August 28, 2012

Republicans attack Angus King's fiscal record

By John Richardson
Staff Writer

Former Gov. Angus King defended himself Tuesday against accusations that his involvement with a federally monitored Portland bank shows he has a history of fiscal mismanagement.

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U.S. Senate candidate Angus King

The Maine Republican Party issued a statement late Monday pointing out that King served on the board of directors of The Bank of Maine, which has been operating under a federal compliance order since shortly after King's departure this spring.

In an interview Tuesday, King said he was part of a turnaround effort at the bank before he stepped down from its board of directors to run for the U.S. Senate.

"This was a Maine institution with 330 jobs that was about to go under," said King, who is running as an independent.

King is the independent frontrunner in the race for Maine's open U.S. Senate seat, and Republicans are hoping to create an opening for the GOP nominee, Charlie Summers. The party issued a second release late Tuesday suggesting King's departure from the board of a Bermuda-based investment company in 2010 is another example of his poor financial track record.

The Maine Republican Party's latest criticism of King is intended to build on the message of a recent $400,000 television ad campaign by the U.S. Chamber of Commerce that called him "the King of mismanagement" for his handling of the state budget as governor.

"He's a nice guy I'm sure. But he just has a real history of fiscal management and Maine needs results, not another nice guy," said David Sorenson, communications director for the Maine Republican Party.

King, who has defended his record of budget management as governor, spoke at length Tuesday about his time on the board of The Bank of Maine between September 2010 and March.

Federal regulators uncovered financial problems at the thrift in 2009, when it was still called the savings Bank of Maine and well before King was involved. The bank was having difficulty covering loan losses because of poor loan decisions and the downturn in the economy, according to news reports at the time and the current CEO.

The Office of Thrift Supervision issued a cease and desist order, restricting the bank's loaning activities and setting deadlines for it to boost cash reserves to cover its problem loans. The order, which was amended in March 2010, said the company could be forced to sell its assets if it didn't increase cash holdings.

John Everets, the current CEO, led a recapitalization in May 2010, investing $60 million and keeping the bank in business.

Everets and partners brought in a new management team and a new board of directors that included top executives in finance and some Maine business experts. Everets said he recruited King, who had built and sold an energy business before becoming governor, because of his knowledge of the state and his business relationships.

"He brought a lot of business savvy to the bank. We miss him," Everets said.

The recapitalization and efforts to shed problem loans eased the concerns of federal regulators, who lifted its business restrictions in January 2011. The bank began building a new loan portfolio, while gradually removing problem assets, Everets said.

The bank was the subject of another regulatory review in the summer of 2011. This time it was the Comptroller of the Currency, which has been imposing a new regime of banking rules as part of the so-called Dodd-Frank Wall Street reforms.

Regulators again identified problem loans remaining on the bank's books, as well as the need for new compliance controls at the bank. The concerns were discussed by the Everets and the board members, including King, last summer and fall. King and Everets said the bank moved quickly to address the regulators' concerns.

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