Senators Delay Vote on Loan Executive
Senate Democrats held up a key vote Tuesday on the confirmation of Ameriquest Chairman Roland E. Arnall for ambassador to the Netherlands, saying he should first resolve a 30-state investigation into his mortgage company’s lending practices.
Sen. Richard G. Lugar (R-Ind.), chairman of the Senate Foreign Relations Committee, reluctantly agreed to stop the panel’s vote on Arnall just moments before it approved a handful of other ambassador nominees without dissent.
Sen. Paul S. Sarbanes (D-Md.) pushed for the delay, noting that Orange-based Ameriquest Capital Corp. is being scrutinized for “predatory lending” practices, and that the panel has in the past delayed acting on nominees with outstanding legal issues.
“I want to express my concern that this matter finds itself on the agenda,” Sarbanes said. “I think this is a very bad development.”
Lugar followed the committee’s tradition and accepted the Democrats’ request to hold off voting on Arnall, but added: “At some point we’ll have to make a decision.”
“We’re taking time out. We’re going to see if in fact there is some resolution. If not, the nomination will recur,” he said.
Lugar did not set a date for reconsidering the nomination.
Arnall, 66, declined to comment. In a rare public appearance before the Senate committee last week, the Los Angeles billionaire acknowledged that Ameriquest employees had made mistakes but said that the problems had been corrected.
Ameriquest is the nation’s largest lender to higher-risk borrowers who don’t qualify for traditional mortgage loans. The company has been accused of gouging its customers with bait-and-switch tactics that leave them with hidden fees and unexpectedly high interest rates.
This summer, Ameriquest set aside $325 million toward a settlement with attorneys general and regulators from 30 states, but an agreement has yet to be reached.
“The precise timetable is difficult to predict, but we anticipate a final resolution by the end of this year,” Arnall recently wrote to the Senate committee.
The White House and State Department have stood behind Arnall, who was once identified with Democratic political fundraising but in recent years emerged as a leading financier of Republicans including President Bush and California Gov. Arnold Schwarzenegger.
A State Department official last week urged Lugar to move toward confirmation.
Bush nominated Arnall “after a careful and exhaustive search for a distinguished American” to represent this country in the Netherlands, Matthew A. Reynolds, the State Department’s acting assistant secretary for legislative affairs, said in a letter to Lugar.
The Netherlands, Reynolds added, is playing a significant military role in Afghanistan, and leaving the ambassador post vacant “runs counter to our interests.”
Groups including the Leadership Conference on Civil Rights have endorsed the nomination of Arnall, who is known for his philanthropic contributions. But others have called for holding up any action until the 30-state inquiry is settled.
“The delay in the confirmation in the long run will help Roland Arnall’s reputation, since he will have an opportunity to correct the harms of the past,” said Robert L. Gnaizda, policy director of San Francisco-based Greenlining Institute, an association of community and religious groups concerned with fair-lending issues.
Sarbanes and other Democrats suggested Tuesday that they weren’t dead set against Arnall, but rather wanted to make sure his firm had cleaned up the outstanding issues before they granted him confirmation.
“Why can’t we defer this until Mr. Arnall has actually been able to ... deal with these allegations?” Sen. Joseph R. Biden Jr. (D-Del.), the foreign relations committee’s senior Democrat, asked Tuesday.
Arnall, who said he would step down as Ameriquest chairman if confirmed, told the panel last week that his company’s management team should be allowed to conclude the talks without him -- because that team would have responsibility for implementing the settlement.
But Biden did not buy it, noting that as ambassador Arnall would retain a personal financial interest in Ameriquest, even if he no longer played a role in running the company.
Sarbanes expressed concern about Lugar’s initial decision to move forward with a vote on recommending Arnall for full consideration by the Senate.
“All of this is what we call predatory lending,” he said, describing some of the accusations raised against Ameriquest. “Preying on the lack of knowledge and inexperience of borrowers who are often on the low end of the scale.”
Sarbanes noted there was precedent for delaying the action. Richard C. Holbrooke’s nomination as U.S. ambassador to the United Nations in the late 1990s was delayed until he paid a fine and apologized over conflict-of-interest charges.
Once the Ameriquest legal issues are resolved, Sarbanes said, “Mr. Arnall can go off to be ambassador to the Netherlands with the sense that justice has been served.”
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Times staff writer E. Scott Reckard in Orange County contributed to this report.
