Brown’s ‘Jobs Czar’ Really a Bailout King
By JOHN SEILER
Tomorrow Gov. Jerry Brown will announce the appointment of a new “Jobs Czar.” It will be retired Bank of America Executive Vice President Michael E. Rossi.
According to his biography, Rossi also “served as Chairman, GMAC Residential Capital, LLC (ResCap) in 2007 & 2008.” The company now is called Ally Financial. It used to be General Motors’ banking unit. Along with GM itself, in 2008 and 2009 the firm was bailed out by the federal government with $15.3 billion of the U.S. taxpayers’ money.
* On May 21, 2009, the U.S. Treasury announced it would invest an additional $7.5 billion in GMAC LLC, which gave the U.S. government a majority stake in the company.
* On December 30, 2009, the U.S. Treasury department said that they would invest another $3.8 billion in GMAC because the company had been unable to raise additional funds in the private sector. This raised the total government investment in GMAC to $16.3 billion.
* On May 10, 2010, GMAC Inc. announced that it re-branded itself as Ally Financial Inc.
* On December 30, 2010, the U.S. Treasury announced it would be converting $5.5 billion of interest-bearing preferred Ally stock into common equity.
* The U.S. government still owns 74 percent of Ally/GMAC.
Rossi has not been associated directly with Bank of America since 1997. However, he has been a director at Merrill Lynch Ventures since 1983, which according to Businessweek “operates as an investment arm of BofA Merrill Lynch Group.” And Bank of America got a massive taxpayer bailout of $45 billion under the 2008 TARP.
So, basically, his expertise is working for banks that eventually need gigantic taxpayer bailouts to avoid bankruptcy.
Moreover, the bailouts were supposed to create jobs and promote economic recovery. It didn’t happen. Despite the TARP and, a few months later in 2009, President Obama’s bailouts, the jobless rate continued to climb. Unemployment stubbornly remains above 9 percent at the national level and just below 12 percent in California.
According to his bio, Rossi “also serves as a Member of the Advisory Board at Shorenstein Company.” According to an April profile in San Francisco Business Times, Shorenstein has done well picking up the pieces of real estate wreckage from the crash. It also is adept at manipulating the system to its advantage. The Business Times reported:
And then there was the dramatic fashion in which Shorenstein jumped into the middle of one of the most highly publicized economic development deals in recent city history. The micro-blogging company Twitter was considering leaving the city for Brisbane when Mayor Edwin Lee and other elected officials intervened. They suggested that Twitter relocate to 1355 Market St., which would be part of a new zone exempt from the city’s 1.5 percent payroll tax.
The Board of Supervisors was gearing up for a vote on the tax break when Shorenstein announced that it had bought the building for $110 million from Adco Group. Without Shorenstein’s deep pockets and ability to bankroll the renovation of the art deco landmark, it’s uncertain whether the Twitter deal would have happened.
“It caught people’s attention because it’s a blue-chip name coming into a market that has not been perceived as a blue-chip location,” said Jeffrey Weber, managing director of the brokerage Eastdil Secured, which represents Shorenstein in many of its investment deals. “But with the Twitter news, it appears to be another opportunity where they are getting in early.”
Perhaps Rossi noticed the importance of reasonable taxes on keeping Twitter in Fog City. But the key for the whole state is not sweetheart deals for glamorous high-tech businesses, but lower taxes for all.
No Kids Allowed
Rossi also has been a director at Del Webb Corp. since 1994. The firm’s actual motto: “Love life to the fullest.” The firm builds restricted housing for senior citizens in resort-style locations, such as Sun City Shadow Hills in Indio.
It’s hard to see how providing exclusive — no kids allowed — housing to seniors translates into creating jobs for young people who pay the massive Social Security and Medicare taxes that support the seniors’ luxurious lifestyle.
Since 2004 he has been a director at at Aozora Bank Ltd., a Japanese firm, giving him insight into international trade and the importance of exports to California.
He also was a director at Union Pacific Resources Group Inc., a petroleum exploration company that in 2000 merged with Anadarko Petroleum Corp. Perhaps Rossi can advise Brown on the importance of the petroleum industry to California, and on the need to suspend AB 32, the Global Warming Solutions Act of 2006 that is killing one million state jobs.
Does Brown Need a Jobs Czar?
Who knows how Rossi might perform as Jobs Czar. But his background is in the financial sector that played a major part in the boom-bust cycle that crashed the economy. The top firms he worked for were bailed out by U.S. taxpayers to the tune of tens of billions of dollars.
But isn’t jobs creation the governor’s own job? Didn’t we elect him to create jobs? Wasn’t his campaign schtick that his great experience — twice governor, attorney general, Oakland mayor, etc. — made him uniquely qualified to get California out of the economic doldrums?
The state’s unemployment rate, 12.8 percent in June, continues to be the second-worst in the country, after Nevada. Brown finally seems to realize that’s not just an economic problem, but a political one. If the economy dips into the second part of a double-dip recession, his political position also will nosedive.
But instead of taking up the task himself, he has passed it off to a Bailout King banker who mainly has been part of the problem, not the solution.
May 25, 2013