San Gabriel Valley Tribune (California)
When a candidate seeking to become the chief regulator of a major industry makes that industry a chief financier of his campaign, he or she inevitably sows the seeds of conflict of interest, at the very least. This is something Democratic Lt. Gov. Cruz Bustamante would do well to remember.
California saw blatant conflict of interest most clearly with the case of Chuck Quackenbush, whose campaigns for state insurance commissioner were principally funded by insurance companies and insurance brokers. Once in office, he did their bidding to the detriment of consumers.
Only because Quackenbush was beholden to them could insurance companies refuse to sell homeowners insurance in California for almost two years after the 1994 Northridge earthquake while still being allowed their extremely profitable sales of car insurance and other products. It is only because Quackenbush willingly did their bidding that insurance companies today can sell homeowners policies without offering earthquake coverage. Quake insurance today is principally the province of the state Earthquake Authority, whose policies carry such high deductibles that most property owners don’t bother with them.
Quackenbush was finally forced from office in 2000, not because of these anti-consumer actions, but because he allegedly funneled insurance company campaign donations to his favorite causes, including a campaign fund for his wife.
Now comes Bustamante, already infamous among political reform advocates for his 2003 funneling of new campaign donations to an old campaign committee in an effort to get around donation limits.
In Sacramento’s perpetual game of term-limit-caused musical chairs, Bustamante has no serious opposition this June as he seeks the Democratic nomination for insurance commissioner. The job will be vacated by fellow Democrat John Garamendi, now seeking the post which Bustamante soon must leave.
But Bustamante will face serious Republican opposition this fall, when he meets Republican Steve Poizner, a well-heeled Silicon Valley entrepreneur writing personal checks for most of his campaign funds.
Bustamante, not personally wealthy, must raise plenty to contend against Poizner. Two interest groups are providing a large share of his funds: insurance companies and labor unions.
As of the last reporting date, Bustamante had received more than $120,000 from insurance companies, their executives and brokers. That was just under one-fifth of his total take at that point.
The amount is far less than Quackenbush received from the same companies and individuals, but it is not trivial and likely was only the start.
Bustamante did not respond to requests to be interviewed for this column, but told others that “I made a decision early on to seek support from all quarters of the business community, but to let everybody know where I stand. I think I’ve made it crystal clear that I will fight for all Californians to have access to affordable insurance, that I will enforce the rules and I will prosecute anyone that is cheating the system.”
But what happens the first time USAA Worldwide asks for a large premium increase? Will the firm’s $29,700 in donations (as of March 1) make a difference? Bustamante says no, but Quackenbush also denied responding to industry influence, even as he became an errand boy for insurance companies.
There were already questions about Bustamante taking donations from companies like Chevron Corp., ConocoPhillips and Sempra Energy, all of whom sponsor projects that Bustamante could yet vote upon while still lieutenant governor and thus a member of the state Lands Commission, which regulates development in state waters up to three miles off the coast.
Garamendi, who served one term in the 1990s and another in this decade, always refused to accept insurance company donations because of the potential for conflict of interest charges.
And consumer advocate Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights, insists that “There are no exceptions, there are no excuses, because contributions and gifts come with expectations.”
That’s essentially what Poizner says, too. “I’m not going to take a dime from anyone the insurance commissioner regulates,” he said. “I draw a very bright line between those who fall under the jurisdiction of the insurance commissioner and anybody else.”
That’s easy for Poizner to say, when he can pull out his own checkbook anytime his campaign needs more cash.
The bottom line: For Chuck Quackenbush, taking insurance company donations was the first step down the path to accusations of corruption. For Bustamante, taking even a penny more would surely leave the door open to similar charges, if and when he takes actions that benefit his donors. His best move would be to swear off insurance company money right now, no matter how difficult that makes his fundraising task.
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Thomas Elias is a freelance columnist who writes on California politics. He lives in Santa Monica. Contact him at: [email protected]
