CAMPAIGN FOR ACCQUN A ILITY September 19, 2016 BY FAX: 202-228-0566 The Honorable Robert P. Corker, Jr. Dirksen Senate Of?ce Building SD-425 Washington, DC 20510 Dear Senator Corker: As you know, the US. Senate Committee on Banking, Housing and Urban Affairs has scheduled a hearing on September 20, 2106 entitled ?An Examination of Wells Fargo?s Unauthorized Accounts and the Regulatory Response.? The hearing follows the recent announcement by the Consumer Financial Protection Bureau that Wells Fargo ?opened unauthorized accounts and submitted fraudulent credit card applications in a duplicitous attempt to boost sales figures.?1 Democrats on the Banking Committee requested that Committee Chairman Richard Shelby convene the hearing, writing ?[t]he magnitude of this situation warrants thorough and comprehensive review.?2 Because some of your personal ?nances appear intricately connected to Wells Fargo, Campaign for Accountability respectfully requests that you recuse yourself from oversight of any matter related to the bank. Background Wells Fargo may have most dramatically affected your ?nancial interests through its backing of a 650,000-square foot shopping center development in Mobile, Alabama called McGowin Park. Your 2015 personal ?nancial disclosure form states that on July 11, 2014, you purchased a stake in McGowin Park, LLC worth between $1 million and $5 million.3 The project, one of the largest retail developments in Mobile in decades, is a joint venture by Jones Lang LaSalle, a Chicago-based developer, and The Hutton Company, a construction company based in Chattanooga owned by Karen Hutton, one of your longtime supporters and former CBL executive.4 Other CBL executives also joined Hutton.5 Letter ?om Sens. Robert Menendez, Sherrod Brown, Jack Reed, Elizabeth Warren and Jeffrey A. Merkley to Sen. Richard Shelby, September 12, 2016, available at 020to I 6?09- 12.1)df. 2 Id. 3 Robert P. Corker, 2015 United States Senate Financial Disclosure Report for 2014, at 88, ?led May 14, 2015, available at I 20 I 4.pdf. 4 Gabriel Tynes, New Retail Complex a ?Win-Win.? According to Manager, Lagniappe Weekly, April 9, 2014, available at 5 Bethany McLean, Sen. Corker?s Relationship with Real Estate Industry Highlighted in Voting Record, Yahoo Finance, December 2, 2015, available at I 446 i 7523 .html. 1201 Connecticut Avenue, N.W. 0 Suite 300 - Washington, D.C. 20036 0 (202) 780-5750 The Honorable Robert Corker September 19, 2016 Page 2 Six days after making that investment, McGowin Park LLC made a Uniform Commercial Code (UCC) ?ling in Alabama disclosing that it had secured a loan from Wells Fargo to ?nance the project.6 No other UCCs have been ?led, suggesting that Wells Fargo is the sole source of ?nancing for the massive project which is projected to generate $200 million in annual revenues. At a September 19, 2014, Mobile County Commission meeting, a lawyer representing McGowin Park mentioned only Wells Fargo as a source of ?nancing.7 The timing of your investment suggests you may have had advance information about the Wells Fargo construction loan, perhaps the single most important factor affecting the project. Given that the completion of a major planned commercial development depends largely on the developers? success in securing the necessary loans and failure to do so means investors may lose their stake, the investment was highly speculative prior to the ?nancing, but much more certain thereafter. Therefore, the value of your stake presumably increased substantially after the loan was secured. In addition, Wells Fargo is a major lender to CBL Associates, a Chattanooga real estate investment trust with which you have a well?documented long and close relationship and in which you have traded heavily and to your signi?cant personal ?nancial bene?t. News reports indicate that your trades in CBL stock are under federal investigation.8 CBL executives have regularly referred to their ?rm?s special relationship with Wells Fargo. One recent annual report referred to Wells Fargo as the ?rm?s ?lead bank.?9 In a 2011 interview with the Chattanooga Times Free Press, CBL chairman Charles B. Lebovitz singled out Wells Fargo for helping prop up the ?rm during the recent ?nancial crisis.10 In a 2009 conference call, chief ?nancial of?cer said Wells Fargo ?has been our lead bank since 1978 . . . it?s totally a relationship driven business.?? The former head of the bank?s commercial real estate business joined board in August 2013.12 Over the last two decades Wells Fargo has provided CBL with ?nancing worth several billion dollars. The earliest loan uncovered to date came in August 1994, when CBL completed a 6 Alabama Secretary of State, UCC Records, available at ?ucc:l4- 0293 530&page=name. 7 Mobile County Commission, Notes at 4, September 19, 2014, available at meetingsiagendasiseptember I 9 20 4.pdf. 3 John Bresnahan and Anna Palmer, Feds Scrutinizing Corker?s Finances, Politico, May 24, 2016, available at http:// ?i 61?051bob-corker-? names-223 544. 9 CBL Associates, 2008 Annual Report at 3, available at I 03092:? CBL2008Annualpdf. ?0 Kathy Gilbert, Mall Men, Times Free Press, January 2, 2011, available at chatter/storylZO I 3 8027!. McLean, Yahoo Finance, Dec. 2, 2015. ?2 1d. The Honorable Robert Corker September 19, 2016 Page 3 $75 million credit facility led by Wells Fargo Real Estate Group.13 Since then the bank has awarded loans to CBL worth up to $1.26 billion. Most recently, on October 16, 2015, Wells Fargo helped CBL secure a credit facility of $1 billion and close a new $350 million term loan.14 The bank has also served as the underwriter of least ten CBL stock and securities offerings, the ?rst in 2002 and the most recent in September of 2015.[5 Congressional Rules Paragraph 4 of Rule 37 prohibits members of the Senate and Senate staff from using their legislative power to advance their personal ?nancial interests. ?6 Senate precedents largely favor allowing members to vote on legislation that may impact their personal economic interests out of concern over disenfranchising their constituents.? As a result, members may vote on questions when they are part of a class of those affected as opposed to affected individually. '3 While the Senate Ethics Manual does not offer detailed guidance regarding actions a senator might take beyond voting, the House manual is more instructive. House rules provide that members may not engage in other of?cial actions, such as sponsoring legislation, advocating or participating in a committee proceeding, or contacting an executive branch agency, when their ?nancial interests are at issue.19 ?3 Wells Leads Credit for Tennessee REIT, American Banker, August 2, 1994, summary available at I I 56226 I 7.html. '4 CBL Associates Properties Inc., SEC Form 8-K, October 16, 2015, available at Archivesfl?gan?datait) I 06 I 200009 I 06 I 2 I 5000070lformS~kiocandtermloan oct2.htm. ?5 Letter ?'om CBL Associates Properties, Inc. to Bear, Steams Co., June 10, 2002, available at I 06 I2i?0000899 I4002000428/cbal 057 I 97m; Letter from CBL Associates Properties, Inc. to Bear, Steams Co., August 6, 2003, available at edaar/datar?9 I 0612.?000 I93 I2503042206.?dex I 2.11mi; CBL Associates Properties, Inc., SEC Form 8-K, August 22, 2006, available at I 06 I 2700009106 I 206000I63/form58k.htm; CBL Associates Properties, Inc. SEC Schedule 14A Proxy Statement, September 2009, available at I06 I 200009 I 06 I 209000034/defa I 4a pressreleaselitm, Letter from Husch Blackwell Sanders, LLP to CBL Associates Properties, Inc., February 24, 2010, available at gov/.4 rahfries/ariactr/claim?l 06] 21'00009l0612 100lltl006/exliibii52. him; CBL Associates Properties, Inc., SEC Rule 433 Issuer Free Writing Prospectus, October 13, 2010, available at I 06 I 2.000] I04659 I 0052 I 57/aI0- I 9272 3pr.htm', CBL Associates Properties, Inc., SEC Form 8-K, September 28, 2012, available at I 06 I 200009 I 06 I 2 I 200004Siform8-kseptember2820 I 2mm; CBL Associates Partnership, SEC Rule 433 Issuer Free Writing Prospectus, November 21, 2013, available at 1046591308643711713?2143 7 4prJ1im; CBL Associates Properties, Inc., SEC Form 8-K, October I, 2014, available at I 06 I 2? 00009106 I CBL Associates Limited Partnership, SEC Rule 4241b1151 Prospectus Supplement, September 28, 2015, available at 9 I 06 I 2i000 I 047469 I 5007574/322260502424b5.htm. ?5 US. Senate Select Committee on Ethics, Senate Ethics Manual, at 69 (108?1 Cong. Sess., 2003 ed). 17 us ?9 House Comm. on Standards of Of?cial Conduct, House Ethics Manual, at 237 (110th Cong, 2d Sess., 2008 The Honorable Robert Corker September 19, 2016 Page 4 As the House Ethics Manual notes, ?such actions entail a degree of advocacy above and beyond that involved in voting,? meaning a member?s ?decision on whether to take any such action on a matter that may affect his or her personal ?nancial interests may implicate the rules and standards . . . that prohibit the use of one?s of?cial position for personal gain.?20 Further, even when no speci?c rule applies, members are advised to avoid situations ?in which even an inference might be drawn suggesting improper conduct?? Moreover, while House precedent on con?icts indicates disclosure ?is the preferred method of regulating possible con?icts of interest,? particularly when a member?s interests and that of his constituents intersect, ?such disclosure must be full and complete, and even if complete, does not always alleviate a con?ict or permit a [m]ember to act.?22 Like the House, Senate rules also warn against conduct that creates the appearance of impropriety. The Senate Ethics Manual provides that ?[c]ertain conduct has been deemed by the Senate in prior cases to be unethical and improper even though such conduct may not necessarily have violated any written law, or Senate rule or regulation. Such conduct has been characterized as ?improper conduct which may re?ect upon the Senate.?23 This rule is intended to protect the integrity and reputation of the Senate as a whole.24 The Ethics Manual explains that ?improper conduct? is given meaning by considering ?generally accepted standards of conduct, the letter and spirit of laws and Rules. . 3?25 2? Id. 2? Id at 186; House Rule 23, cl. 2. 22 House Comm. on Ethics, In the Matter of Allegations Relating to Representative Shelley Berkley, H. Rep. No. 112-716, 112th Cong, 2nd Sess. (Dec. 13, 2012), Appendix A, Report of the Investigative Subcommittee at 46, citing House Ethics Manual at 251 (hereinafter Report?). 23 Improper Conduct Re?ecting Upon the Senate and General Principles of Public Service, Senate Ethics Manual, Appendix E, p. 432. 2" Id. 25 Id. at 433; see also fn. 10 citing a 1964 investigation into the activities of Bobby Baker, then Secretary to the Majority of the Senate, the Committee on Rules and Administration, which stated, ?It is possible for anyone to follow the ?letter of the law? and avoid being indicted for a criminal act, but in the case of employees of the Senate, they are expected, and so, to follow not only the ?letter? but also the ?spirit? of the law.? S. Rep. No. 1175, 88th Cong, 2d Sess. 5 (1964). The Honorable Robert Corker September 19, 2016 Page 5 Conclusion In light of your long and fruitful relationship with Wells Fargo over the years, any defense of the bank you might make in the course of the Senate exercising its oversight jurisdiction might create the appearance of impropriety. As a result, respectfully requests that you abstain from attending Tuesday's hearing and from participating in further oversight of Wells Fargo. Thank you for your consideration. Sincerely, Ctva Anne Weismann Executive Director