Ameriquest Exec Faces Panel for U.S. Envoy Post
Roland E. Arnall’s nomination for ambassador to the Netherlands hit turbulence Thursday on Capitol Hill, as two lawmakers suggested that his confirmation could be withheld until after his mortgage lending company resolves an inquiry by attorneys general and regulators in 30 states.
The Los Angeles billionaire is principal owner of Ameriquest Capital Corp. in Orange, which has been accused of unfair practices in its business of lending to higher risk borrowers who don’t qualify for traditional mortgages. The company has set aside $325 million to settle the probe, but a final agreement has yet to be signed.
“I’m wondering whether it is appropriate for us to send someone to represent our country with these issues still looming in the horizon,” Sen. Barack Obama (D-Ill.) said.
Ameriquest has been accused of bait-and-switch tactics that stick borrowers with hidden fees and higher interest rates. Arnall called Ameriquest a “great company” that has taken firm steps to address past problems.
“Some of our employees did not do the right thing,” Arnall told the Senate Foreign Relations Committee. “When we found out, they were let go and action was taken so it wouldn’t happen again.”
The panel took no action Thursday on Arnall, and no vote was scheduled. Although delaying confirmation of ambassadorial nominees is rare, Sen. Paul S. Sarbanes (D-Md.) said it was not unprecedented.
“In other instances, we’ve delayed and deferred until people were able to resolve these matters,” Sarbanes told Arnall. “I happen to think that’s a pretty good precedent.”
Sarbanes and Obama stopped short of saying they would block the nomination, but their comments underscored the political sensitivities that surround Ameriquest and Arnall, a major political donor who shuns the public spotlight and avoids news media interviews.
Thursday’s hearing offered a rare opportunity to see Arnall publicly address criticisms leveled at his company. Among other things, he was questioned about his plan to cede control of his company to his wife, Dawn, if he is confirmed as ambassador.
Obama asked whether that was “a meaningful recusal,” alluding to the challenge Arnall would face in not discussing business with his mate.
Arnall, 66, said he believed that the arrangement satisfied ethics standards, but added that “certainly if it’s an issue, she would step down.” In his opening statement, he had declared: “I have made ‘do the right thing’ my motto.”
As for the settlement talks with the 30-state coalition, Arnall told the panel that he was not personally involved in the discussions, but believed with “total candor and from the bottom of my heart” that the current management team was well qualified to finalize an accord with the state regulators.
Addressing Arnall, Sarbanes said: “I’m pressing here this morning to try to get this matter fully resolved and settled. I want you to understand what the concerns are. It seems to me the ability to resolve it is essentially in your hands.”
A Jewish refugee who survived the Holocaust as a child in France, Arnall later moved to Montreal and then Los Angeles. He went from selling flowers on L.A. streets to launching the nation’s biggest “sub-prime” lender to people who cannot qualify for traditional prime loans. The Holmby Hills resident has a personal fortune estimated at $3 billion by Forbes magazine.
He has lavished contributions on politicians of both major parties, most recently becoming a top contributor to President Bush and California Gov. Arnold Schwarzenegger.
But he still counts prominent Democrats among his supporters: Those writing letters to the Senate panel endorsing Arnall included Los Angeles Mayor Antonio Villaraigosa, whom Arnall paid for consulting work after Villaraigosa left the state Assembly, and Herb Wesson, former Assembly speaker and a past recipient of Arnall’s contributions.
Community activists and other critics, including Robert L. Gnaizda of the public policy organization Greenlining Institute in San Francisco, wanted the hearing delayed until the 30-state talks are resolved.
Arnall attributed the delays in concluding the settlement to the difficulties of dealing with so many regulators and to the many details involved. But he said “the most important aspect” had been resolved with Ameriquest’s decision to set aside $325 million.
Although the hearing remained cordial, Arnall seemed to resist Sarbanes’ suggestion that he should employ his hands-on business skills to resolve Ameriquest’s regulatory issues.
“I want to get this thing corrected, and you’re the person who can correct it,” Sarbanes said.
Arnall said he had faith in the Ameriquest team that is spearheading the talks. “These people know what the right thing is, senator.”
In 1992, Sarbanes prevented Donald H. Alexander from becoming an ambassador because the senator was concerned about a $100,000 donation Alexander had made to the Republican Party shortly before his nomination. President George H.W. Bush had nominated Alexander for the Dutch ambassadorship, the same post Arnall is seeking.
In the late 1990s, Sarbanes and other committee members delayed confirmation of Richard C. Holbrooke to be ambassador to the United Nations until after he settled conflict-of-interest charges by paying a fine and apologizing.
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Times staff writer E. Scott Reckard in Orange County contributed to this report.
