at managing the city’s piggy bank? (Oct. 19, 2017)

In St. Petersburg mayor’s race, Rick vs. Rick is also Rays vs. Rowdies (Oct. 21, 2017)

Democrats line up to help Kriseman battle Baker (Oct. 31, 2017)

Comments
Romano: A pathetic legacy for Florida’s all-or-nothing Democrats

Romano: A pathetic legacy for Florida’s all-or-nothing Democrats

Explain this to me: In the world of partisan politics, how is being an independent thinker a bad thing? When it comes to general elections, we seem to like rogues and mavericks. We want outsiders and swamp scrubbers. Folks appreciate a good finger-...
Published: 05/22/18
‘World’s most expensive Witch Hunt’: Trump lashes out at New York Times, Democrats

‘World’s most expensive Witch Hunt’: Trump lashes out at New York Times, Democrats

WASHINGTON - President Donald Trump lashed out Sunday at "the World’s most expensive Witch Hunt," trashing a new report in the New York Times that said an emissary representing the governments of Saudi Arabia and the United Arab Emirates offered help...
Published: 05/20/18
Obama’s education secretary: Let’s boycott school until gun laws change

Obama’s education secretary: Let’s boycott school until gun laws change

Former Education Secretary Arne Duncan pushed a radical idea on Twitter: Parents should pull their children out of school until elected officials pass stricter gun control laws.His tweet came hours after a shooting rampage at a Houston-area high scho...
Published: 05/20/18
China offers to buy more US products to reduce trade imbalance

China offers to buy more US products to reduce trade imbalance

WASHINGTON - China offered to boost its annual purchases of U.S. products by "at least $200 billion" Friday as two days of talks aimed at averting an open breach between the two countries ended in Washington, a top White House adviser said.Larry Kudl...
Published: 05/19/18
Hillsborough candidate falsified contract for fund-raising gospel concert, lawsuit says

Hillsborough candidate falsified contract for fund-raising gospel concert, lawsuit says

TAMPA — A concert organizer is accusing Hillsborough County Commission candidate Elvis Piggott of falsifying a contract and prompting the headline act to pull out of a gospel show.In a lawsuit filed in Hillsborough Circuit Court, Corey Curry claims h...
Published: 05/18/18
Gina Haspel confirmed as CIA chief despite scrutiny of her role in interrogation program

Gina Haspel confirmed as CIA chief despite scrutiny of her role in interrogation program

WASHINGTON - The Senate voted Thursday to confirm Gina Haspel as the next CIA director after several Democrats were persuaded to support her despite lingering concerns about her role in the brutal interrogation of suspected terrorists captured after ...
Published: 05/17/18
GOP pushes for speedy confirmation vote for CIA nominee

GOP pushes for speedy confirmation vote for CIA nominee

WASHINGTON — Republicans are pushing for a speedy confirmation vote as early as Thursday after the Senate intelligence committee endorsed President Donald Trump’s CIA nominee Gina Haspel to lead the spy agency. But opponents concerned about Haspel’s ...
Published: 05/16/18
Gina Haspel, Trump’s pick to lead CIA, wins support of Senate Intelligence Committee

Gina Haspel, Trump’s pick to lead CIA, wins support of Senate Intelligence Committee

WASHINGTON - The Senate Intelligence Committee moved Wednesday to recommend Gina Haspel for CIA director, setting up a floor vote that her opponents say will signal to the world whether the United States condemns or condones torture.The committee vot...
Published: 05/16/18
Carlton: Time for Hillsborough’s Uncle Tom Road to go — but artfully.

Carlton: Time for Hillsborough’s Uncle Tom Road to go — but artfully.

In Hillsborough County — where one of the world’s largest Confederate flags still flies near a busy interstate — you may not be surprised to learn there’s an Uncle Tom Road.The name is a flash point and a slur, shorthand for a black person who will d...
Published: 05/16/18
Clearwater Vice Mayor Doreen Caudell drops out of Pinellas Commission race

Clearwater Vice Mayor Doreen Caudell drops out of Pinellas Commission race

With six months to go before the Nov. 6 election, Clearwater Vice Mayor Doreen Caudell on Monday dropped her bid against Pinellas County Commissioner Pat Gerard for the at-large District 2 seat.Caudell said she decided she’d better be better suited f...
Published: 05/14/18