Politics: Quick Links

by hilzoy

(1) Delegates: From Ben Smith:

"A pretty stunning gain out of Iowa for Obama, where an Iowa Democratic official confirmed to me just now that the county convention results will translate into a 25-14-6 edge for Obama over Clinton and Edwards.

That's a gain of nine for the Illinois senator over the results reported in January, while Clinton lost one delegate. (Edwards lost eight.)"

The numbers vary a bit: seven, ten (though Ambinder might be counting superdelegates; it's unclear.) But a gain of nine pledged delegates seems to be the most common view.

(2) Rezko: The reason I haven't written about the Rezko story is that I don't really understand it. Every so often, I think: I really must understand this, and start reading, only to find myself wondering: what is the central issue or allegation? Back when the question was whether Obama had somehow gotten a discount on his house, I thought I just couldn't aswer that question without knowing a lot more about Chicago housing markets than I do; after the sellers came forward and confirmed Obama's account, I found myself wondering what, specifically, the remaining problem was supposed to be. In any case, he sat down with the Chicago Tribune and Sun-Times to answer all their questions (full interview with the Trib here.) Reporters at both papers, who have been covering this for ages, seem to be satisfied. The one who wasn't doesn't give much detail as to why not, other than saying: "I'm too old to believe in fairy tales."

Tom Maguire seems to think this is like something out of The Godfather, with Obama as the undertaker who asks for a favor and Rezko as Don Corleone. There are three problems with that analogy, though. First, as far as I can tell, there is no evidence at all that Rezko did Obama a favor: his purchase of the adjoining lot was independent of, and not needed for, Obama's purchase of his house, and he has since sold the lot and made a profit on it. Second, there have been times when Rezko actually needed Obama's help, and even if you don't believe Obama when he says that Rezko never asked for any favors, the fact that in the one case in which Obama's support might have meant a great deal to Rezko, Obama took the other side. ("But when Rezko pushed for passage in Springfield of a major gambling measure, Obama vocally opposed it.") Third, and most importantly: it's obviously central to the Godfather example that the person who might someday ask for a favor is Don Corleone. When he asks you for something, you don't refuse, at least not if you don't want to find a horse's head in your bed. That's why putting yourself in a position where he might someday ask for a favor is such a big deal. In this case, the allegation, as best I understand it, is that Rezko decided, unsolicited, to do a favor for Obama, and that that might mean that someday, he would be in a position to ask for a favor in return. As I said, it's unclear that he did do Obama a favor, but let's suppose, for the sake of argument, that he did, and he was hoping that someday, he might get to call it in.

If Rezko were, in fact, Don Corleone, that would be significant: when the Don asks, you say yes. When people other than Don Corleone ask for favors, though, the person they ask is quite free to say no. And if the person asking for a favor says: but I did this unsolicited good thing for you in the past, and I did it because I thought you'd be in my debt, people are free to say: well, that was your mistake. In view of the fact that Tony Rezko is not Don Corleone, is there any reason at all to suppose that if he tried to call in his alleged chits, Barack Obama would say anything other than: sorry? No, especially since, as noted above, Obama has been quite willing to oppose Rezko's interests in the past.

As far as I can tell, the land deal is the source of most people's suspicions that there is some actual malfeasance here. The claim that Obama represented Rezko is false:

"Attorneys there say Obama never represented Rezko directly. The future senator did represent community organizations that were Rezko partners in rehabilitating buildings to provide apartments for the poor.

Judson Miner, a partner in the firm, said that Obama’s role was small. He said Obama did perhaps six or seven hours of work on such projects, mainly filing incorporation papers for the nonprofit groups."

(See also here for the results of a fairly serious investigation of this ("At the Tribune's request, Cook County Circuit Court Chief Judge Timothy Evans produced a list of all 260 civil and criminal cases in which the firm filed appearances, and the Tribune separately examined 1990s lawsuits that Rezmar Corp. listed in applications for government grants. The paper also examined files from the Illinois Housing Development Authority and the city housing department, as well as the hundreds of clients Obama listed in the unusually frank ethics disclosure reports he filed as a state senator from December 1995 through April 2004... "), and Obama's answers to questions about his legal work here.)

For the rest, I can't see any there there. (E.g.: Obama did give the son of someone associated with Rezko a month-long summer internship, to which I can only say: whoop de do.) That said, I am open to the possibility that I'm just missing something. If any of you can let me know what it is, I'd be very grateful.

As the Chicago Tribune points out, it would be nice if Clinton were this forthcoming. As I've said before, I think it's important that we be able to examine her tax returns, and the list of donors to the Clinton library and foundation, sooner rather than later. I have no idea why she hasn't done this already -- or, for that matter, why there hasn't been more pressure for McCain to release his tax returns.

(3) McCain's finances: In just a few short days, McCain (along with everyone else) will have to file and FEC report for February. I suspect it will show that he has gone past the spending limits for candidates receiving federal funds. This would mean that if the FEC is right in its interpretation of campaign finance laws, McCain is in violation of those laws. He could face jail time, though I don't know of anyone who expects anyone to send him to jail anytime soon.

That said, playing chicken with the campaign finance laws is hard to square with McCain's image as a reformer.

(4): Open Thread!

Comments

[Ugh]

I don't know of anyone who expects anyone to send him to jail anytime soon.

And McCain knows this, thus he can continue with Bush's tradition of "laws are for little people."

[von]

McCain will be fine.

Also, the money quote from Kass' quasi-critical article regarding the Obama-Rezko connection is not the one you highlight ("I'm too old to believe in fairy tales"). Obama undeniably got a sweetheart deal from Rezko at a time Rezko was facing a federal indictment. If Obama is believed, and I do believe him, this was amazingly stupid of him. Or, here's how Kass explains it:

So I left half-satisfied, thinking Obama more naive than crooked, wondering what the Daleys of Chicago and the Kennedys of Massachusetts will do to him.

Finally, since this is an open thread, an anecdote regarding the upcoming primary in Indiana. As some know, I live in Indianapolis. The Obama folks are out in force in the city: signs are going up and they're staffing a voter registration booth at a prominent location in my neighborhood (Broad Ripple), etc. Hillary? Haven't seen anything.

[Wagster]

I'm not a Rezko expert, but I'm not sure this is right:

First, as far as I can tell, there is no evidence at all that Rezko did Obama a favor: his purchase of the adjoining lot was independent of, and not needed for, Obama's purchase of his house,

Here's the Times of London:

Donna Schwan, the real estate agent who handled the sale, said that the Obamas only wanted the house, not the adjoining garden lot.

But the sellers insisted that the two pieces of property be sold at the same time.

Apparently, this was a necessity because the garden lot did not have it's own access to the street. Maybe more light has been shed on this since this article was published. I'm willing to be enlightened.

[Nell]

von: Obama undeniably got a sweetheart deal from Rezko at a time Rezko was facing a federal indictment.

Please explain, with a cite, what the sweetheart deal consisted of.

[von]

Nell:

Please explain, with a cite, what the sweetheart deal consisted of.

Sorry, I figured that this was common knowledge. Here's a brief outline, from the Chicago Sun-Times (http://www.suntimes.com/news/watchdogs/757340,CST-NWS-watchdog24.article)

7. A few months after Obama became a U.S. senator, he and Rezko's wife, Rita, bought adjacent pieces of property from a doctor in Chicago's Kenwood neighborhood -- a deal that has dogged Obama the last two years. The doctor sold the mansion to Obama for $1.65 million -- $300,000 below the asking price. Rezko's wife paid full price -- $625,000 -- for the adjacent vacant lot. The deals closed in June 2005. Six months later, Obama paid Rezko's wife $104,500 for a strip of her land, so he could have a bigger yard. At the time, it had been widely reported that Tony Rezko was under federal investigation. Questioned later about the timing of the Rezko deal, Obama called it "boneheaded" because people might think the Rezkos had done him a favor.

[crr]

Now Pastor Wright is retiring, and part of the reason that this is not an issue once it came to my attention that we pressed very hard was the fact that he's on the brink of retirement. He's preached his last sermon. He's taken a sabbatical. He is not going to be active in the church and has not been active in my campaign and he is no longer a part of that committee. But my judgment at the time was that this was not as problematic as what I've seen over the last couple of days.

I love that last sentence. I can envision President Obama at the news conference.

Press: Mr. President you said you would withdraw the troops from Iraq immediately.

Obama: But my judgment at the time was that this was not as problematic as what I've seen over the last couple of days.

Press: Mr. President you said you wanted to bring back fiscal responsibility to our government.

Obama: But my judgment at the time was that this was not as problematic as what I've seen over the last couple of days.

Press: You say your are a lifelong advocate for the poor -- as a young college graduate, you rejected the high salaries of corporate America and moved to the South Side of Chicago to work as a community organizer. What do you think of your wife's $316,000 salary she receives?

Obama: But my judgment at the time was that this was not as problematic as what I've seen over the last couple of days.

From Hilzoy:

but that he is, in general, the last person on earth to rely on any community to tell him what to think

I think someone has a crush on Obama. I hope that doesn't cloud anyones judgment.

[Jake]

von,

If he was the highest bidder for the property, how is it a sweetheart deal precisely?

Maybe buying the strip for $100k is the sweetheart deal? Is a vacant lot going for a lot more?

[Jake]

crr,

Right. Because the choice to leave someone on as an honorary member of a committee on African American leadership in religion is equivalent to pulling troops out of Iraq.

How's your Hillary crush working for you?

[Gary Farber]

"(4): Open Thread!"

I wrote about this subject in the other thread, actually, but you've been holding it hostage.

And *now* there's an open thread? On Sunday, not Friday?

Crankcrankcrank. Could possibly I suggest there just be an automatic Friday open thread, when it would be useful for the whole weekend, rather than when the weekend's almost over? Every Friday? So we wouldn't have to constantly have no open threads on Fridays and Saturdays?

Perhaps it's an unreasonable suggestion, since I'm pretty sure I've made it repeatedly for years now, and I don't want to put forward an unwanted suggestion.

[crr]

Maybe Obama should be President. He negotiated a 20% discount from the asking price in 2005.

Ya gotta give the man credit. I say we send him to Saudi Arabia next week.

[Gary Farber]

"Here's a brief outline, from the Chicago Sun-Times"

I'd ask for a non-broken link, but I'd first be baffled by why you might be going to some old story, rather than the currently known facts.

Which Hilzoy just cited at length. Which specific current information that she linked to were you suggesting should be disregarded in favor of allegations from months ago, exactly, and might I ask why?

"I think someone has a crush on Obama. I hope that doesn't cloud anyones judgment."

I think this is an offensive personal characterization that deliberately denigrates a commenter for its own sake, and that crr engages in such consistently, and thus violates the posting rules. I also think the writer is apparently mentally 13 years old.

[katherine]

I thought he bought about 1/6 of the lot for 1/6 of the price of the vacant lot. What's the sweetheart deal? That Obama paid less than the asking price for his own house? Isn't that pretty standard in real estate?

[Nell]

Thanks, von, but I thought you must be referring to something that's not laid out in the Sun Times column that Hilzoy linked. In which the columnist Mark Brown says:

On the central question: Did Obama do something improper in the purchase of the house?

I see no proof he did, other than that he had no business at all getting involved with Rezko in any personal financial transaction.

Since this is the same columnist who says that all the questions capable of being answered by Obama (versus by Rezko and the people who sold the property to Rezko) have been answered, then it seems far from undeniable that there was a sweetheart deal. It seems, in fact, to be specifically being denied.

[crr]

Gary,

I didn't notice you had a crush too. Now I understand why you are upset. Hilzoy is gettin' all your Obama lovin'. ; - )

Obama also doesn't strike in the least as someone prone to relying on what a mass of other people think to figure out what he thinks.

Denigrating for the sake of it such as this:

I also think the writer is apparently mentally 13 years old.

How mature is it to do what you critize another for doing?

Or maybe like this one.

brain dead stupid

Maybe two sets of posting rules would be more appropriate?

[crr]

Anyone here manage to negotiate a 20% discount on a home deal in 2005?

[Gary Farber]

"How mature is it to do what you critize another for doing?"

Ah, so what you consistently do is wrong and juvenile?

That's all I needed to confirm. Thanks.

[farmgirl]

Gary -- Welcome back! I noted your absence from the comments a couple of days ago and was hoping you were ok.

[Ugh]

I think the sweetheart deal was that Obama got the house and didn't have to buy the vacant lot, which the sellers wanted to sell at the same time as the house. It does seem odd that Obama got the house for less than ask and the vacant lot went for the asking price. Presumably they both would have gone for less than ask (e.g., the house at $200K less and the lot at $100K less). Then the purchase of the strip later, which seems convenient.

That and most people don't have someone to come parachuting in to help them out in a property purchase. Like Obama said, extremely stupid of him.

[felix culpa]

Offensive and tiresome. Your estimate of mental age gives him too much credit.

[Gary Farber]

"Gary -- Welcome back! "

Thanks. Busy since eviction notice. (And, frankly, a bit hurt no one responded to my mentioning it here, or to my subsequent mention that I was hurt; but that's silly of me, I guess.)

And busy with the below, and busy with other stuff.

For what it's worth, I wrote this earlier, since there was no open thread.

[gwangung]

Offensive and tiresome. Your estimate of mental age gives him too much credit.

It can't read the posting guidelines very well either.

[KRK]

Gary, FWIW I was concerned when you mentioned the eviction (I missed the subsequent mention), but since I'm 99.5% lurker, it seemed presumptuous to comment on something personal.

[Gary Farber]

Or maybe like this one.

brain dead stupid

Does anyone perchance have any idea what this might have been intended to mean in English?

[farmgirl]

Gary, I hadn't seen your mention(s) of your situation on ObWi (sorry) and was going to ask on Friday if anyone knew if you were all right. I did go over to your site first and saw you were facing apartment issues and figured that was taking precedence over our collective wrongness.

[Adolphus]

If even the worst thing alleged here is true, this is pretty weak beer as far as sweetheart real estate deals and politicians go.

Powerful people do not live by the same rules we normal people do. Never have, never will. They'll get better deals on real estate, they will get better seats at sporting events, they will get treated better by the criminal justice system, their kids will get in to good schools and the best rehab clinics regardless of need or qualifications, and they will always get better health care than you and me up to and including getting jumped up the organ recipient list.

We may tut tut in the press and on blogs, but it is unstoppable.

I doubt there is a politician at ANY level or anyone making over $250k a year that hasn't done something, or had something done for them (with or without their knowledge), that "normal people" would not arch their eyebrows over.

The question we have to ask is how does this incident compare with other candidates past real estate deals and/or efforts to game the campaign finance laws.

Like I said, this Rezko thing seems like pretty weak beer, even if the worst that has been alleged here is true.

[mightygodking]

I have to admit, I totally missed Gary being evicted, since I don't read his blog and missed the comment in question here.

So: dude. That blows.

[Donald Johnson]

First I heard about the eviction, Gary. I'm sorry--it sounds unfair, not to mention very stressful. I was wondering where you were, but you've been absent from this blog from time to time and I don't read all the threads either.

[Jay Jerome]

hilzoy: "If Rezko were, in fact, Don Corleone, that would be significant: when the Don asks, you say yes. When people other than Don Corleone ask for favors, though, the person they ask is quite free to say no."

The fact that Rezko isn't Don Corleone, or the Devil, and Obama isn't the Undertaker or Faust doesn't diminish the fact that Obama seems to be either naively stupid or intentionally dense when it comes to sizing up people he considers good friends.

Here's a Salon article that provides a comprehensive picture of the unsavory dealings of Obama's good pal and patron, Tony Rezko. If these allegations are true, it clearly brings into question Obama's judgement. Is he just plain stupid when it comes to judging character, or has he raised the art of seeing no evil to astronomical heights?

[Kevin Donoghue]

Gary: "Does anyone perchance have any idea what [crr's quotation] might have been intended to mean in English?"

I believe it refers to a disparaging remark made about a crr comment in another thread. AFAICR, crr was expressing astonishment that somebody saw fit to give Michelle Obama a large pay increase.

I missed the story about the eviction - I hope you have a roof over your head.

[russell]

Anyone here manage to negotiate a 20% discount on a home deal in 2005?

In addition to patrolling the internets for people being wrong, I also exasperate my wife by tracking local house sale prices using Zillow.

For laughs, I zillowed the house Obama bought in '05. I won't include a link because I don't know if the URL is persistent or not. If you're interested, you can find the address in the Times of London article upthread and do the same for yourself.

Zillow's market evaluation for the property in the couple of months before Obama's purchase is below $1.5M, and about $1.2M just at the time of the purchase. The sale price of $1.6M is right about the high point for the prior year.

Also per the Times of London article, Obama made three offers -- $1.3M, $1.5M, and then the sale price of $1.6M. The offer dates in the article are in January 05, Zillow has the sale date in June, I assume the difference in timing is between date of offer and date of closing.

What to make of this? It looks to me like the Obamas made a lowball offer on an overpriced property in a soft market, and then the seller negotiated them up to the sale price.

Just another data point, FWIW.

Thanks -

[hilzoy]

von: my understanding is that the sellers have confirmed that the Obamas' offer was the highest they received, and that they "did not offer or give the Obamas a `discount' on the house price on the basis of or in relation to the price offered and accepted on the lot", and that they (the sellers) had "stipulated that the closing dates for the two properties were to be the same." (cite.) Also, that the reason the Obamas payed below the asking price (after 2 previous, lower offers had been rejected) was in part because the sellers wanted to move, and the house had been on the market for some time.

About the strip of land: here's Obama's account:

"And during the discussions about building that fence, I suggested to him, you know, I would be interested potentially in purchasing either 5 or 10 feet, a 5- or 10-foot strip alongside that property to widen my side yard. And, but I said that "if it turned out that you had, if that was of interest to you and the rest of the lot was perfectly developable, then that's something that I would be interested in."

So I threw that out in a relatively casual way. This was not a big deal to us. It was not something that was critical to our property values, but it was something that I thought would be nice because I've got a 9-year-old daughter and a 6-year-old daughter. And in fact, the way this came up was there was a, originally a play, big swing-set thing that went across both properties that we had to tear down, and constructing a new one, there wasn't going be enough room. And so that's what triggered my thinking that it would be nice to widen the lot.

He said that he would have his developer or surveyor, whatever the term is, come out and take a look and see how big the property would be and how much space they would need in terms to develop it to see if it would be something that would be buyable.

I, in turn, asked my attorney to do an appraisal of what it would, what a fair price for that 10-foot strip would be or a 5-foot strip would be to make sure that I paid fair market value for such a transaction. The appraisal actually came back relatively low, something like $40,000.

And that was attributable to the fact that there just aren't comps for a 10-foot strip of land and that was noted by the appraiser. The appraisal—which is, by the way, all these documents are in there—the appraisal did note that the other parcel, Rezko's remaining parcel, would be fully developable if he sold this to me. And so rather than pay the appraised price, I paid one-sixth of the cost of his property. He agreed to sell that 10-foot strip."

You can see the appraisal he had done here (pdf): the appraised value is $40,500. Since, as Obama said, he thought the appraisal was low because there were so few comparable sales, he actually paid $104,166.00.

I did try to figure this one out, but, as I said, just let me know what I'm missing.

[KathyF]

Before anyone comments further on the Rezko deal, I'd urge you to listen to the full transcript of the Tribune interview, or at least read it. It's fascinating--I couldn't help but remember the times my husband and I have bought property, and how exactly like our transactions this was (except for a higher cost). In other words, the Obamas found their dream house, and bought it after a bit of wheeling and dealing with the owner.

There was no sweetheart deal. Period.

The owners did not mind selling the lots separately; in fact, they had an offer already on the lot when Obama looked at the house.

When Rezko heard this, and knowing the man who'd made the offer (a former employee), he decided he wanted to develop the lot himself. (To get closer to Obama? Maybe. But why, if he'd never asked for any favors?)

The Obamas made 3 offers on the house, eventually reaching an agreement. Since the house had been on the market a while--at least 6 months--and the sellers were both anxious to relocate to Johns Hopkins, where their new jobs were, the offer of 300k less was accepted. Sounded fair to me, having bought and sold property at similar discounts.

The owners did insist on closing on the two properties on the same day--probably for their convenience.

The owners are very publicity shy, with good reason (if you listen to the interview you'll hear how they've been hounded) and have until recently resisted clarifying their end of the deal, which backs up what the Obamas say happened. Rezko hasn't said a word about the property.

Likewise, buying the strip of land didn't seem to have any serious ethical implications either. It was all above board, with the Obama's paying more than was asked--instead of the appraisal, they paid 1/6 of the total lot price for the strip. Rezko was required by law to assist them in paying for the fence.

Obama also talked about his relationship with Rezko, saying he'd never tried to curry favor or insist on access. When he said the charges against him were nothing, Obama believed him, as he had no reason not to.

I think the most you could say about Obama was that he was naive.

Listen to the interview. LIke I said, it was fascinating, not only because of the amount of detail he goes into about the facts of the case, but because of the sheer humanity it conveys. Unlike when listening to a stump speech, I really got the feeling the I was listening to someone very much like me, who goes about the mundane matter of buying a home that his wife fell in love with.

Nothing shady at all, except the porch.

[ThatLeftTurnInABQ]

Anyone here manage to negotiate a 20% discount on a home deal in 2005?

It is a well known fact that all real estate markets are the same at a given point in time. There is no difference from one state to another, or between individual lots, or in the circumstances and motivations of their sellers. Also, sellers always list using reasonable initial asking prices, they never shoot for the moon and then negotiate downwards when no high offers materialize. A seller would never overestimate the price they can get during a turbulent housing market.

Given all of these known facts, this is a crucial question, which I doubt Obama can provide a satisfactory answer to.

[hilzoy]

Oh, and ugh: I gather someone other than Rezko had an option to buy the lot at the same price, but Rezko somehow took over that option from him. As Mark Brown says, we don't know how Rezko got that option. But if it existed, it would (I think) mean that Rezko's involvement did not mean that a deal went through that wouldn't have otherwise, that the sellers got a better deal than they would have otherwise, that they therefore had an incentive to give Obama a better deal, etc.

It might mean that Rezko wanted it to look like he had done the Obamas a favor, or something.

Also, one more thing for von: note that the story you cite was written before the sellers came forward with their side of the story.

[KathyF]

Sorry, hilzoy, looks like I was composing while you were posting essentially the same thing.

[hilzoy]

KathyF: the perils of the internets.. :)

[Gromit]

Jay Jerome: If these allegations are true, it clearly brings into question Obama's judgement. Is he just plain stupid when it comes to judging character, or has he raised the art of seeing no evil to astronomical heights?

Is this a road down which you, as a purported Clinton supporter, really want to go? Next you'll be darkly hinting that Obama and his gay lover murdered Vince Foster and moved the body to Fort Marcy Park.

[hilzoy]

Gromit: gay lover? nonsense. He put Vince Foster's body on the back of his lover, the Saint Bernard...

[von]

Hilzoy [and Nell], see Ugh's post at March 16, 2008 at 4:30 PM. That's the basis for my claim that this is a sweetheart deal; it's not disturbed (or addressed) by you. Obama also either elides -- or tacitly accepts [e.g., I did a "boneheaded" thing] -- Ugh's points.

I do give Obama credit for realizing that he'd be a whole heap more trouble if he accepted the lowball assessment.

Gary, I'm sorry about your eviction.

[Ugh]

I gather someone other than Rezko had an option to buy the lot at the same price

An option exercisable at the whim of the buyer would not have guaranteed that the deal went through, although it would sort of explain why there was no discount on the lot in addition to the house (I say "sort of" because presumably if a disinterested holder of the option had known Obama was getting a discount on the house would have asked for the same on the lot or otherwise let the option lapse (maybe)). The fact that Obama made multple (lower) offers that the sellers refused makes things look much better, IMHO.

And since this is an open thread: god d@mn Tiger Woods is awesome.

[John Thullen]

"Anyone here manage to negotiate a 20% discount on a home deal in 2005."

That's a more complicated question than you may believe.

Allow me to make it more complicated.

In 2005, homebuilder American Wet Dream Corp., through its mortgage subsidiary, Tipoftheiceberg Lending Inc., secures zero downpayment mortgages to sell its inventory of new homes priced at $300,000.

Priced, that is, with the help of WhatcrackIdon'tseeacrack Appraisal Company, which has a little arrangement with aforementioned builder and mortgage lender to inflate the appraisal values of the homes from their rational values of @$240,000.

Smirks, winks, high signs all around because the mortgage paper created by the transactions is quickly bundled and securitized by HighIQSmilingfellow Investment Bank and sold to BREAKtheBUCK Money Market Fund, not to mention being insured, optioned, hedged, and quanted backwards, forwards and inside out with further leveraged funny money.

Realtor Chlamydia Subprime, smiling way too much for one person, shows said homes to two buyers: Bob and Pam Wideeyedyoungcouple, and Mr. Slick Flipper, who knows the game and skims it while he can. Both buy homes, no money down or up.

Mr. Flipper, whose shrewd antenna pick up tremors below the market surface signaling the top of the real estate market, walks away from his purchase. Market begins spiraling downward .... (Did I skip ahead there?)

.... Bob and Pam hold on, heck, it's their home, but see Slick's (he seemed really nice...kinda quiet .... except for the bloodcurdling screams in the middle of the night, wasn't around much during the day) house go up for sale (now we're in late 2007) for $240,000, roughly (who's counting?)and ipso facto mirablu dictu Bob and Pam wish they'd taken Latin in high school.

They hold on, but think maybe they should put a little money away, so they take a spare $300 and put it in BREAKtheBUCK Money Market Fund ........... (which last visited had bought BobandPam's mortgage at par and watched it become deeply discounted and illiquid mortgage paper, and no one wants it except Bob and Pam, who don't know they want it or have it and who begin noticing the small print has disappeared altogether and there is no sqiunting that can makes things more transparent).....

..... sold to them by Bob's brother-in-law down here at the corner NowyouseeitnowyouDon't Financial Planning Center.

That's on top of the 20% discount they negotiated on their new home in 2005 which, if you'll notice, was not the discount they had in mind.

NOTE: All names of firms or individuals have been changed to protect me, because none of the details here are completely true, but if they are mildly amusing that's good enough for me.

The dates should be changed, because they don't quite make sense. Figure it out for yourself, because I need to go to another thread and yell at Jay Jerome.

[Ugh]

I can see, however, that someone who knew that Obama was buying the house would be willing to pay more (maybe a lot more) for the lot than someone who didn't know he was buying the house, given who Obama was at the time, which would also explain the lack of a discount on the lot.

[Bill]

Michelle wants to live in a $1.95 million mansion as to not be confused with us proles and because God Damn America has been mean to her.

Mrs. Resko (net worth $35k, annual salary $37k) buys $625k vacant lot next to Obama’s dream home with $125k down payment from same seller. Her husband, Mr. Resko, of course has:

"no income, negative cash flow, no liquid assets, no unencumbered assets [and] is significantly in arrears on many of his obligations."

Ironically, three weeks before Obama and Resko became neighbors, Iraqi billionaire Auchi lends Mr. Resko $3.5 million. No discount for the Reskos. Full price.

Fruit. Forbidden. I feel for Barack because this probably wasn’t his idea.

[Bill]

I hope that Barack’s judgment is better on world affairs than it is on real estate timing. He’s probably two years’ Senate pay in the hole.

[felix culpa]

Uh, LeftTurn, that was sarcasm, yes? Or maybe John Th. spoke to that point.
Gary, likewise apologizing for not taking note. I almost did...
Shyness no virtue nor fitting neither. Hope you’re coping. Any gory details you’d like to pass around the table?

[crr]

because none of the details here are completely true, but if they are mildly amusing that's good enough for me.

I guess if I could sum up your post: No, I don't know anyone who got a 20% discount in 2005.

[ThatLeftTurnInABQ]

felix culpa,
Yes, sarcasm.

Gary,
Ditto what the others said; I didn't see your earlier post and hope you are OK.

John Thullen,

You left out the part where Bob and Pam Wideeyedyoungcouple find out that their dream house is now only worth $180,000 and contract youwalkaway.com to call them a taxicab so they can go back to LivingInTheirParentsBasementBurg.

Also, from both the top and bottom of my heart, I'd like to thank you for the pleasure created by these things (whatever it is that you call them) that you do with words, these Whitman-esqe prose koans that you seem to create so effortlessly, and which are immediately recognizable (I can always tell after about 2-3 sentences) due to their priceless combination of a suffusion of grace and pure loopiness.

Reading them is like watching an artist peel back a layer of reality to reveal the truth within, and then give that truth a big wet kiss and an affectionate slap on the ass, following which he hops on his moped and rides off into the sunrise, leaving us to wonder, in stunned admiration "Who was that masked man? And when is he going to pen the novel that Milan Kundera would have produced, if he had been writing on National Talk-Like-A-Pirate-Day?"

[brent]

I guess if I could sum up your post: No, I don't know anyone who got a 20% discount in 2005.

LOL. If I thought about it for 3 days I actually don't think I would be able to come up with a way of missing the point more spectacularly.

Now, I get that you've got this sort of willfully obtuse schtick you are working on, but you should at least try to work in some mention and then some sort of hand waving dismissal of the fact that the house owners clarified that Obama's offer was the highest they received on a house that had been on the market for quite some time. If you don't at least try to work in some of the actual facts that contradict your position than your act just doesn't come off very believably.

[liberal japonicus]

Is there a better example of being damned if you do, damned if you don't than Bill's 6:25? I wonder what the average house price is for U of Chicago law faculty? I wonder if it's just Obama or all black folks who shouldn't adhere to the 'buy as much house as you can possible afford?'

[ThatLeftTurnInABQ]

I guess if I could sum up your post: No, I don't know anyone who got a 20% discount in 2005.

crr,

If you think you can summarize a John Thullen comment like that in one sentence, then to quote Roy Scheider in Jaws: "You're gonna need a bigger boat".

And for what it's worth, I had the experience in late 2004 of being in the same postion as that of the sellers who sold to Obama, albeit at a lower price level and in a different part of the country. We ended up selling for about 25% less than the intial listing. Market comps are at best an art not a science (especially if there are unique aspects to the property which make it hard to value), and any seller who doesn't overshoot a bit in a rising market is potentially leaving money on the table. This will normally lead to some situations where a price is negotiated down. 20% is not out of line.

[tom p]

Was Obama naive? or was there some kind of shady deal? Due to all of the in depth plumbing of the depths of this deal...

The conclusion seems to be Obama was at worst naive. (something I am not at all sure I agree with)(how could he know Rezko would be indicted?)(well, I suppose he could have just asked Karl, and Karl being the great and wonderful guy he is would have done Barack a favor....) Of course, all of this fact checking and parsing of statements has been done with 20/20 hindsight.

Which of us can not look back on a life time of wheeling and dealings (in my own case, my marraige) and not find at least one instance where we have to say: "Boy, was THAT stupid"? (I could have ended up in prison for the things she was doing)

Now... Let us put the shoe on the other foot: (from wikipedia @ http://en.wikipedia.org/wiki/Marc_Rich)

"On January 20, 2001, hours before leaving office, President Bill Clinton granted Rich a presidential pardon. Since Rich's former wife and mother of his three children, socialite Denise Rich, had made large donations to the Democratic Party and the Clinton Library during Clinton's time in office, Clinton's critics alleged that Rich's pardon had been bought."

Hmmmmm..... Naivete? Or "quid pro quo"?

Or maybe now we can guess why the Clinton's still haven't released that donor's list to the Clinton Library?

Get real guys...

[gwangung]

LOL. If I thought about it for 3 days I actually don't think I would be able to come up with a way of missing the point more spectacularly.

Well, that's why I think crr's not a sock puppet; few of the usual suspects are naturally that clumsy.

[ThatLeftTurnInABQ]

gwangung,

Only Imperial stormtroopers are capable of such precision.

[von]

Oh, and ugh: I gather someone other than Rezko had an option to buy the lot at the same price, but Rezko somehow took over that option from him. As Mark Brown says, we don't know how Rezko got that option. But if it existed, it would (I think) mean that Rezko's involvement did not mean that a deal went through that wouldn't have otherwise, that the sellers got a better deal than they would have otherwise, that they therefore had an incentive to give Obama a better deal, etc.

It might mean that Rezko wanted it to look like he had done the Obamas a favor, or something.

Also, one more thing for von: note that the story you cite was written before the sellers came forward with their side of the story.

Sorry, Hilzoy, I missed this response in composing my answer above (I have a two-year-old who occasionally gets in the way of my blogging).

The seller's side of the story* doesn't affect my point. I simply stated that Obama got a sweetheart deal from Rezko. Obama couldn't have closed on the house, or, likely, expanded his lot, without their participation. Obama's explanation is that his good fortune resulted from coincidence, not collusion. And, as I stated in my very first comment, I believe he simply got a bluebird here; your post does an excellent job of laying out the reasons why.

My point, however, is that Obama should've known that the Rezkos were trouble and should have realized that his dealings with them would look bad -- especially since we're dealing with Chicago, where shady land deals and sketchy pols are the norm. Thus, I echo Kass' conclusion: This was pretty naive of Obama, and doesn't reflect all that great on his judgment. (A point that Obama apparently accepts, given his own comments.)

von

*Whether we have the seller's complete side of the story is perhaps questionable; as I understand it, Team Obama claims to have a supporting email from the sellers. I don't believe that the email has been released, however, or that the sellers have gone on the record. (I'm sure if either has occurred, someone will point it out.)

[hilzoy]

Not having the gift of prophecy, I didn't engage in any real estate transactions in 2005. I paid the asking price (iirc) in 2006; considerably below it in 1993 and 2000. But in 2000 I also made a bid above the asking price on a house I lost (probably luckily) to someone who bid even higher.

In my experience, asking prices, like opening bids in bargaining sessions, are generally fictions, and say more about what the seller wants you to think about where things will end up than anything else.

[hilzoy]

von: the email. (pdf)

[Ugh]

I paid the asking price (iirc) in 2006; considerably below it in 1993 and 2000.

I (or, more accurately, "we") paid the asking price in 2004, so we've got Obama trapped! ;-)

And holy cr@p:

JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.
...
The deal represented a 93.3 percent discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.

93.3 percent of the capitalization on Friday? Friday??!!? Hello 1929.

[Ugh]

To clarify, the first "we" being my wife and I, the second "we" being my 2004 price and hilzoy's 2006 price.

[von]

von: the email. (pdf)

Thanks, Hilzoy; this lends further support to your post (as well as my impression that Obama was naive, not corrupt, in his dealings with Rezko).

[Ugh]

And Jeebus, Bear Stearns was trading above $70 as late as last Monday.

[Ugh]

And the fed cut its rate another quarter point?

Link

And link to my comment with the quotes above.

[Bernard Yomtov]

Bear Stearns was trading above $70 as late as last Monday.

And over $150 a year ago.

[Adam]

Thanks. Busy since eviction notice. (And, frankly, a bit hurt no one responded to my mentioning it here, or to my subsequent mention that I was hurt; but that's silly of me, I guess.)

!

I hadn't seen your mention of it. I actually was wondering where you were yesterday and was going to check your site before I saw this.

I hope you'll accept my apology, though I know it might ring a bit hollow since I should have noticed your absence sooner. It is, however, heartfelt. :( Is everything all right?

[tom p]

"Is everything all right?

Posted by: Adam | March 16, 2008 at 08:23 PM "

No, everything is all wrong. Gary is now living on the streets, sleeping on benches, standing in lines at soup kitchens etc.

Actually I have no idea how Gary is doing, but I can tell you this as one who has lived on the streets, the worst part is not knowing.

We all know we will survive... We just don't know how. Then we do whatever it takes.

Gary, my thoughts are with ya. You'll make it, one way or the other, with friends or without...

[Ugh]

NIKKEI's down 3% in the first half hour of trading.

[Ugh]

Oops, link.

[Gary Farber]

Thanks, everyone. I'm still busyish tonight, so not much time for commenting at the moment (maybe later, and doubtless later in the week), but I appreciate all the kind thoughts.

(And, no, I won't turn down donations.)

I do have until June 1st, so there's no immediate crisis, at least.

And I did realize the next day that I was silly to take personally the lack of responses to my first two notices; it was in the middle of a busy thread, and it's easy for comments to get lost, and absurd to take it as more than that. But sometimes it takes a night's sleep for that obvious fact to occur, when one is feeling all anxious.

(Back here, and eleven hours later.)

(I shouldn't have said no one, since crionna noticed!)

Anyway, more later, and it's not as if you guys have problems carrying on without me. Thanks again.

[Gary Farber]

Oh, and I owe Barnabas, and a zillion other people, email. Sorry about that! I'm a horrible email correspondent. Apologies all around! 100 lashes for me!

But I'm good at Jeopardy, so I like to think it all balances out.

[KCinDC]

Gary, I tried to comment on your blog at the time but repeatedly got errors (from your blog software, not a timeout or similar network or server issue). Sorry I didn't come back later or just e-mail you.

[Michael]

von:

But...my understanding from reading this thread is that the deal actually could have gone down even without Rezko's participation, as the seller's had another bid on that plot of land. As such, having Rezko per se purchase the adjacent lot is not a necessary condition of the Obama's purchase, and indeed, the sale of the two lots were entirely separate, save for the closing dates. Now, there was a necessary condition, mind you: Having somebody purchase the lot.

As such, Rezko is the default necessary condition for Obama's purchase (and as such, becomes the guy doing Obama a favor) if and only if there are no other potential buyers for the adjacent lot. So long as there are other potential buyers, Rezko's participation is completely redundant; he's simply filling a role in the sale that's already been filled. Now it's possible, as someone suggested up thread, that he decided to over-bid whoever it was that had previously put in a bid on that lot so as to appear to give the Obamas a favor, in the hopes that they would feel indebted to him. Or there may have been some nefarious plan from the get-go for Obama to buy back a strip of land from Rezko that he would not have been able to purchase from the other potential purchaser for the adjacent lot.

But the construct you're suggesting (I believe) simply isn't there. Rezko's involvement was not necessary in this deal; Obama could've bought the house without him over-bidding the other potential purchaser.

Further, at least in theory, Obama could've purchased the strip of land from this other purchaser, so long as (s)he was willing.

And of course lastly, as described above, there is no evidence that Obama was given a great price on the strip of land from Rezko, and ample evidence that Obama actually paid a very good price for it.

So, again:

Rezko's involvement was not in anyway necessary to facilitate the Obamas' purchase

The Obamas negotiated a fair price for the house.

The Obamas then paid Rezko a fair price for the adjacent lot.

Rezko sold the rest of the lot for a profit (which sort of makes the point that Rezko was not enduring some sort of financial hardship on behalf of the Obamas, [1]because such a hardship was completely unnecessary, and [2]because the fact that he--I believe--regularly engages in similar transactions with the expectation of profiting from them, as he did from this transaction, strongly suggests he was making an investment comparable to, presumably, other similar investments he's made in the past, seeing as how he was, at least nominally, a developer)

So, yeah, I don't see the sweetheart aspect here at all. Rezko, a developer, entered into a run-of-the-mill land investment, paying asking price a lot in a good neighborhood at a time when land value was on the rise, sold part of that land to Obama at a fair value and later sold the rest of profit, and none of that involvement was necessary to the Obamas purchase of their home, which was pretty run-of-the-mill as far as home-ownership purchases go.

What's the controversy again?

To the extent this was "boneheaded" on Obama's part, it was "boneheaded" to enter into any sort of financial transaction at all with a big donor, just because of the "optics" of it. The fact that Rezko has turned out to be dirty is neither here-nor-there, and it seems to me that the big fuss is precisely over that: the optics of this, not the substance. Because on actual substance, there's nothing going on here.

Here's the key part, again, for emphasis:

The owners did not mind selling the lots separately; in fact, they had an offer already on the lot when Obama looked at the house.

From KathyF here

Now that makes me question even the necessity of having anyone purchase the adjacent lot; while it remained unsold the Obamas couldn't official close their deal, but they could agree to terms.

[trilobite]

I spent 5 minutes explaining the Rezko deal the other day to a friend who is a sharp lawyer but not particularly interested in primary politics. When I finished outlining the facts, he looked puzzled and said, "and"?

There's no there there.

Re Ugh's 4:30 post that Von finds persuasive:
It does seem odd that Obama got the house for less than ask and the vacant lot went for the asking price. Presumably they both would have gone for less than ask (e.g., the house at $200K less and the lot at $100K less).

That bothered me for a while too, but the apparent problem turns out to be based on a misunderstanding, namely that the two sales were part of the same deal. The sellers demanded closings on the same day so they wouldn't have to come in to sign papers twice (and maybe they got to combign some fees that way), but they listed the house and lot separately and were taking separate offers. So no reason to think that the price on one should have affected the price on the other. Apparently they overpriced the house but not the lot. Houses are harder to appraise than vacant lots. In short, no there there.

Then the purchase of the strip later, which seems convenient.

Or just unusually competent. You go after what you want. Most people aren't as good at that as Presidential candidates. That said, it probably did help that he knew Rezko as a business friend. That's life -- you get better deals from people who know you. They're willing to go to a little extra bother to do a deal that might otherwise have been more trouble than it was worth even at a good price. So what?

That and most people don't have someone to come parachuting in to help them out in a property purchase.

Like I said, people do more deals with people they know. Except that, as covered upthread, there was another buyer in the offing, so Obama probably didn't particularly need help anyway.

Put it this way: if Rezko had NOT turned out to be a crook, if someone had come up with a story about how Obama bought a house and some friend of his bought the lot, and there was no evidence of any quid pro quo of any kind, ever, or that the sellers were bullied, or that they gave Obama a discount because of getting full price on their other parcel, or, in short, of any impropriety -- would anyone give a flying s*&t? I doubt it. So, please explain to me why Rezko's (alleged) crimes make this deal look worse even though nobody can find anything wrong with it? The guy was a major developer, bought and sold probably hundreds of parcels that year. As far as anyone knows, most of his business was perfectly legit. End of story.

[hilzoy]

I have very sad news: our traffic was up for a while, especially in the wake of being linked on a dKos top diary. But now, alas, not only have we fallen behind Atlas Shrugs, we've even fallen back behind my personal little benchmark, the Mary-Kate and Ashley Olsen News.

Honestly. The Olsen Twins. Andrew Sullivan, if you're reading this, this is your cue to link to us. ;)

[KathyF]

Someone up above was asking for a copy of the sellers' email, and voila! Searching my browser history for Saturday turned it up.

I'm telling you, I spent several hours Saturday evening transfixed by the details of this, as I wrote above. It's like reading a book where someone is recounting the very normalness of their day and you keep expecting a giant rock to fall through the ceiling and it never does. And then you realize, that's the point.

[Johnny Pez]

Hilzoy, Digby answered your question about the Rezko Scandal here:

These are patented Whitewater-style "smell test" stories. They are based on complicated details that make the casual reader's eyes glaze over and about which the subject has to issue long confusing explanations in return. They feature colorful and unsavory political characters in some way. They often happened in the past and they tend to be written in such a way as to say that even if they aren't illegal they "look bad." The underlying theme is hypocrisy because the subjects are portrayed as making a dishonest buck while pretending to represent the average working man. Oh, and they always feature a Democrat. Republicans are not subject to such scrutiny because a craven, opportunistic Republican isn't "news." (Neat trick huh?)

Hope this helps.

[Adam]

As this is an open thread: Florida says no revote.

[Gary Farber]

If anyone is interested in local results here:

Boulder County Democratic Party 2008 Assembly and Convention Results
Udall 869 92%
Benner 62 7%
Uncommitted 17 1%

Fitz-Gerald 515 61%
Polis 328 39%
Uncommitted 37 0.4%

Obama 878 75.75%
Clinton 281 24.24%

The first is for the Senate nomination to replace Wayne Allard, and the second is for the 2nd District (mine) seat that Mark Udall is vacating for his Senate run. (Which we're all pretty sure he'll take, bar something very weird happening.)

I called the Obama/Clinton results at 75/25, didn't I? Bwahahaha.

(I left out the CU Regent results as a little too local.)

[Gary Farber]

"The first is for the Senate nomination to replace Wayne Allard,"

Ah, to be a touch clearer there, the race there was for the Democratic nomination for the run for the Senate seat that Republican Senator Wayne Allard is vacating from by retirement, against a to be determined Republican nominee, this November.