Governor Aide’s Bank Position Prompts Concern, Legal Review

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The Los Angeles Times

SACRAMENTO – Gov. Arnold Schwarzenegger is reviewing whether a top-ranking aide violated conflict-of-interest rules by joining the board of directors of a Nevada bank that does business in California, officials said Wednesday.

Marybel Batjer, Schwarzenegger’s cabinet secretary, joined the board of Bank Holdings on Sept. 16 — a month after the company announced it was purchasing a bank charter in Costa Mesa and moving the operation to Sacramento. The company, based in Reno, also runs a loan office in Sacramento.

As cabinet secretary, Batjer helps oversee the Department of Corporations and the Department of Financial Institutions, which regulate banks, lenders and mortgage brokers. Former chief of staff to the Nevada governor, Batjer now is one of the highest-ranking officials in California, with easy access to the governor and power over the state’s vast bureaucracies.

Margita Thompson, the governor’s spokeswoman, said administration lawyers will review the relationship between Batjer and the Nevada bank, “and if any conflicts arise, appropriate action will be taken.” Thompson stressed Batjer did not know before she joined the board that the company was purchasing CNA Trust of Costa Mesa.

Batjer already has stopped dealing with gambling issues — which have preoccupied Schwarzenegger for months — because she worked for Las Vegas gambling mogul Steve Wynn before joining the staff of Nevada Gov. Kenny C. Guinn.

Government watchdog groups raised alarms this week about Batjer’s bank board appointment, which was first reported by Dow Jones Newswires. Doug Heller, with the Foundation for Taxpayer and Consumer Rights in Santa Monica, said Batjer’s new job presents a clear conflict.

“It’s totally inappropriate to have a high-level government official taking a job on the side as a director of a bank,” Heller said, “especially when the official is the chief liaison to the state’s banking regulator.”

Batjer’s duties will include attending one board meeting a month in Reno. The sessions usually last up to 90 minutes, said Hal Giomi, chairman and chief executive of Bank Holdings. Board members are also expected to spend up to three hours a month reviewing company material. They are not reimbursed for travel and lodging expenses tied to the meetings, Giomi said.

Giomi said that California financial regulators have no jurisdiction over the company’s California interests because “we are a state-chartered bank in Nevada and we’re regulated by Nevada banking laws and by the FDIC” — Federal Deposit Insurance Corp.

He added that Batjer had been under consideration for the spot for a “long, long, long time. Marybel’s name popped up when we were first starting the bank three years ago. And it was just recently that we got serious about it.”

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