ALTA announced earlier this week that, Kurt Pfotenhauer, current MERS Chairman and then-CEO of ALTA, was leaving his post at ALTA to take a position “in the private sector”.
His new position? Chief Lobbyist for First American Title.
To those who follow the advocacy efforts of ALTA and the big four national underwriters, a move from ALTA to First American is like getting a job doing what you were already doing. The big four title underwriters — i.e. First American, Stewart Title, Old Republic and Fidelity — run ALTA. After all, the combined market shares of the four entities is 90% of the entire United States title insurance business. Therefore, at best, going from ALTA to First American to do the same thing he was doing at ALTA is a lateral move. Have to imagine the pay is good, though.
Kurt’s replacement at ALTA?
Current ALTA COO, Michelle Korsmo.
Who is Michelle Korsmo? Well, she isn’t a title industry veteran. In fact, she has no background in title or real estate — unless you count the last three years as COO of ALTA. Prior to joining ALTA, Korsmo was the executive vice president of the Americans for Prosperity (AFP) Foundation, where she managed a team of 52 people and a $10 million budget, and grew the organization from one state chapter to 21 in four years. At AFP, she dabbled in a range of politically charged subject matter.
Click on the link below to see a sample of one such subject:
Since I am not a climatologist or meterologist, I see no value in challenging Korsmo’s version of the Poor Richard’s Almanac for 2008. For the record though, I do know that weather and climate are not the same things.
What then is the AFP? It is a right-wing non-profit group backed by David and Charles Koch. AFP has been at the center of anti-labor bills in Wisconsin and Ohio, anti-tax and anti-spending initiatives in Washington DC and operating as a fundraising arm of the GOP since 2007. AFP is a Tea Party off-shoot. It is the consequence of the Citizens United decision. Unlimited corporate donations for one cause: getting government out of the business of free market regulation.
Before AFP, Korsmo served three years as deputy chief of staff to U.S. Secretary of Labor Elaine L. Chao, where she managed non-political agency heads, served as a member of the budget committee, exercised approval authority on all Departmental action to be published in the Federal Register, and developed an outreach program to the non-profit community. Former Labor Secretary Chao was a George W. Bush appointee and is the spouse of Senate Minority Leader Mitch McConnell.
Korsmo is clearly a well-connected DC insider and an obvious continuation of the ALTA slant towards K Street policymaking from the right side of the aisle. Right or wrong, that’s what it is.
Is that a problem?
Well, it might be.
AFP is not a “middle-of-the-road” organization, and no, we are not suggesting that we oppose all right-leaning or even right-wing causes. Instead, the problem here is the lack of moderation exposed by a relationship with the AFP. AFP is an ideological organization much like MoveOn.org is for the left. Trust us, if we had a situation where a George Soros lieutenant was running ALTA, you’d have us making the same blog post — but we don’t have to worry about that because it didn’t happen.
There is no question that ALTA’s previous CEO, Kurt Pfotenhauer, leaned right. His resume is an accomplished expose of Republican insider ties: he worked for Rep. Denny Smith (R-OR) and Senator Gordon Smith (R-OR). He lobbied for UPS and the Mortgage Bankers Association. His wife is a regular contributor on Fox News. Et cetera. But, to his credit, Kurt is not an ideologue. His tenure at ALTA didn’t represent a seismic shift towards ideologically connected policymaking. He is a middle-of-the-road Republican and his leadership accurately reflected that stance.
The concern is that ALTA, now being run by a former AFP ideologue in Korsmo, will now commence with the business of ideology instead of being in the business of broad policy for the improvement of the title insurance industry.
Is it fair to raise these issues in the first week of Korsmo’s tenure as CEO of ALTA?
Yes, it is.
First, ALTA is run by the national underwriters whose big corporate interests trump many of the issues facing regional underwriters and independent title agents across the United States. Not everyone in the ALTA tent thinks proactive regulation of the free market is a bad thing. Will Korsmo, who clearly believes the opposite, be able to represent that side of the coin when it matters to ALTA’s membership? I have my doubts judging by her record and her outspoken stance on many of these issues.
Second, is the ridiculous notion of faux populism that ALTA is now playing with Korsmo. The new CEO’s credentials are meant to give credibility to the idea that ALTA is a grassroots organization. After all, Korsmo helped launch the expansion of AFP and its viral upbringing. It is supposed to translate to title insurance.
Going back a few sentences, I mentioned that ALTA is run by the national underwriters. The largest four underwriters grossed $8.4 billion dollars in premiums in 2010. The net profits of the underwriters were mixed. First American had a net profit of $76 million dollars. Fidelity reported a net loss of $188 million dollars.
What grassroots organization starts with controlling members whose gross business is counted in the billions of dollars and whose net profits are counted in the millions of dollars?
Finally, let’s talk about the money. ALTA is raising more money than it did prior to 2008. Part of that is a credit to Mr. Pfotenhauer. He pushed the lobby factor upon arriving at ALTA. Where that money ends up going, though, needs to be carefully examined, especially with a former AFP ideologue now running the show. Let’s not be confused with the effusive praise of Pfotenhauer’s fundraising ability, though. ALTA’s PAC raised $500K or thereabouts in 2010. By comparison, the National Association of Realtors (NAR) spent more than $17 million dollars on lobbying in 2010 and raised over $3 million dollars for its PAC.
ALTA is no lobbying juggernaut and without supporting the banking, mortgage finance and realtor lobbies, it has no real influence as its own player. More disturbing is that when you parse the numbers on ALTA’s recent fundraising efforts and see who they gave their money to, it begins to show a few anomolous trends. Curiously, not all member donations from ALTA’s PAC are going to those with an opportunity to impact change on the housing and title fronts. Instead, some appear to be used to support AFP-related causes that have little or nothing to do with the title insurance industry.
In 2010, ALTA gave 51% of its PAC money to Republicans and 49% of its PAC money to Democrats, which reflects favorably to the trends in DC during the 2010 election. However, digging deeper into the numbers, there were two strange $10,000 expenditures from the PAC in 2010. The first was to the Blue Cross/Blue Shield Association PAC. The second was to Senator Mitch McConnell’s Bluegrass PAC.
Why does a land title association need to donate member PAC money to an unrelated health insurance PAC? Well, one could surmise that the money was used to support the AFP’s position on preventing a “government-run” health care system. And how does that relate to title insurance – right or wrong?
It doesn’t and that is the point.
With Korsmo in ALTA’s COO chair and her connections to Senator McConnell’s wife, why did ALTA’s member PAC make donations to McConnell’s PAC at the exclusion of other PACs more closely related to the issues in housing and mortgage finance? Other than his role on the Senate’s Appropriations Committee and a tangential connection from there to policymaking as it pertains to HUD and the new CFPB, there is no direct link to McConnell and the hot-button RESPA or financial reform issues that impact title insurance. Yes, he is the Republican Minority Leader in the Senate, but where’s the bang for that buck? Or is it something else?
In fairness, ALTA’s PAC also donated to other PACs, including some with left-leanings. However, even those donations are a bit misleading. The New Dem PAC and the Blue Dog PAC that received ALTA PAC funds in 2010 are PACs that support “Democrats” in red districts. These are not the left-wing influencers who are enacting regulatory overhauls of the financial and mortgage systems. It is quite the opposite.
The bottomline is that any perceivable balance that could be excused by ALTA is now disappearing. Hiring someone with ideologue credentials to lead ALTA is a troubling development and one that apparently has received little consideration.