“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
We San Diegans are all too familiar with the mayoral side of Jerry Sanders—part tough-love parent, part city pitchman, part reminder of the coming fiscal hangover. No matter how dismal the financial picture grows in San Diego, count on Sanders to comfort us in knowing that it could be worse.
But it might surprise some of you to know that it's not all city deficits, podiums and script readings for the mayor. No, there are days when he becomes Banker Jerry.
As noted in a recent Dallas Morning News story, Sanders holds a distinction shared by only two other big-city mayors—serving on a for-profit corporate board while simultaneously sworn to uphold the public good.
In Sanders' case, that would be Coronado First Bank. Sanders has served as one of the bank's directors since its inception in 2005. Back then, the newly elected mayor reportedly received a nod from then-City Attorney Mike Aguirre that it was OK to remain on the bank board while serving as mayor, seeing that the bank was outside San Diego jurisdiction. (Aguirre did not respond to a request for confirmation.)
Sanders was brought on to the community bank's board by old college chum and financial raconteur Tom Stickel, the former head of the California Chamber of Commerce who recently ran unsuccessfully to become Coronado's mayor.But last week, Coronado First Bank announced that it has signed a lease to establish a branch—its first off the peninsula—in Downtown San Diego.
The proposed 2,000-square-foot, full-service branch is set to open mid-year at the corner of India and West Ash streets in a modest three-story building that will bear the bank's name. The building once housed Cox Channel 4 and now appears to be headquarters for the 2010 Census. The shuttered Harborside School grows weeds next door, and San Diego National Bank is a block away.
Bank President Bruce Ives told Spin Cycle that the foray across the pond will put the bank in a position “where we can take advantage of what's going on” with larger banks that are still reluctant to lend, given the shaky national financial climate.
“We have the capacity to continue lending and servicing customers that other banks may or may not be able to service at this point,” Ives explained. “This is great opportunity for someone like us.”
The choice of a less-polished section of Downtown for the branch highlights the bank's desire to avoid getting “caught up with all the big banks.”
The decision was not without its controversy. Stickel, a bank founder, tendered his resignation over the matter. “Tom felt strongly that the economic and banking climates make this the wrong time to open Downtown,” bank
Chairman Bill Huck said in a written statement for the press. “However, the majority of the board felt that the present uncertainties will make a strong, local bank an even more attractive option for people who may be anxious about certain large, out-of-town financial institutions that seem to confront new challenges every day.”
Asked how Sanders came down on the decision, Ives was less evocative. “Well, certainly that's something that the board determines,” he said. “I certainly can't get into the details of board decisions, but it is a board decision.”
Whether there were discussions about any concerns that moving into a city where a board member carries significant political clout—Sanders now says he wants sole authority to hire and fire the head of the Centre City Development Corp.—the bank president hedged.
“You know, I would really be more comfortable if you asked him directly,” Ives said, before assuring, “We approach things appropriately and make sure that there's no conflict associated with any resolution that we adopt.”
Mayoral spokesperson Rachel Laing said Sanders, a regular bank-board-meeting attendee, is sensitive to the concerns and has stayed out of talks pertaining to the San Diego move. “Yeah, he's had to recuse himself from any of those discussions,” Laing said.
Laing also insisted that no city funds will be deposited in Coronado First Bank. “So, no city business with them,” she added.
Sanders has regularly listed his association with the bank on his Statement of Economic Interests, as required by state law. In his latest filing, he declares owning stock and stock options in the bank valued somewhere between $20,000 and $200,000. J.P Morgan he ain't.
But such filings, Laing argued, demonstrate that Sanders is “acting with complete transparency so that everybody knows what his interest is, and they can examine as much as they like.”
Well, not exactly. As a state-chartered bank, Coronado First is miles behind a city government in terms of public disclosures. Although Ives said the bank has been the lender for smaller projects in North Park and Bankers Hill and has Downtown clients, the public has no clear way to know with whom the bank does business.
At least one conflict-of-interest expert had a suggestion.
“If I were advising the mayor, I would say: While you're mayor, don't sit on that board because of potential questions that could come up,” said Bob Stern, California's ethics guru who heads the Los Angeles-based Center for Governmental Studies.
He recalled an episode in the late '80s that tarnished the career of L.A.'s then-mayor, the late Tom Bradley, who became embroiled in a scandal over city surplus funds that wound up in a bank for whom he served as a consultant. No charges were brought, “but people were saying it was an improper relationship,” Stern said.
“The question is, can you have two masters? Can you serve two entities?” Stern asked. “That's where the disqualification provisions of state law come in. Again, there's no ban on this. It's just a question of: Does he have to disqualify himself from any decisions affecting the bank as mayor?”
Spin Cycle, admittedly, often thinks in conspiratorial tones. But what happens if some developer decides to seek favor with the mayor by making a sizable deposit into this new bank branch or inquiring about taking out a nifty loan? Stern calls those possibilities “pretty remote stuff” but agrees that such theories would go away if Sanders simply stepped down from the bank board.
Stacey Fulhorst, head of the city's Ethics Commission, said the Mayor's office has reached out for “informal verbal advice” on Sanders' banking role, to which she has advised that the mayor continue reporting his economic interest and to “refrain from participating in or influencing a municipal decision if it is substantially likely that the decision will have a material financial impact on the bank.”
Civic activist Mel Shapiro, who frequently does battle with Downtown interests, notes that “Downtown prosperity, of course, would affect the bank. So, Sanders being very pro-Downtown-development while on the board of a potential lender to Downtown, it would seem prudent for him to resign. In fact, he should have resigned long ago.” Send tips to email@example.com.