4 Reasons Alex Sink’s Record May Haunt Her in Congressional Race
Florida District 13 will capture the attention of the nation March 11 when Democrat Alex Sink and Republican David Jolly square off in a special election in the ultimate Congressional swing district. Sink’s name recognition resulting from her term as Florida Chief Financial Officer and her unsuccessful 2010 gubernatorial campaign give her an early advantage over Jolly, but experience and name recognition can be fickle early advantages. As the Sink and Jolly campaigns hit full stride during the next 47 days, here are four reasons Sink’s experience may come back to haunt her.
1. NationsBank Florida Callously Ripped Off Its Customers
Sink’s supporters frequently tout her business experience as making her uniquely qualified for Congress, frequently citing her experience as the head of Florida operations for Bank of America/NationsBank. (NationsBank acquired Bank of America in 1998, shortly before Sink left the company, and took on the Bank of America name). Who wouldn’t want a successful business executive, especially in the financial services industry, tackling the nation’s budget deficits, spending problems, and other economic challenges?
This storyline makes a good political narrative, but a closer look shows Sink’s time at Bank of America/NationsBank was defined more by scandal than success.
Under Sink’s watch, NationsBank Florida gave employees financial incentives to mislead customers into purchasing uninsured, high-risk mutual funds that generated large profits for the bank. Worse, employees were directed to affirmatively promote the high-risk mutual funds to customers under the slogan “safety, predictability and return.”
As PolitiFact Florida reported, “While Sink was state president of NationsBank, bank tellers in Florida were being paid a 5 percent commission for directing bank customers to bank-related stock brokers. The stock brokers were then selling riskier investments under the guise that they were protected either by the bank or the federal government.”
Bilked customers filed a class action suit against NationsBank Florida. The U.S. Securities and Exchange Commission socked the bank with $17 million in fines for misleading its customers, and the bank paid another $8 million to its customers.
Political narratives about Sink being a successful Bank of America executive are likely to backfire unless voters consider deliberately misleading customers a hallmark of business ethics and success.
2. Bank of America Keeps Demanding Bailouts
Being a top executive for a successful, widely admired company is one thing, but being a top executive for a failed company requiring multiple taxpayer bailouts to remain in business is another. Bank of America not only stuck it to taxpayers by taking billions of dollars in the 2009 Wall Street bailouts, but even after the 2009 bailouts it continues to lean on the federal government to shovel more bailout money its way.
At Bank of America/NationsBank, Sink’s culture of encouraging high-risk investments continued even after her departure, resulting in federal taxpayers twice having to bail out the bank. Bank of America took $45 billion of federal taxpayer money during the initial round of the 2008-2009 bank bailouts. Divided among the 100 million households in the nation, the average U.S. (and Florida) household sent $450 in bailout money to Bank of America in 2008-2009.
Then, just last year, the federal government bailed out Bank of America again, wiping out $7 billion that Bank of America owed to other companies, while simultaneously making it impossible for outside companies to follow through on fraud claims against Bank of America.
Sink’s credentials as a top executive for Bank of America are likely to win over about as many voters as would the credentials of a top executive for Enron or Solyndra.
3. Sink Continued Making Failed, High-Risk Investments
Sink left Bank of America in 2000, during the height of the NationsBank Florida high-risk investments scandal. In 2006 she ran for statewide office as Chief Financial Officer (CFO), a cabinet position overseeing the state’s finances and serving as watchdog for the people’s money. Sink won the election, and she touts her experience as Florida CFO as another unique qualification for representing Floridians in Congress. Her record as Florida CFO, however, is just as problematic as her record with Bank of America.
With Sink overseeing investment decisions regarding the state’s government workers pension fund, the fund lost $27 billion – 20 percent of its value – during Sink’s four years as CFO. Florida taxpayers must ultimately foot the bill for these losses. With 7 million Florida households on the hook for $27 billion in losses, Sink’s financial decisions cost each Florida household an average of $4,000.
Sink’s apologists claim she shouldn’t be blamed for the losses, arguing a drop in the stock market during Sink’s four years as CFO made it difficult to make money in stocks. However, nothing required Sink to so heavily invest other people’s money in a stock bubble. At the same Bank of America scrambled to make high-risk real estate loans during an unsustainable housing bubble, Sink scrambled to make high-risk stock market investments during an unsustainable stock market bubble. Having failed to learn her lesson from the NationsBank Florida scandal, Sink disregarded safe, solid investments for the state’s government workers pension fund, and instead pushed government worker money into high-risk investments. Government workers and Florida taxpayers are now paying the price for this risky behavior.
Had Sink invested in bonds or money market funds instead of gambling on a stock market bubble, she would have earned Florida taxpayers a guaranteed profit. Had she merely tucked the taxpayers’ dollars inside a mattress, she wouldn’t have lost taxpayers a dime.
Making her experience as Florida CFO a centerpiece of her campaign message, Sink risks a backlash from voters who had to pay higher taxes during the past several years to cover Sink’s stock market losses.
4. Sink Proved Strikingly Inept at Stock Picking
Even if Sink felt compelled to risk other people’s money in a stock market bubble, she proved remarkably inept at making individual stock decisions. The stock market lost merely 7 percent of its value during Sink’s term as CFO, yet Sink lost Florida government workers and taxpayers 20 percent of their investment value during that same time period. Had Sink hired a blind monkey to randomly throw darts at a stock sheet, she would have cost Florida households merely 7 percent of their investments – or merely $1,400 per Florida household – instead of 20 percent and $4,000 per household.
Even today, state taxpayers are paying the price for Sink’s poor investment decisions. With Sink’s investments adding to an already floundering state debt, state officials in 2009 imposed new fees on necessary services such as motor vehicle registrations. Gov. Rick Scott is asking state legislators to finally roll back some of these fee increases, but after five years of higher taxes and fees to cover Sink’s losses, the financial damage has already been done.