BISMARCK -- John Korsmo has answered a Senate Banking Committee investigation, saying he had no role in the guest list for a controversial fund-raiser.
Korsmo, formerly of Fargo, is chairman of the Federal Housing Finance Board, a presidential appointment.
Wednesday, Senate Banking Committee Chairman Paul Sarbanes, D-Md., asked federal investigators to look into Korsmo's role as "special guest" at a Washington, D.C., fund-raiser for Rick Clayburgh's congressional campaign. The problem: Among those invited to pay $500 each to attend the Oct. 1 event were the presidents of the Federal Home Loan Banks, which Korsmo regulates.
Sarbanes and Rep. Henry Waxman, ranking Democrat on the House Committee on Government Reform, asked if the Clayburgh campaign or Korsmo were using Korsmo's position to hit up the bank executives for contributions.
Sarbanes wrote to Korsmo this week with a list of questions. The senator acknowledges that Korsmo says he cleared his role in the fund raiser with his agency's lawyer and an ethics expert beforehand. But he wrote, "it is not clear to me that you gave any consideration to the propriety of your conduct."
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Sarbanes quotes from the new code of conduct Korsmo's agency adopted in September and asks "whether you have lived up to the standard you set for yourself."
Sarbanes wanted to know if Korsmo or his staff had any role in inviting the bank presidents or asked them for political contributions. He wanted to know if any of the invited bank presidents have any regulatory business pending before Korsmo's board. He wanted to know if Korsmo or his staff have researched the political contributions of the Home Loan Bank executives. And he wanted to know if Korsmo has been involved in any other political fund-raisers since he became chairman.
"Do you agree that it is inappropriate even (though) not illegal, for a financial regulator to allow his name to be used by a political campaign in an effort by that campaign to solicit funds from the regulated entities?"
Sarbanes has asked the Federal Housing Finance Board's inspector general and the comptroller general of the General Accounting Office to investigate the same questions.
In his response to Sarbanes Friday, Korsmo said he and his staff have not solicited political contributions from the bank executives he oversees.
He said he only agreed to have his name printed on the Clayburgh fund-raiser invitations because the two men are long time friends. He doesn't know who was invited or who gave money. Only about 15 people attended and Korsmo did not know most of them.
Clayburgh's campaign did nothing wrong, either, Korsmo said.
Clayburgh, the Republican candidate opposing Rep. Earl Pomeroy, D-N.D., said the National Republican Congressional Committee drew up the list of 500 or more people who were invited.
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Clayburgh said he had no intention of using Korsmo's position to influence fund raising.
"It has everything to do with friendship. John has been a friend of the Clayburgh family and a friend of mine for many years. That's the whole reason he was at the event," he said.
Clayburgh said the call for an investigation is just an attempt by Democrats to distract from his campaign.
Korsmo told Sarbanes and The Forum that he realizes now he should have taken proactive steps to ensure that none of the bank executives he regulates were invited.
"I should have erred on the side of caution," he wrote.
He said one bank president from Ohio did attend, probably because the sponsors of the reception were Reps Michael Oxley and Bob Ney of Ohio, who serve on the House Financial Services Committee.
Readers can reach Forum reporter Janell Cole at (701) 224-0830
