FTX Bought Government’s Silence; Did Fintechs Buy Attacks on Appraisers?

FTX Bought Government’s Silence; Did Fintechs Buy Attacks on Appraisers? 

The nation’s 80,000 licensed real property appraisers should pay close attention to the manipulation of Washington by FTX, which turned out to have the characteristics of a Ponzi scheme. 

Fallen crypto whiz kid Sam Bankman-Fried and his associates are a living testament to the power of political donations in American politics. It’s unclear precisely what the more than $70 million in political donations bought FTX during an 18-month period leading up to the midterms, but one can speculate the money silenced what was once a brisk debate on Capitol Hill and at the U.S. Treasury on the regulation of crypto-currency.

The nation’s 80,000 licensed real property appraisers should pay close attention to the manipulation of Washington by FTX, which turned out to have the characteristics of a Ponzi scheme. It may help the appraisers explain their own predicament as a result of a campaign underway since 2018 to weaken or eliminate appraisals in mortgage transactions through ad hominem attacks on appraisers by federal officials; robo-complaints to state boards by the politically compromised Fannie Mae; now-discredited research by the Brookings Institution (an organization that has itself been linked to influence peddling); formulaic lawsuits bankrolled by donation-seeking nonprofits; and attacks on time-tested analytical methods and economic principles.

Who’s funding the campaign against appraisers? We know that thousands of workers at loanDepot, Guaranteed Rate, Fairway Independent Mortgage, Caliber Home Loans, New American Funding and United Wholesale Mortgage have funneled millions in small-dollar donations to political action committees across the political spectrum; much of this activity was during the 2020 campaign and much of it went to the people currently in office. More on that in a bit.

In the now unfolding FTX debacle, Bankman-Fried and Ryan Salame, an executive at FTX Digital Markets, became two of the biggest donors to both parties during the last election cycle. Bankman-Fried personally gave $40 million to politicians and political-action committees ahead of the 2022 midterm elections, according to OpenSecrets.org, a nonpartisan group that tracks campaign donations. Salame donated more than $23 million.

“Sam Bankman-Fried influenced Washington across basically every mechanism available,” said Jeff Hauser, who runs the Revolving Door Project at the Center for Economic and Policy Research.

The New York Times explained how Bankman-Fried “built a massive operation to woo politicians, regulators and nonprofits to support his crypto goals.” In May, Bankman-Fried signaled he might spend $1 billion on donations in the 2024 election cycle.

According to research by the Wall Street Journal, Sens. Debbie Stabenow (D., Mich.) and John Boozman (R., Ark.) took money from FTX. They co-introduced a bill this past summer that would have given FTX a path toward regulatory compliance in the United States. FTX made maximum donations to Sens. Kirsten Gillibrand (D., N.Y.), Cory Booker (D., N.J.), Lisa Murkowski (R., Alaska) and Susan Collins (R., Maine), among others, as well as dozens of House candidates.

As of this writing, the extent to which members of the House Financial Services Committee may have been compromised by FTX is not yet known.

The nation’s appraisers have been the target of a similarly well-financed influence campaign – one as obvious as it has been clumsy. Its aim: to co-opt members of the 117th Congress and officials currently in the executive branch. The goal: To link the nation’s real estate appraisers – an important bulwark for taxpayers and investors against bogus collateral values in mortgage lending – to the culture wars playing out in other segments of society.

While the point of the FTX campaign may have been to silence debate on crypto-currency, the well-choreographed campaign against appraisers seeks to paint them as hopelessly biased and to delegitimize the sales comparison approach to value and its underlying bedrock principle of substitution. The goal is to replace these gatekeepers of value with computer models, waivers or to create something akin to a social score for collateral – affirmative action for buildings.

Eliminating human appraisers suits the nonbank mortgage lenders and so-called fintechs in their quest to originate loans and refinancings at high velocity and sell them to, or have them guaranteed by Fannie, Freddie and the FHA, i.e., the U.S. taxpayer. After Dodd-Frank, eliminating long-accepted valuation norms seems to have been identified as the easiest way to keep the party going.

Using the Federal Election Commission’s screening tool, author-appraiser Jeremy Bagott has compiled an Excel spreadsheet with over 43,000 small-dollar donations totaling more than $11 million from individual employees of nonbank lenders. You can view and download the Excel file here. Or you can run the filters yourself at the Federal Election Commission’s website. All of the information is public and available to anyone with a browser and a little time.

Many of the donations are in uneven amounts and many repeat donations were made at irregular intervals – as if created by a random-number generator. This becomes apparent when the data is sorted by donor and date in Excel.

Now that the damage is done, those caught flat-footed with the FTX lucre are scrambling to make amends. A spokesman for Sen. Gillibrand told the Wall Street Journal she has donated the money she received from Bankman-Fried to a nonprofit in the Bronx. Sen. Manchin said he has donated the ill-gotten gains to a food bank in West Virginia. Representatives for Boozman and Collins said they were planning to give the money to charity.

The damage done by this high-profile dumpster fire eclipses the $70 million one rascal – now standing naked in the low-tide zone – donated to politicians who sold out their constituents. The same might someday be said when valuations are eliminated in federally insured mortgages by the same group of bought politicians.


Jeremy Bagott
Image credit flickr - Jagz Mario
Jeremy Bagott

Jeremy Bagott

Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

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11 Responses

  1. Avatar Midwest Appraiser says:

    Good article and glad somebody is looking into this. A more interesting question, the American Guild of Appraisers is supposedly affiliated with the AFL-CIO or other labor unions. How much money does the AGA have to give/transfer to the AFL-CIO for this affiliation and is any of that money from appraiser dues used for similar political purposes? Appraisers need a strong appraisal organization, which we don’t currently have anywhere, but at the least we should hold organizations accountable that are taking money from appraisers and using it for purposes that are anti-appraiser, even if indirectly.

  2. Avatar Chuck Minzenberger says:

    Interesting article, the attacks on appraisers are largely bogus and unsubstantiated, I am sure there are some horrible appraisers in the field, but when someone takes a closer look at most of these cases they fall apart. this makes me think this article may be on to something.

  3. Avatar jaydee says:

    Let’s eliminate the R.E. appraisers, the vanguards of this nations actual wealth (Real Estate). Dang appraisers hinder our goals of making bogus loans and then give the faulty bill to the American Taxpayers.

    • Baggins Baggins says:

      You will own nothing and be happy. This dystopic timeline is rather disappointing. Great summary of the issue though. Equity!

  4. Avatar henry says:

    I laugh at crypto investors more than anything.

    Worthless garbage. There’s no intrinsic value to any of the cryptocurrencies except that there’s a limited amount.

    Blockchain is worthwhile in the big picture though; just not cryptocurrencies, with huge price fluctuations seemingly unrelated to fundamentals, are about as risky as an asset class can get.

    All crypto is a Ponzi scheme of speculators looking for their next sucker… just like sellers in the post pandemic real estate market. (2020+)

    U.S. house prices again became unhinged from fundamentals.

    This article tells us nothing new. The govt. is slow as usual to regulate anything. And if anything needs regulating it is this junk.

    • Baggins Baggins says:

      Understood Henry, but it’s not quite that simple when it comes to bitcoin. It’s the decentralization aspect of crypto and blockchain which led to the original appeal and subsequent expansion. As the systems grew and the technology behind crypto became better understood, this generated more interest and more confidence. The volatility of the system is in many ways imposed by government due to the looming threat of government regulation and funds tracing, both of which have a nullification effect on the users confidence because said actions are the very reason they pulled from the fiat petrodollar to invest in an alternative fiat. The allure and promise of crypto believers is that fiat can work, if it’s decentralized and not able to be manipulated by consortium of special interest groups such as the federal reserve. A pure altruistic form of fiat by the people for the people. Unfortunately at scale there has been ample room for abuse, as should be expected by any system which eventually lands in the purview of central planners.

      Crypto is not a true ponzi scheme when it’s decentralized because nobody can pilfer the accounts or simply create more bitcoins which devalue other interested parties holdings, rather the expansion of more coins creates more participation and more confidence, aka mining. The confidence or lack of confidence in the systems is soley based on user confidence. Also of note is the coding reliability, which is why actual bitcoin is regarded as the best and occupies the majority space. For issues like the FTX scandal it’s important to understand said pilfering came by way of a trading exchange, otherwise such malfeasance would not have occurred. Additionally somewhere out there is a bulwark holder whom has an unknown quantity of bitcoin, speculated to be substantial. People still to this day speculate that is Elon while others remain convinced it is an individual from Japan. That or it’s some grand calamity of errs such as someone sinking thousands in the early days then simply misplacing their access codes, a kings fortune forever lost in time. Something akin to losing a 100billion dollar lottery ticket in the clothes washer or spilling your coffee on your keyboard and the entire computer and network blows up, while one neglected to ever back up the data. Bitcoin also has dual use benefit, such as the ability to lock a piece of important data in time behind virtually impenetrable coding, only to be released upon access code sharing or even created with something as innovative and reliable as a dead mans switch. It’s all so fascinating and I was looking into creating an account just to participate a little. However, it’s complicated.

      Personally I like the concept of blockchain technology in voting systems. This is an instant readily available solution which would create absolute accountability and stop the most destructive forms of ongoing vote fraud. Every voter would simply receive a hash tag receipt which is their specific portion of the block chain, tied to their vote. They would remain anonymous but could also simply log in and personally verify at a later date and time, their vote was tallied as cast. Surety in voting because every single individual in this country could validate their own vote, skipping all the malfeasance which continues to occur. The old saying, it’s not who votes, but who counts the votes, we could put an end to all those uncertainties, as with blockchain voting nobody could ever manipulate, change, miscount or improperly discredit another persons valid vote ever again.

      As far as housing prices becoming unhinged from fundamentals, blame the gse’s for continuing to allow certain corporate entities to have special access and special privileges. Reo is back and raging, but most of us this time around are unaware of the scale of these activities. Article link below and it’s back bigger than ever, will make the ibuyer fiascos pale in comparison. Now every hopeful buyer in america is up against global tycoons if reviewing listed properties, but what they don’t commonly understand is the tycoons already bought 9 out of 10 properties that would otherwise have been delivered back to market at a discount, and this gives them incentive to foreclose on more people and also to perpetuate an economy on the rocks. It’s a rather ingenious way to prop up market prices and prop up market values, while funneling almost all the financial benefits to big corporations. Without these groups present, billions if not trillions in discounted properties would have flowed back to regular citizens hands over the past 5-10 years and would have greatly assisted with economic stabilization and provided a better bulwark to resist so many ongoing abuses of our formerly reliable systems. The very entities tasked with protecting the public have long since been co opted and sold us down the river. Central planning never works and what’s new, it’s hardly surprising that when government is involved, profiteers get their bags out. “The real cost of the State is the prosperity we do not see, the jobs that don’t exist, the technologies to which we do not have access, the businesses that do not come into existence, and the bright future that is stolen from us. The State has looted us just as surely as a robber who enters our home at night and steals all that we love.” Bastiat.


  5. Avatar Dana says:

    Great article

  6. Baggins Baggins says:

    Look at the donation spreadsheet mentioned. Like who in the world takes time to donate .48c, or even $25, and does so fifty different times in one single day? This takes us back to Citizens United. Money is not supposed to be speech. The entire governmental system is hopelessly corrupted, sycophants following scam wizards in every office every hallway. There is the Convention of States proposal but given the influence peddling, I’d personally be too worried that only one representative per state is not enough, completely susceptible to peddlers, and this could lead to disastrous consequences. However, the allure of limiting the federal government…

    We always have the power of the purse though, if only such funds were appropriately limited per article 1 section 10. As always, these problems can be traced back to the federal reserve. 100 years of not being federal, and not having any reserves. These people have taxed us to death while the public remains blissfully unaware it’s happening, despite the obvious signs disrupting everyone’s lives, they don’t understand root causes of this and instead seek out individuals to blame. Of course many individuals are responsible and some are easier to blame than others, like perhaps some funny looking dude with silly hair who stole billions from pension accounts. The set up could not be more obvious but people can not get enough of the political theater regardless. Until we fix the root cause, strike one whom takes unfair advantage down, another will simply pop back up in their place. The next one will be just as supported and just as loved, until their house of cards crashes too, rinse, repeat.

    If there is an atm machine which requires no code, has no access restrictions, has unlimited paper, and all you would have to do is hold your finger on the button, unlimited funds, unlimited influence, that is the federal reserve. Printing fiat is a tax on everyone, which requires no legislative approval other than the general agreement for the government to spend more of other peoples money. Then first receivers of this money get the highest velocity of the funds, first pick of purchase opportunities, enjoy the permanent bent ears of policy makers. While the general public experiences monetary devaluation and hence a reduced velocity of their available funds, aka inflation and the trickle down portion, rising costs, reducing value. So in their ignorance they turn around and demand more entitlement programs rather than seeking an appropriate lasting remedy such as limiting and shrinking the government, abolishing the fiat press which spews continental dollars at a breathtaking pace.

    As the public remains mystified by the process through general ignorance and perceive stimulus, entitlement, and modernization programs which facilitate this as a benefit, rather than understanding these programs are among the largest taxation schemes ever implemented in the history of the world. The illusion of a lot of money flowing around keeps the dollar signs in their eyes, needy hands always out, eyes on the clock for faster responses, politicians politicking and pandering, it all now becomes the normal routine which everyone expects and a rare few actually object to. It all traces back to the federal reserve, a consortium of private banking interests which in a round about way also includes fintechs, hedge funds, investment firms, as they all play towards systems at hand.

    From a logical perspective none of it is surprising. Why would a bunch of counterfeiters worry about another counterfeiter redirecting a fiat supply a little more here or a little more there, they’ll just print or generate more if they need it, no permission needed to tax if that tax comes by way of an expanded money supply. The public is the taxable cash cow, as we care so little about our posterity and wealth the general public now demands increases to entitlement programs, and the 501c companies whom are funded 80% if not far more by the government and it’s fiat funds, continue to expand at a rapid pace. If we more honestly consider where the money comes from and where the money goes, we would include 501c’s as government entities and government spending. Obviously the open door to 501c program expansion has led to increased abuses of systems at hand. What we’re actually looking at is a federal government which taxes well over half of all wealth generated, also generating an artificial economy which employs roughly half of all working persons in the country who’s primary function has become to appease special interest groups. 501c’s are the mechanism by which a minority group can impose it’s will on the unwilling majority, skipping the legislative processes for budgetary and voter approvals, kickbacks to boot.

    For what’s happening in appraisal it can not be any more obvious either. 501c’s with their minion activists and politicians in their pockets have been promoting the idea that lenders should have more control, less accountability, and the appraiser whom represents one of the last effective checks to the balance within lending, should simply step aside and go away. These pundits may be punting the racist biased take since that’s popular today but what they’re really doing is dismantling effective checks and balances systems which restrict their power, using taxpayer funds to fund the 501c advocates to achieve their goals. Free of charge advocacy using a thousand willing souls with blank stares and empty minds arguing for continued dismantling of the last vestiges of actual liberty and true independence, as they believe they’re ‘fighting racism’. Don’t let your wandering eyes deceive you upon reviewing the donation spread sheets, this is not a political issue but rather one of posterity vs bondage and the future of liberty itself. In case anyone has not noticed, as the independent checks and balances systems continue to be over rode by the unlimited purse, as rule of law continues to be ignored and exploited by the entitled classes (which said class now includes welfare recipients corporate and citizen alike), our liberties have been restricted and our social cohesion as a country severely disrupted. Hows globalism working out for you personally? Would you like more stimulus money or debt relief to make things better? Perhaps the next politician will do a better job, for you. We are from the government and are here to help.

    No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

    • Avatar Midwest appraiser says:

      I agree with most of what you say except “money is not speech”. I’m very politically involved at the local level and my freedom to support the candidates I choose through donations is an act of personal freedom – no different than putting a sign my yard or standing on the corner speaking about my political views. In fact, those signs cost $5/each and can’t be put in my yard without political donations. The ability to do what you choose with the money you’ve earned is core to being a free person. Political campaigns are GOING to get money, one way or another. They cost what they cost. Signs don’t manufacture themselves. Websites don’t work for free. Run for a local office sometime- anything- your local city commissions – take zero donations and see how it goes. Do we really only want rich, self-funded candidates? Freedom is messy and imperfect but should always be chosen over government control. If you don’t think so, how’s that extensive government control working out for those of us that choose to be appraisers all our lives?

      • Baggins Baggins says:

        Sure, absolutely. However think about it, we do have rich self funded candidates and they outnumber the rare statesmen or even community driven politicians by exponential factors. Three words; World Economic Forum. The actual puppet masters. I liked that congress guy whom recently won with the single tv ad that only cost him like a few hundred bucks, of him riding off on the harley with the American flag. He beat out other candidates that spent millions. People online were abuzz with joy; ‘Now that’s fiscal responsibility!’ However that is a very ultra rare sort of event.

        ‘Money is speech’ is a longstanding argument about the Citizens United legislation. You are correct that money is speech, from an individual perspective. In the bigger picture though, you simply can not afford as much ‘speech’ as these other groups. The argument is that Citizens United silenced a country and handed the reigns of power to the super wealthy. They speak for all of us now, whether we like it or not. Some of the more zany counter arguments to provoke different perspective on the matter included like; We need to rob banks to get some speech, and that is a legal defense so the action would not actually be a crime, since we’re all supposed to have free speech and equal voices. Personally I’m more inclined to harp on the need to revisit the permanent apportionment act and expand representative count with a more logically applied sliding scale to account for population increase. Because clearly the representatives are out of reach to regular people and we are no longer represented by local community interests by and large, politicians pander to money not constituents these days. Dialing for dollars and all of that. And it’s just getting worse with time, mail in ballots is a product of zucks bucks. And of course those companies get corporate welfare most people could not even comprehend. Your bucks now belong to zuck so don’t even try, it never ends.


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FTX Bought Government’s Silence; Did Fintechs Buy Attacks on Appraisers?

by Jeremy Bagott time to read: 4 min