Will Cleaver's car wash woes kill his re-election?
Yael T. AbouhalkahU.S. Rep. Emanuel Cleaver is a polarizing politician for his many critics, partly because he’s so darn liberal, partly because he’s a black man representing a majority white district and partly because he can be so outspoken.
So when Cleaver gets in trouble, you can expect to hear his critics going for the jugular, hoping against hope he isn’t re-elected.
In 2012, these opponents think they have the perfect message to get rid of Cleaver: He’s being sued by a bank seeking repayment of a large loan used to buy a Grandview car wash owned by Cleaver Co. LLC.
Conservative opponents are especially worked up by the fact that the federal Small Business Administration has guaranteed about 75 percent of the loan, or close to $1 million.
The next deadline scheduled to come in this case is a response by Oct. 1 by Cleaver’s lawyers.
Any discussion of this political matter comes with two big “howevers.”
The first is quite simple:
However, Cleaver may not have done anything legally wrong with the loan. He may have to pay a fine or pay some money back, as SBA loans often require. In the end, there’s the possibility that Cleaver will be treated like everyone else who has an SBA loan that goes bad.
It won’t be a mark of distinction, for sure. But it also might not be the big legal problem that his critics claim it is at this point.
The second “however” in this matter:
Cleaver has been elected and re-elected in a district that still leans in favor of the Democratic Party. In fact, the new lines drawn for his district are supposedly as friendly if not more friendly to Democrats.
Plus, Cleaver is facing Republican Jacob Turk, a candidate Cleaver has beaten handily in the past, albeit with slightly lower margins each time. Even in the GOP-dominated year of 2010, Turk didn’t come close to unseating Cleaver.
The answer to the question posed in the headline will depend on a number of factors. The most essential one coming up: Will the car wash court case be resolved before the 2012 election is held?
My bet is no, because the wheels of justice work very slowly.
That non-decision would help Cleaver while frustrating his many detractors.
An earlier Star story on Cleaver’s car wash case is here.
Kent Mueller
8 months, 2 weeks agoYael, I’m not sure what you mean by “He may have to pay a fine or pay some money back, as SBA loans often require”.
A fine? You don’t pay a fine when you default. You may pay fees, but they aren’t fines. You also have interest to pay along with the principle.
And pay some money back as SBA loans often require? Do you know how SBA loans work? You ALWAYS have to pay ALL the money back. In short form….A bank loans money to a business within the SBA guidelines. The SBA, as in this case, guarantees 75% of the principle and accrued interest. If there is a default, the loan is typically assigned by the bank to the SBA, with the SBA forwarding a check for 75% of the outstanding principle and accrued interest to the bank. The SBA then collects the loan as best it can.
But you implied the SBA sometimes doesn’t require the loan to be paid back since you used the word “often”. Of course, you can’t squeeze blood out of a turnip which is what leads to write-offs, but they would never say…you don’t have to pay that back. However, the pledged assets are liquidated with the proceeds put towards the outstanding balance. Usually, if not always, the loan has the personal guarantees of the owners and their spouses. If so, that makes Cleaver and his wife indirectly responsible for the entire outstanding debt, and directly responsible should the personal guaranties be called upon. And it is standard operating procedure to call on the guaranties available, since that is precisely what they were there for.
Mark Hastert
8 months, 2 weeks ago“The question that the community deserves a response to from the Editorial Board is “should Cleaver be re-elected?” Those who see ethical and moral compromises in much that the man does”
…now there you go again Chuck. There is no evidence of any ethical or moral lapses unless you consider failing in business immomral or unethical. Conservatives are quick usually quick to point out that in capitalism there are successes and failures. It’s wrong to made such an assertion purely on the basis of your political POV.
Kent Mueller
8 months, 2 weeks agoMark, I’m not sure Chuck was making that assertion. But, maybe he was. I don’t. What I find interesting is that this has been a troubled loan for some time. Has it been kept current? Were there special allowances because of who the guarantor is? Having been in commercial banking for over twenty years, I know it is rare when a loan becomes troubled, but yet remains viable for so long. It happens, but it is not common. And besides, having managed loans to car wash operations before, I can tell you that that is a huge amount of debt on a car wash. The possible ethical and moral lapses don’t have to do with the loan’s condition, but if he got special treatment.
I have heard it said that the loan was to an LLC, and not to Cleaver. I can’t remember who was defending him with that, if it was Cleaver himself or not. But, it doesn’t matter if Cleaver and his wife personally guaranteed the loan. And if they didn’t I would say there was special treatment involved, because personal guaranties are standard with SBA loans.
And it is very interesting that we must stay hands off with out proof regarding Cleaver’s loan, but Romney is fair game for every capitalism hating, left wing mudslinger. Romney caused that guys wife to die? Yeah, right.
Mark Hastert
8 months, 2 weeks ago“And it is very interesting that we must stay hands off with out proof regarding Cleaver’s loan, but Romney is fair game for every capitalism hating, left wing mudslinger. Romney caused that guys wife to die? Yeah, right.”
What you too? I’m saying that a failed business venture isn’t immoral or unethical. The Rev should have stayed in the pulpit. I thought that was agreeing with you.
My quarrel with Romney’s style of capitalism is that there was often never any doubt that he and Bain would succeed. They always paid themselves first, often with borrowed money in highly leveraged deals. They never really had a skin in the game. The business could succeed or fail but Bain and Romney were nearly always gonna get paid.
I know it’s legal to do business that way. Heck, by today’s standard of business ethics it’s perfectly OK to do business that way but it smacks of something tainted, some sort of bastardized capitalism that isn’t quite right.
James O'Brien
Alexandria
8 months, 2 weeks agoChuck: here is the link to the lawsuit: https://docs.google.com/file/d/1g54p8M6aix4xOCYsneCcctbvMkt5cRlT85eV_x0fOGj954jAEGNxAUrXSRST/edit?pli=1 published originally by Tony’s Kansas City. The Cleaver’s are going to owe close to $2,000,000.00 on the with attorney fees and continued interest accruing at about $159 per day on the $1.5mil principle. Cleaver received 3 forebearances with his TARP vote giving BOA billions of dollars coming in between the 2nd and 3rd Forebearance. Cleaver did not disclose his personal interest in the loan from a company he regulated and still claims he doesn’t have to. There is so much… like what happened to the money at the car wash? And it seems he’s never paid any of it back?
Martin Howard
8 months, 2 weeks agoWell, Jacob Turk who is running against Emanuel Cleaver for US Congress ran his small business successfully for 12 years! Jacob Turk is the true conservative alternative to Cleaver. He understands what it take to create jobs because he has already done it. I also like the fact that Turk is a Marine Veteran. We need more veterans in Congress! Semper Fi!
Martin Howard
8 months, 2 weeks agoWell, Jacob Turk who is running against Emanuel Cleaver for US Congress ran his small business successfully for 12 years! Jacob Turk is the true conservative alternative to Cleaver. He understands what it take to create jobs because he has already done it. I also like the fact that Turk is a Marine Veteran. We need more veterans in Congress! Semper Fi!
Kent Mueller
8 months, 2 weeks agoMark, and you have a problem with the huge number of jobs Bain “saved” and created? Even the GST employees kept their jobs for eight more years than they would have if Bain had not purchased the company. DAMN those horrid capitalists!!!!
Reginald Thornton
8 months, 2 weeks agoThat first paragraph is a riot, rolling on the floor laugh out loud funny!
“U.S. Rep. Emanuel Cleaver is a polarizing politician for his many critics, partly because he’s so darn liberal, partly because he’s a black man representing a majority white district and partly because he can be so outspoken.”
Yes, he can be “so outspoken”. Like claiming to have been spat upon when countless videos from all angles reveal nothing of the kind, yet he refuses to recant his allegation.
Yes, he’s “so darn liberal”. If by liberal you mean unwilling to entertain spending cuts while fully endorsing class warfare and generational theft in touting higher taxes.
And then there’s this story. Although not its actual topic, the story does not speak well of his business accumen. The real topic of this story and others should be how do the rest of us get so lucky that this economic lightweight should be anywhere near the process of writing our laws?
Which of course points to who would be more qualified at governing, emminently more qualified. Hint: It’s not another community organizer.
Thomas Johnson
8 months, 2 weeks agoTwo Howevers to your howevers.
Just because it wasn’t illegal doesn’t mean it was right or that this reflects positively upon Cleaver. That’s one of the things that worries me most about our politics, as long as it’s legal it’s OK. How is it that we let crooks go to Washington, make the laws and then cheat other people by taking advantage of our “laws”? That’s crazy, and you know it!
That’s not a valid point. Just because Cleaver hasn’t been unseated yet doesn’t mean he should keep the job! Is he dishonestly making the people foot the bill to an unprofitable and wasteful investment? Yes. Is Cleaver actively working in a divisive manner? Yes. Did Cleaver personally insist on redistricting out his opponent Jacob Turk’s house? Yes. U.S. Rep. Emanuel Cleaver has not put the needs of the people above his own needs. If Emanuel Cleaver was really concerned about the needs of the people, he would not let them pay for his bad investments.
Joe Mick
8 months, 2 weeks agoAnother interesting point is that this car wash is always busy. Some days more so than others, but begs the question why the bank has waited so long to make noice about it. If the location is always busy, it begs the question of where the cash is going. There is plenty of business to be at least paying something on the note
Kent Mueller
8 months, 2 weeks agoLost in this discussion is Yael’s blatant accusation or racism. Is there a racist who voted for Cleaver’s opponent because of Cleaver’s race? I am sure. In fact I am as sure of that than I am that there is a racist who voted for Cleaver and not his opponent because Cleaver is black and his opponent is white.
Yael, if you are going to make a broad accusation of racism, then you need to come with the goods to show that to be true and material to the discussion.