When Gov. Dannel P. Malloy appointed a New Canaan Democrat last month to an out-of-the-limelight board, there was little fanfare and little notice.
The governor’s press office included a brief biography about Kathleen Corbet, saying she spent nearly 25 years in the financial services industry before founding her own firm specializing in private equity investing.
But the press release never mentioned that Corbet had also been named by Time Magazine in February 2009 as one of the top “25 people to blame for the financial crisis’’ that plunged the United States into the deepest recession since the Great Depression. Now, a leading Republican is questioning the appointment.
Time featured Corbet, with her picture, on a story about “the good intentions, bad managers and greed behind the meltdown’’ of 2008 that caused the national unemployment rate to shoot up as the recession deepened. She was listed along with convicted financier Bernard Madoff and Angelo Mozilo, who founded mortgage lender Countrywide Financial and was ranked second by Conde Nast Portfolio on its list of the “worst American CEOs of all time.’’
Corbet, now 52, served from 2004 to 2007 as the president of the Standard & Poor’s ratings agency, which gave its blessing to various financial investments.
“By slapping AAA seals of approval on large portions of even the riskiest pools of loans, rating agencies helped lure investors into loading on collateralized debt obligations that are now unsellable,’’ Time said regarding Corbet. “Corbet ran the largest agency, Standard & Poor’s, during much of this decade, though the other two major players, Moody’s and Fitch, played by similar rules. How could a ratings agency put its top-grade stamp on such flimsy securities? A glaring conflict of interest is one possibility: these outfits are paid for their ratings by the bond issuer. As one S&P analyst wrote in an email, “[A bond] could be structured by cows and we would rate it.’’
Reached Friday on her cellphone, Corbet declined to speak publicly about Time Magazine.
“I’m delighted to be on the Connecticut Housing Finance Authority,’’ she told Capitol Watch. “It’s a very worthy organization – helping first-time buyers with mortgage loans. That’s very worthy for our state.’’
Through Republican and Democratic administrations, CHFA has been involved in providing rehabilitation loans to help expand affordable housing in the state, particularly in places like New Haven and Waterbury.
“At my very first meeting, the very first loan that was presented to members of the board was a property that was requesting a rehabilitation loan in Waterbury, a 230-unit complex called Country Village Apartments,” Corbet said. ”I looked at the picture of the complex and that was where my parents first moved in 1958 and where I was born two years later. It was a surprise to me to see that as the very first loan that was under consideration. It was where I was born in public housing. It brought home to me that I’ve come full circle. It’s what the CHFA does. They provide mortgage loans to first-time homebuyers. That’s obviously a worthy purpose. I have a tremendous interest in it.’’
A story by Bloomberg News, reprinted in The New York Times, in August 2007 said that Corbet resigned from Standard & Poor’s “after lawmakers and investors criticized the company for failing to judge the risks of securities backed by subprime mortgages.”
The Bloomberg story quoted then-Senate banking chairman Chris Dodd as saying that the credit-rating agencies needed to provide an explanation for why they issued “AAA ratings to securities that never deserved them.” The story also said a company spokesman explained that Corbet had resigned as president to spend additional time with her family “and her exit is not related to the current credit-market turmoil.”
House Republican leader Larry Cafero, who has met Corbet in her role on the board of the Maine-based Jackson Laboratory, said Friday that he questions her appointment as an unpaid board member of the Connecticut Housing Finance Authority, a quasi-public housing agency that is poised to oversee nearly $500 million in public investments in affordable housing over 10 years.
“You have to question the judgment of this particular appointment when she’s involved in a board that oversees investments and decisions regarding housing,’’ Cafero said Friday. “I don’t think I’ve ever seen one appointed whose financial mistakes rank them among the 25 people in the world who are responsible for the biggest fiscal crash since the Great Depression. You gotta question that.’’
Cafero had concerns that the state was spending too much money to help Jackson Laboratory, which started moving forward this week with knocking down buildings at the University of Connecticut Health Center to make space for the new laboratory. Cafero said he was not convinced by Corbet’s comments about Jackson Lab as he was seeking financial security on the state’s behalf. As a nonprofit, Jackson would not pay any property taxes or corporate income taxes. Cafero and many other Republicans said the Jackson deal was a giveaway, and they eventually voted against the plan for the laboratory on state land on the health center campus.
Malloy’s senior adviser, Roy Occhiogrosso, said he was not familiar with the appointment and referred questions to communications director Andrew Doba.
“We were aware of it prior to her appointment,’’ Doba said Friday. “Ms. Corbet has over 25 years experience in the financial industry. She worked for S&P for three years, contrary to Time Magazine’s assertion of 10 years. Since leaving, she has actually helped an alternative ratings agency called Rapid Ratings International because of the need for competition in the field. … She’s been very upfront about her experience. She’s not trying to hide anything on this.’’
Corbet was hired by S&P as an outsider to the ratings industry, and now – years later – she is investing money with a competitor. Her supporters note that she was never an apologist for the ratings agencies and was at S&P for only three years out of a 30-year business career. They question why she should be singled-out for the problems of the entire industry.
She is a graduate of Boston College, the governor’s alma mater, and has contributed to the campaigns of many prominent Democrats, including the presidential campaigns of Hillary Rodham Clinton and Christopher Dodd. She has also contributed to Ned Lamont, Jim Himes, William Tong, Diane Farrell, U.S. Rep. Barney Frank, and Martha Coakley of Massachusetts. She recently donated to Elizabeth Esty, who is currently running for Congress in the 5th District against Republican Andrew Roraback. She also helped raise money recently for Democrat Chris Murphy in Greenwich.
Cafero said he initially believed that many of the appointments in Malloy’s first months in office were solid choices. But he compared Corbet’s appointment to Malloy’s handpicked choice of Robert Kennedy to lead the public higher education system that oversees the state’s community colleges and four-campus university system. Kennedy was forced to resign last week after revelations about more than $250,000 in raises that the Board of Regents had not approved and after spending nearly nine weeks this summer at his vacation home in Minnesota.
Cafero said that he has no problems with Malloy choosing a Democratic campaign contributor or a fellow graduate of his alma mater. She has given nearly $25,000 to Democrats over the past 12 years, according to public records.
“He has the right to pick Democratic partisans,” Cafero told Capitol Watch. “That’s not what I’m questioning. What I am questioning is the track record and where we’re going with that.”
“The only thing you have to question about this appointment is Representative Cafero’s timing,’’ Doba responded. “The closer we get to Election Day, the more erratic his comments get.’’
Corbet is the founder of Cross Ridge Capital LLC, which specializes in private equity investing in the financial services industry, as well as strategic consulting.
She became president of Standard & Poor’s on April 19, 2004 after serving for four years as the chief executive officer of the fixed income division at Alliance Capital Management. That division managed more than $160 billion in global assets. She had also served as chairman of Alliance Capital Australia and New Zealand. At S&P, she replaced the retiring Leo C. O’Neill.
“Kathleen brings substantial experience in the worldwide capital markets and in the global operations of a major financial services company,” Harold McGraw III, chairman of the McGraw-Hill Companies said at the time of her appointment by the parent company.
After graduating from Boston College with a bachelor’s degree in marketing and computer science, Corbet attended New York University’s Stern School of Business and received an M.B.A. in finance. She currently serves on the board of trustees at Boston College and previously served on the New Canaan Board of Finance.
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42 Responses to Malloy CHFA Appointment Questioned; Listed On Time Magazine’s “25 People to Blame For the Financial Crisis” That Sank Economy
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Malloy is an A%%, Plain and Simple!
Once again Roy O didn’t do anything – I mean, didn’t do anything wrong! Gosh a few more scandals erupt like the past few weeks and it will turn out he really HASN’T done anything !
Enough is enough. Get rid of all the Conn. Democrats on Nov 6th.
BAD CHOICE
I agree with Robin here. Some members of the Republican party seem to have gone over the edge. Please don’t vote straight ANY party. Take a careful look at each race for which you will vote. Look at the voting/personal/jobs record of each candidate. This is an EXTREMELY important election. We cannot afford to simply vote along party lines.
Dear M….this was a republican appointee…I think not…..
I have no idea what you’re talking about?
I’m a big supporter of Malloy as opposed to Foley. Little mister Foley would have been a disaster in office. But some of Malloys well connected friends like Corbett and both of the Estys are just pseudo-liberal parasites. I hate to find myself in agreement with Larry Cafero, but Corbet seems so incompetent that she should not be consulted about state financial decisions.
Let me tell you about these first time home mortgage plans. When Obama had his 8000k dollar credit to first time home buyers I went out to purchase a home. I put 20% down and when it came time to collect the 8000k my accountant told me that after 60k the credit goes down based on how much you make. Well I made 120k that year and got 0 $! My friend out of college with NO job put 3.5% down and had a family member co sign got 8000 and made money. These programs are meant for low income people who can barely afford a mortgage and are more likely to default and lead us to the same mess that happend in 2008
Remarkable. Just remarkable. Malloy strikes again. Taxpayers get only the best. Right.
Malloy, not your Father’s democrat. A new, more corrupt version, modeled after Mr. Obama.
What better person to have for cooking the books. Nepotism runs high in the Malloy and Democratic camps, and reminds me of the TV series “The Boss”. Everything is fine, no need to worry, we just need to increase taxes again, and again, and again. This toxic state is already seeing a mass exodus of young people, and who would ever think of retiring here. Make your cash and leave.
A point of concern is whether this person learned anything going forward or is she still just as likely to throw caution to the wind. At least she has done some work vs. lifelong politicians who claim to be Democrats. As with Obama on down, never having worked a day in their lives on anything of substance, they can only spew disdain and angst in a torrent of subterfuge as they are unable to formulate or present any viable plans for the economy, efficient healthcare, strong world presence, etc. The more Obama, Malloy, Murphy, et. al. open their mouths, the stronger and more viable their opponents look.
Seriously? What the hell? What is WRONG with Malloy? He needs to GO!
“Colonial Realty Company Countrywide Financial” Will Connecticut Housing Finance Authority be the next corporate scandal to hit Connecticut?
Connecticut seems to be “ripe” for picking from financial institutes.
Do you expect anything less from this good boy governor.
She is very well qualified. The problem with credit agencies ran deeper than one lady. It was a systemic issue of trying to ease credit guideline to help new businesses. The creators of the bad mortgages who were encouraged by Barney Frank to ease the qualification to obtain a house had more to do with the financial collaspe than this lady
Conde Nast Portfolio and Time magazine disagree with you. What are your qualifications that you are in a better position to judge her suitability for this position?
One has to question when someone like Corbet leaves the private sector to work in the public sector. Can’t she find a JOB in the private sector. Of course note. She is just another DANNY BOY HACK. And look at who eles DANNY BOY gave a nice cushy job to. THE LOSER JOHN LARSSEN. Things to remember taxpayers of CT come voting day. I’ve told you before DANNY BOY IS A LIAR AND SLIME. Time to kick the DEMS out
This is an unpaid position.
You know, it takes hutzpah or profound ignorance or both to talk out of both sides of your mouth at once and be proud about it:
“It’s a very worthy organization – helping first-time buyers with mortgage loans. That’s very worthy for our state.’’
“At my very first meeting, the very first loan that was presented to members of the board was a property that was requesting a rehabilitation loan in Waterbury, a 230-unit complex called Country Village Apartments,”
How many first time home buyers have the down payment to buy a 230 unit Section 8 apartment complex?
Go take a look at CHFA’s own site — I’m only seeing $18M in bonds dedicated to single family housing, out of the $500M over the next decade the article mentions.
http://www.chfa.org/Press%20Room/Investor%20Relations/Bond%20Disclosure/default.aspx
Let’s put it this way:
At the most altruistic, it’s a way for the State to finance low income housing projects by keeping the interest rates below market. This is done either by the State promising to pay part of the bonds (on some), or by giving tax breaks (on all).
At the most cynical, it’s an organization that exists to provide capital to businessmen at reduced rates, who most likely turn around and make generous political donations to keep the patronage flowing. It gets that capital in the first place by issuing bonds to wealthy investors who are looking for tax shelters so they can pay less in taxes that people who work for a living do. And they also provide generous campaign contributions to make sure the patronage keeps on flowing.
And Kathleen is either clueless, or more likely simply complicit in trying to tell the public it’s this great program to benefit first time homeowners when in reality it’s just a rich get richer on the taxpayer’s dime program.
(This wasn’t intended to be a reply here, sorry
)
And after rereading the article–really, Doba? “The only thing you have to question about this appointment is Representative Cafero’s timing,’’ Doba said. “The closer we get to Election Day, the more erratic his comments get.’’
You consider these comments erratic? Questioning the appointment of a woman with this track record is erratic? The woman was named “one of the worst CEOs of all time,” and was identified by Time magazine as among the top 25 people to blame for the financial crisis. TOP 25 out of the entire NATION! And Malloy thinks she’s a good choice for this board? For ANY board? Seriously–there aren’t people he could appoint who did NOT play a major part in the worst financial crisis since the depression? Whose comments are erratic here, Doba? And where are our Democratic legislators in all of this? Why aren’t THEY questioning this decision? Where are your voices, CT legislators? Have you forgotten that you’re supposed to be protecting the interests of the constituents, not kowtowing to the governor or your political party? Grow a set, please, CT legislators. Prove that you’re not as useless and spineless as many of you appear to be.
So….all of a sudden it’s MSAVAGE and not Melanie Savage….what’s up with that….too ashamed of your past posts….you should be…
Obviously it is the same person and she is not trying to hide that. Wouldn’t someone trying to hide it have come up with a whole new name. She has nothing to be ashamed of and you are not so sharp.
First of all–not ashamed of any of my posts. Far as I know, my posts have always appeared as msavage on the Courant site. You must be thinking of another blog.
Second–isn’t it the height of hypocrisy for someone who goes by a completely anonymous “handle” to call me out for abbreviating my first name–hmmm, “sharpshooter.”
No…I’m Sharpshooter all of the time and take responsibility for my posts as a single entity….
Why should this surprise anyone? It’s Malloy being Malloy. Hard pressed to find any good appointment or decision he has made. Simple background checking would want you as far away as possible from Corbet.
Imagine that, another bad choice by Malloy in an appointed position….
What does this say about the future of CT??????
Looks like all the Democrats that the Courant endorsed have done us more harm than good as Country and State. Is there any shame or remorse at the Courant these days
The Courant, like the NYTimes and WashPost have all failed American in general. They are cheerleaders, not instutions that should be dedicated to telling people what is actually happening. I wonder how some of these “journalists” can sleep at night … no guilt at all, obviously, for not doing their jobs. They are a turning into a bunch of mini Jim Shea’s and we’re suffering for it.
She sits on the Board of Massachusetts Mutual Life Insurance Company, too. Nice….
But wait. I thought all evil Wall Street 1% scum were Republicans. How can this be? Please o’ liberal media- please reconcile this indisputable fact for the unwashed masses.
The 1% Wall Streeters that are Democrats, are not responsible for the evil that the Republican ones do….
Nice double standards the Dem’s have?
So many poor appointments by the esteemed career politician who is our governor….
And yet the Courant and other newspapers continually cite S&P and Moody’s when it comes time for bond ratings, including CT’s, as if they are infallible.
So, which is it??
Insightful, professional bond rating agency worth quoting? Or disaster-making machine worth beating up?
Take your pick. Because it cannot be both.
To Mr. Keating and the HC,
In light of all the crony corruption can you check into the special benefits for the k-12 “leadership”? We have a wizard of a reformer who carpet bags from city to city moving the shells around and with a fancy title..Special Master Steven Adamowski and we have a Commissioner of
Ed. With no prior teaching experience named Stefan Pryor..can you find out if they have special vacation privileges where they can work remotely and do they have new SUV’s and unlimited traveling expenses, too. Who have they hired to help them “reform” our failing schools? The higher Ed debacle is only the tip of the iceberg. Keep watching as these reformy wizards keep reforming each others reforms. Remember when Adamowski saved Hartford Public Schools and he was a eduhero…guess what? Evidently it needs to be saved again. Who knew?
I gotta admit it really does not get much better does it. The only sure bet these days is to buy stock in turd polish.
http://www.guffsturdpolish.com/
This is the fault of every Connecticut voter who voted for Malloy and all the other corrupt democrats in the legislature who are giving this psycho Malloy free reign. VOTE OUT ALL DEMOCRATS!!!
Disgusted–I think that just voting out someone depending upon what party they belong to is a mistake. How about actually researching a politician, examining their past record, etc? Seems to me that’d be a better approach. The clinging to party lines phenomenon is apparent in BOTH parties. It’s like politicians have lost their ability to think for themselves and are only capable of going with the flow. Look for those who appear to have a mind of their own. Who support their own morals and principles and the needs/wants of their constituents rather than kowtow to their party. There might not be many left but there are still SOME. Voting along party lines is a big mistake, I think, and is partially responsible for the situation in which we currently find ourselves
msavage….That would be the ideal way to vote, but there are no democrats with a mind of their own. They have all proven to be destructive tax and spend socialists, which is the very last thing this state needs. I am not pro republican, however, voting for an independent is equal to throwing your vote away and giving it to the democrats. Nothing is worse than the democrat control we have now. They ALL need to be voted out!
She said the first loan was for a 230 unit complex and in the same paragraph says, That’s what CHFA does provides loans to first time home buyers. Homes and apartment complexes are not the same thing. In 1955 we lived public housing, but I was born in a hospital. Was she really born in an apartment in Waterbury in 1960?