The asset that's keeping Edwards' campaign afloat.

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In the past two elections for president, two candidates have made poverty a central theme of their campaign, Dennis Kucinich and John Edwards. With poverty at the core of these campaigns, it seems inevitable that these men would be forced to address subprime loans and how discriminatory and predatory they have become. The very nature of debt buying businesses (as highlighted in the startling documentary Maxed Out, which goes from talking about credit card debt to how victims of credit card debt find more woes after allowing debt buyers to buy off their debt) is crude and vile to the core. Interestingly, these two men have chosen two different ways of handling the issue of subprime lending with one, Dennis Kucinich, holding a series of hearings on “urban America” that have involved special attention being given to subprime loans, and the other, John Edwards, choosing to work for a hedge fund so that he could “learn more about poverty.”

This is not new news, yet however, it is important to look at Edwards’ involvement up to this moment. It is necessary to compare it to another candidate to show how Edwards could have really done something for poor and middle class Americans. Based on his history, this will allow us to ask if John Edwards is really capable of being a beacon of hope for the poor and middle class if elected.

John Edwards Goes to Work for Fortress

Edwards was hired as a part-time senior adviser by Fortress by October of 2005. His job was to provide “support in developing investment opportunities worldwide and strategic advice on global economic issues.” Like Dan Quayle (Cerberus Capital Management) and Rudy Giuliani (Giuliani Capital Advisors), he joined a group of former politicians who had left politics to become “dealmakers.”

Edwards claims that in 2005 he went to work for them “mainly in order to learn about the relationships between financial markets and poverty.” But if that is the case, why not just take a class? To, those who ask this question, he responded to an AP reporter saying, “That’s true,” and adding, “making money was a good thing, too,” while maintaining that he went work for Fortress to “primarily learn.”

Edwards’ advising has made Fortress one of the biggest if not the biggest campaign contributors to his campaign for president. At the time of his hiring, Fortress had given through it’s employee’s political action committee approximately $143,000 to Democratic candidates running for Congress and the White House. Since then, the numbers have noticeably risen as Fortress’ contribution to Edwards of $4,000 is nearly forty times what it was before Edwards took the job in 2005. (*This does not include contributions made by the Fortress PAC.)

Hurricane Katrina Hit in August 2005

It’s not so much that John Edwards took the job, but what he did or didn’t know before taking the job that makes me wonder why he chose to. I have no reason to believe that he didn’t want to run for president again in 2008. Therefore, a move to work for Fortress had to be carefully calculated. Even if he wasn’t running for president, Edwards wasn’t going to be retiring anytime soon?

But, in fact he was going to run, and this was mentioned by the Washington Post in an article published in September 2005, one month before taking the job with Fortress. In the article, Edwards was quoted attacking the issue of poverty and even offering policy initiatives to help the victims regroup in the aftermath of the hurricane.

Edwards “criticized Bush for suspending a law requiring federal contractors along the Gulf Coast to pay prevailing wages on reconstruction projects:”

"I might have missed something, but I don't think the president ever talked about putting a cap on the salaries of the CEOs of Halliburton and the other companies . . . who are getting all these contracts," he said in a speech at the Center for American Progress, a liberal think tank. "This president, who never met an earmark he wouldn't approve or a millionaire's tax cut he wouldn't promote, decided to slash wages for the least of us and the most vulnerable."

Edwards was also quoted using “the metaphor of the flooded levees in New Orleans to describe what he called society's inadequate efforts to bolster the poor.”

How could he have offered policy iniatives that were "comprehensive" if he did not know the full involvement of predatory and subprime lenders in Louisiana?

If this is when Edwards began to run for the presidency in 2008, why would he jeopardize his political future by not asking about Fortress’ involvement unless he was ignorant to the fact that Fortress had subprime lenders involved in the area Katrina hit?

After ACORN, a group he has worked with on poverty since Katrina, published this report on subprime Lending one month after Katrina titled “Subprime Katrina,” how could he have ignored this and not talked with Fortress about their involvement with loans in the area hit by Katrina?

Maybe he intended to take a chance that he would be found ignorant because working for Fortress would be one easy way to make money to finance a future presidential campaign. And maybe, Edwards was counting on his personality and reputation to offset the possibility that people would suspect something fishy had gone on between Fortress and Edwards.

Offering Critics on the Left and Right a “Gotcha” Opportunity

This whole mess with Fortress calls into question his campaign that has been based on fighting poverty in America. Calling it into question goes beyond showing Edwards may not understand what causes poverty in America but also that he may not have what it takes to do his homework and make the right decisions if elected president.

According to Salon.com, the campaign has defended the investment saying Edwards is “specifically against “predatory” lenders” and that he feels subprmine lenders “perform a useful service in expanding homeownership.” However, in a WSJ article by Christopher Cooper (that you now have to pay for to read) argued that subprime lenders “may fit into the predatory category.” And even “mortgage experts say there's no clear line dividing standard subprime loans from "predatory" ones.”

Thomas Lawler, a former official at mortgage buyer Fannie Mae, offered some insight into predatory loans:

…predatory loans carry high interest rates that are allowed to rise but not drop. They may be loaded with prepaid fees. Lenders may make monthly payments look smaller than they really are by not requiring borrowers to put taxes and insurance in escrow. And the loans generally don't allow early payoff without a steep penalty. That bars refinancing if interest rates drop…

This is essentially the case with many of the mortgages in Louisiana as a “review of some courthouse records in Louisiana shows that Green Tree and Nationstar mortgages carry many of those attributes. Several carry accelerators that allow the already-above-market initial interest rate to nearly double. They also carry penalties for early payoff.”

Visits Cleveland

On July 19, 2007, John Edwards visited Cleveland to specifically talk to people about home foreclosures. At this time, he still had stock in Nationstar and had recently been questioned about Green Tree, which were both subprime lenders Fortress owned in 2007.

Was John Edwards aware of the fact the domestic policy subcommittee was running a series on “urban America”? Had he contacted anyone who was testifying in this series to learn more about subprime loans and predatory lending?

Chairman Dennis Kucinich stated in a hearing held on March 21, 2007 (which essentially kicked off the 2007 series), that it was projected that “one out of five sub-prime mortgages originated during the past two years will end in foreclosure. These foreclosures [would] cost homeowners as much as $164 billion. The exact cost it will have on urban America is unknown. I wonder if any of us in government has a proper understanding of the dimensions of the forthcoming foreclosure crisis…”

The opening remarks are stunning as is the testimony given by people invited to speak to the committee because it explicitly shows how discriminatory practices based on race and class are being instituted.

Dennis Kucinich, as chairman, clearly has done his job and as evidenced in this YouTube video and based on his record of hearings could solve the problem. Interestingly, he did not have to go to work for Fortress to learn anything about subprime or predatory loans.

Final Thoughts: Iowa and South Carolina Foreclosures

After the “Katrina flap,” Fortress was found to have foreclosed on homes in Iowa and South Carolina.

A South Carolina newspaper reported that a subprime lending entity partly-owned by Fortress had “foreclosed on or [was] in the process of foreclosing on 132 homes in South Carolina since Edwards went to work for Fortress in October 2005.” This was not good considering that Edwards was born in South Carolina and Edwards needs to maintain his reputation to win the South, which he needs to carry to be elected.

The Des Moines Register [scroll down for posted article by the Register] covered the Iowa foreclosures saying:

A total of 107 Iowa homeowners were foreclosed upon by subprime mortgage companies owned by Fortress Investment Group while Democratic presidential candidate John Edwards was associated with the equity company, court records show.

Fortress foreclosures have occurred in other states, but the Iowa cases bring Edwards’ tie to subprime lending to the leadoff presidential nominating state, where he has staked his political future.

At this point in the election, it is unknown how much money Edwards still has invested in Fortress. It is unknown whether or not this is an issue for Edwards when the big issue right now for him may be no longer issues-based and instead a question of electability in a race controlled by Obama and Clinton. Yet, he still has money invested and it is important to note the duplicity in Edwards’ record and statements on poverty.

John's notoriety could have been used to convene higher profile hearings for Americans deeply affected by this subprime disaster in America. He did not, however, convene hearings.

If one wants to learn about poverty, he or she should not go to the top and learn from the oppressor about how people are being oppressed. And if Americans are looking for a leader to fix this subprime loan scandal, they should know that he must not just have done his homework on subprime loans and predatory lending in America or divested all his money from investments in hedge funds but he must also be able to admit America is experiencing a subprime loan scandal.

That said, what does John Edwards know about subprime loans and predatory loans? Anything? What about "corporate greed"?

Authors Bio:
Kevin Gosztola is managing editor of Shadowproof Press. He also produces and co-hosts the weekly podcast, "Unauthorized Disclosure." He was an editor for OpEdNews.com