Clinton campaign head made $200,000 with subprime lender
BY GLENN THRUSH
glenn.thrush@newsday.com
March 30, 2008
WASHINGTON - Hillary Rodham Clinton's campaign manager, Maggie Williams, earned about $200,000 on the board of a Long Island subprime lender that charged prepayment penalties - a practice that Clinton, a critic of the subprime industry, now seeks to eliminate.
Williams, who took over the reins of Clinton's campaign in early February, served as a director on the board of the Woodbury-based Delta Financial Corp. from April 2000 until the firm declared bankruptcy in December, according to Securities and Exchange Commission records.
She was recruited by former New York City Deputy Mayor Bill Lynch, a Delta consultant. Her assignments were to create a new code of "best practices," and to improve the company's crisis management operation in the wake of state and federal predatory lending probes that resulted in a $12 million payout to borrowers.
Her hiring coincided with stepped-up Delta outreach efforts in minority communities, where the company made a large number of its loans, an initiative that included parties for homeless children and mortgage seminars in Brooklyn and Queens.
Williams, 53, isn't the only Clinton insider who made money from an industry the candidate has demonized. A month ago, The Wall Street Journal reported that Clinton ally and former HUD Secretary Henry Cisneros grossed more than $5 million in stock sales and board compensation from Countrywide Financial, one of the nation's largest subprime lenders.
Once a poster child for predatory practices, Delta's reputation improved substantially until it buckled, as executives avoided adjustable-rate mortgages for fixed-rate loans, which have fewer defaults.
To boost revenue in the absence of high-profit adjustable loans, the company charged relatively steep interest rates - 11 percent in 2007 - and levied higher-than-prime-loan closing costs.
And Delta assessed penalties to borrowers who paid off before their loans matured - a practice Clinton frequently decries on the campaign trail.
"I would eliminate the prepayment penalties that lead to such high rates of default," Clinton said in a March 24 speech at the University of Pennsylvania. "I would require lenders to take into account the borrower's ability to pay property taxes and insurance fees when deciding whether to make a loan in the first place."
Subprime loans come with higher interest rates and are offered to borrowers with poor credit. The loans soared along with the housing boom and are an underlying cause of the current credit crisis.
Williams downplayed her role at the company, saying, through an assistant that she served only in "an advisory/oversight capacity."
In a statement released through Clinton's campaign, Delta senior vice president Marc Miller said Williams "did not have a role in the day-to-day operations and management."
Calls to Delta executives, board members and their bankruptcy lawyer weren't returned. The company's switchboard and Web site have been deactivated in the last few days.
Williams turned down repeated requests to be interviewed, although her assistant, Amee Patel, provided brief responses to several written questions by e-mail.
Asked if Williams shared her experiences in the industry with Clinton, Patel responded, "She generally does not discuss her business, board memberships or organizational affiliations with the Senator."
For her services on the board, Williams was paid around $30,000 per year plus expenses and granted at least 25,000 stock options, according to the SEC.
Records show she was able to cash in some of the options for a profit of about $15,000 during a temporary rise in Delta's stock price in July 2007.
"She lost remaining options due to the company bankruptcy," Patel wrote in an e-mail.
A month later, in August 2007, Delta was shaken by a sudden contraction of the credit markets and began a first wave of layoffs. By year's end, the company had laid off all but 50 of its 1,350 employees after bailout attempts failed and the credit crisis deepened.
Like many prominent African Americans, Williams, who served as Hillary Clinton's top White House adviser from 1993 to 1997, initially had high hopes subprime lending would offer homeowning opportunities to inner-city families long stymied by discriminatory bank practices.
Speaking to Directors & Boards magazine in June 2000, Williams said she was excited about offering Delta's home equity loans to working families trying to move into the middle class.
"There are people who miss payments and have bad credit for all kinds of reasons," she said. "It is a very middle-American kind of problem, although I believe it does affect poor people disproportionately."
In the article, Williams said her first tasks were building a new communications operation and learning the ins-and-outs of subprime lending from Hugh Miller, the company's chief executive. "Hugh was really my teacher in all of this," she told the magazine.
If Williams was impressed, others remained skeptical of Delta's reinvention, with some watchdog groups arguing the company continued to aggressively market high-fee loans to low-income borrowers, driving them deeper into debt.
"There was some improvement after the settlement, but they were still the most aggressive company," said Matthew Lee, founder of the Bronx-based Fair Finance Watch, a nonprofit that monitors inner-city lending.
Clinton campaign head made $200,000 with subprime lender
BY GLENN THRUSH
glenn.thrush@newsday.com
March 30, 2008
WASHINGTON - Hillary Rodham Clinton's campaign manager, Maggie Williams, earned about $200,000 on the board of a Long Island subprime lender that charged prepayment penalties - a practice that Clinton, a critic of the subprime industry, now seeks to eliminate.
Williams, who took over the reins of Clinton's campaign in early February, served as a director on the board of the Woodbury-based Delta Financial Corp. from April 2000 until the firm declared bankruptcy in December, according to Securities and Exchange Commission records.
She was recruited by former New York City Deputy Mayor Bill Lynch, a Delta consultant. Her assignments were to create a new code of "best practices," and to improve the company's crisis management operation in the wake of state and federal predatory lending probes that resulted in a $12 million payout to borrowers.
Her hiring coincided with stepped-up Delta outreach efforts in minority communities, where the company made a large number of its loans, an initiative that included parties for homeless children and mortgage seminars in Brooklyn and Queens.
Williams, 53, isn't the only Clinton insider who made money from an industry the candidate has demonized. A month ago, The Wall Street Journal reported that Clinton ally and former HUD Secretary Henry Cisneros grossed more than $5 million in stock sales and board compensation from Countrywide Financial, one of the nation's largest subprime lenders.
Once a poster child for predatory practices, Delta's reputation improved substantially until it buckled, as executives avoided adjustable-rate mortgages for fixed-rate loans, which have fewer defaults.
To boost revenue in the absence of high-profit adjustable loans, the company charged relatively steep interest rates - 11 percent in 2007 - and levied higher-than-prime-loan closing costs.
And Delta assessed penalties to borrowers who paid off before their loans matured - a practice Clinton frequently decries on the campaign trail.
"I would eliminate the prepayment penalties that lead to such high rates of default," Clinton said in a March 24 speech at the University of Pennsylvania. "I would require lenders to take into account the borrower's ability to pay property taxes and insurance fees when deciding whether to make a loan in the first place."
Subprime loans come with higher interest rates and are offered to borrowers with poor credit. The loans soared along with the housing boom and are an underlying cause of the current credit crisis.
Williams downplayed her role at the company, saying, through an assistant that she served only in "an advisory/oversight capacity."
In a statement released through Clinton's campaign, Delta senior vice president Marc Miller said Williams "did not have a role in the day-to-day operations and management."
Calls to Delta executives, board members and their bankruptcy lawyer weren't returned. The company's switchboard and Web site have been deactivated in the last few days.
Williams turned down repeated requests to be interviewed, although her assistant, Amee Patel, provided brief responses to several written questions by e-mail.
Asked if Williams shared her experiences in the industry with Clinton, Patel responded, "She generally does not discuss her business, board memberships or organizational affiliations with the Senator."
For her services on the board, Williams was paid around $30,000 per year plus expenses and granted at least 25,000 stock options, according to the SEC.
Records show she was able to cash in some of the options for a profit of about $15,000 during a temporary rise in Delta's stock price in July 2007.
"She lost remaining options due to the company bankruptcy," Patel wrote in an e-mail.
A month later, in August 2007, Delta was shaken by a sudden contraction of the credit markets and began a first wave of layoffs. By year's end, the company had laid off all but 50 of its 1,350 employees after bailout attempts failed and the credit crisis deepened.
Like many prominent African Americans, Williams, who served as Hillary Clinton's top White House adviser from 1993 to 1997, initially had high hopes subprime lending would offer homeowning opportunities to inner-city families long stymied by discriminatory bank practices.
Speaking to Directors & Boards magazine in June 2000, Williams said she was excited about offering Delta's home equity loans to working families trying to move into the middle class.
"There are people who miss payments and have bad credit for all kinds of reasons," she said. "It is a very middle-American kind of problem, although I believe it does affect poor people disproportionately."
In the article, Williams said her first tasks were building a new communications operation and learning the ins-and-outs of subprime lending from Hugh Miller, the company's chief executive. "Hugh was really my teacher in all of this," she told the magazine.
If Williams was impressed, others remained skeptical of Delta's reinvention, with some watchdog groups arguing the company continued to aggressively market high-fee loans to low-income borrowers, driving them deeper into debt.
"There was some improvement after the settlement, but they were still the most aggressive company," said Matthew Lee, founder of the Bronx-based Fair Finance Watch, a nonprofit that monitors inner-city lending.
Copyright © 2008, Newsday Inc.
http://www.newsday.com/news/nationworld/ny-ushill305631627mar30,0,3896712,print.story 
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