Political Notes – An eight-headed defense of Jack Murphy

[private]

The eight-man committee that replaced Lt. Gov. Casey Cagle as the entity responsible for appointing committee members rose up as one to defend its recent decision to put Sen. Jack Murphy (R-Cumming) in charge of the Senate Banking Committee.

Murphy was one of eight former directors and officers of a failed Alpharetta bank, Integrity Bank, who were named in a lawsuit filed by the FDIC this week alleging gross negligence and breach of fiduciary duties in their operation of the bank.

The civil allegations have prompted criticisms of Murphy’s committee appointment and calls for him to step aside as chairman, which Murphy says he will not do.

The Committee on Assignments, apparently speaking in a unified voice, issued this statement Thursday in defense of Murphy:

“The banking industry has been troubled worldwide, and valuable lessons have been learned from these unfortunate experiences. It is important to remember, this is a civil lawsuit over business practices. Senator Murphy has denied the allegations. It would be improper for anyone to rush to judgment based on mere allegations and without a determination of fact.”

Murphy also released a statement defending his position as committee chairman.

“I have served on Georgia’s House and Senate Banking and Financial Institutions Committees for eight years,” Murphy said. “I know Georgia banking laws and I know that I not only followed the letter of the law but the spirit of the law as well. This is a civil lawsuit. Portions of this FDIC lawsuit ignore specific aspects of the corporate status of several of the bank’s borrows, to the point where the facts have been twisted.”

Murphy added: “What has been printed in the media regarding this lawsuit represents only one side of a complex business arrangement that evolved and grew successfully over the better part of seven years. The board members and I will file answers to this civil suit. As this case proceeds through the court, a clear understanding of the Integrity Bank Board of Directors’ protocol will come to light.”

The FDIC filed the lawsuit Tuesday in federal court in Atlanta. The lawsuit accuses Murphy, a former director of the bank, and seven other bank officials of gross negligence and breach of fiduciary duty in approving risky loans that resulted in losses of about $70 million.

The 21 real estate and construction loans were approved between February 2005 and May 2007, according to the lawsuit. Integrity Bank was shut down by regulators in August 2008.

Murphy was named chairman of the Senate Banking Committee last week by the Committee on Assignments.

Lindsey names assistant whips

House Majority Whip Edward Lindsey (R-Atlanta) has named a team of 11 deputy whips who will try to keep Republican votes together on key legislative issues.

Rep. Katie Dempsey (R-Rome) will be chief deputy whip, helping lead a group that includes Reps. Stephen Allison (R-Blairsville), Lee Anderson (R-Grovetown), Rick Austin (R-Demorest), Paul Battles (R-Cartersville), Bubber Epps (R-Dry Branch), Michael Harden (R-Toccoa), Barbara Sims (R-Augusta), Kip Smith (R-Columbus), Randy Nix (R-LaGrange), and Tom Weldon (R-Whitfield).

One of the deputy whips, Epps, is a recent switcher to the GOP from the Democratic caucus.

“The legislative understanding and personal integrity that enables these representatives to successfully serve their constituents will also make them valuable members of the House majority whip team,” Lindsey said.

Smith is a diplomat

As DOT Commissioner Vance Smith was delivering his budget presentation to the House and Senate appropriations committees Wednesday, Rep. Amos Amerson (R-Dahlonega) tried to zero in on the reason why the cash-strapped department is so heavily saddled with long-term debt.

Did the debt level rise to such a high level because of former governor Sonny Perdue’s “Fast Forward” highway construction program, Amerson asked Smith.

“Were we robbing Peter to pay Paul?” Amerson inquired.

Amerson was referring to Perdue’s initiative of several years ago to speed up highway construction through the massive issuance of GARVEE bonds, debt instruments that are secured through pledges to pay back bondholders with money that DOT receives in future federal highway grants.

State auditors later determined that the acceleration of all these highway projects was a major factor in DOT’s 2008 financial crisis, when the agency rang up a budget deficit estimated at $1 billion.

Smith essentially gave a “yes” answer to Amerson’s question, but tried valiantly to be diplomatic about it. “I was part of the problem,” Smith said, because as a legislator he voted to adopt budgets that included funding for the misguided “Fast Forward” effort.

“From 2015 to 2019, we’ll see some of the GARVEE debt drop off,” Smith said. “We’re going to live with our debt service. We’re going to live with it because they are good projects. We’ll maintain what we have right now.”

© 2011 by The Georgia Report

[/private]

Tags: Amos Amerson , DOT deficit , Ed Lindsey , Fast Forward , FDIC lawsuit , Jack Murphy , Senate Banking Committee , Sonny Perdue , Vance Smith