TALLAHASSEE — When Democrat Alex Sink announced she was running for governor recently, the Republican Party instantly branded her a "former banker," invoking the ugliness of subprime loans, corporate greed and government bailouts.
But by raising questions about Sink, the state's chief financial officer and longtime Bank of America executive, the party walks a precarious line.
The GOP's own candidate, Attorney General Bill McCollum, spent 20 years in Congress, all of them on the committee that oversees banking, and he advocated many of the industry's issues. When McCollum left Congress in 2001, he became a lobbyist. His first client: the Mortgage Bankers Association of America.
With next year's governor's race likely to be overshadowed by a fractured economy and Florida's crippled housing market, a central question will be whether Sink or McCollum had any role in promoting or preventing the crisis.
"Sink has the DNA of a banker and McCollum has acquired some of the DNA because he represented bankers for so long,'' said Ken Thomas, an independent banking consultant in Miami who teaches at the Wharton School of Business. "Neither of them have done big favors for consumers.''
Sink, whose banking career began in 1974 and ended when she retired in 2000, defends her role as Florida president of NationsBank and then Bank of America.
"I was the head of the commercial and small-business divisions and the retail banking of 800 branches from around the state," she said. Mortgage banking and the divisions that traded in subprime lending were handled by a separate corporation, she said. "I did not have any supervisory or policy authority over the mortgage corporation.''
McCollum, too, distances himself, noting he left office before the situation exploded. He says he always acted with the consumer in mind, trying to expand banking options.
Of the Republican attacks, he said: "I don't have any comment on it right now. I haven't examined her record as a banker. I may get an opportunity to do that but I have not done so."
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McCollum's interest in banking began shortly after he was elected to the U.S. House of Representatives in November 1980, when he joined the Banking, Finance and Urban Affairs Committee.
As McCollum settled into Washington, the subprime lending industry was being born. Significant legislation in the early 1980s, which McCollum and most members of Congress supported, loosened rules on mortgages so banks could sell exotic versions, such as interest-only and adjustable rate loans. The year before McCollum arrived, Congress allowed banks to charge much higher interest rates.
More than a decade later, he was pushing his own banking-related legislation, including a bill aimed at curbing the rapid increase of personal bankruptcy filings that stymied debt collection (a version passed in 2005).
Over the years, McCollum collected hundreds of thousands in campaign donations from financial institutions. In the 1998 cycle, his top contributor was Bank of America with $18,000.
In 1999, McCollum co-sponsored the Gramm-Leach-Bliley Act, which undid a Depression-era law and allowed holding companies of commercial banks to own investment firms. That and a subsequent law in 2000 changed investment rules to allow banks to take on riskier investments in mortgages.
"The deregulation of credit default swaps turned the subprime mortgage arena into a big gambling casino," said Pat McCoy, a law professor and banking expert at the University of Connecticut. Among the players was Bank of America.
A financial storm was beginning to take shape. In May 2000, while McCollum was vice chairman of the banking committee, his panel held daylong hearings into mortgage issues, including rising defaults rates and subprime lending practices.
But hours of testimony resulted in little action. "It was very hard to convince anyone it was epidemic," said Cathy Lesser Mansfield, a Drake University law professor who testified before the committee.
McCollum could not recall the details, but said there was nowhere near the concern then as there has been in recent years, and linking the two would be out of context.
"It's great to look back in 40/40 hindsight," McCollum said. He blames regulators and the expansion of government-backed lenders Freddie Mac and Fannie Mae's reach into the housing market — a move done at the direction of President George W. Bush, who in 2002 pushed a "home of your own" campaign that drew bipartisan support.
Looking back on his congressional career, McCollum said his goal was to expand banking options and, in the case of the bankruptcy bill, to limit abuses that hurt responsible consumers who paid higher fees. "I think you'd have to characterize me as pro-consumer," he said.
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Sink's record is harder to examine because she wasn't a public policymaker; she worked at a private institution. She rose through the ranks of the male-dominated banking world to head NationsBank's Florida operations in 1993, and encountered her toughest challenges when NationsBank bought Florida-based Barnett Bank in August 1997.
The merger led to the elimination of 6,000 jobs and significant procedural troubles. When NationsBank switched over Barnett's computer systems, for example, employees struggled with the software. Customers waited in long lines. Telephone lines were jammed for weeks.
Sink, and other bank executives, were forced to apologize for the trouble.
She said the decision to merge with Barnett was made by corporate executives at NationsBank headquarters in Charlotte, N.C. "I got a call one day just like the people at Barnett did that said an agreement has been reached.''
By September 1998, NationsBank had merged with Bank of America and taken Bank of America's name. Along with Barnett, the bank had acquired Barnett's subsidiary, EquiCredit, a company that specialized in making high-interest-rate loans to lower-income borrowers. EquiCredit and NationsBank's own subsidiary, NationsCredit, were among the lenders accused of predatory lending before McCollum's committee in 2000.
"They targeted minority communities, the elderly and women," said William J. Brennan, an attorney with the Atlanta Legal Aid Society who testified.
Amid growing consumer complaints, and a rise in interest rates, NationsBank quietly shut down NationsCredit and EquiCredit in August 2000 — including 22 offices in Florida.
Brennan said he does not know Sink, and is not familiar with her role at NationsBank and Bank of America. He said anyone involved with the loans at any of these mortgage companies "knew what was going on and turned a blind eye," but the depth to which executives throughout a banking chain knew "kind of depends on the chain of command.''
Sink said she had nothing to do with NationsCredit or EquiCredit. "They were separately run corporations, separate subsidiaries. I never had any involvement with them.''
Republicans continue to try to link Sink with predatory lending, saying "she played a leading role in tanking Florida's economy."
Florida pollster Brad Coker of Mason-Dixon Research questions whether the charge will stick.
"I don't think anybody cares about what job Alex Sink had before she became CFO or what Bill McCollum did on the banking committee," he said. "The average voter is worried about getting through 2009."