ROBERT SIEGEL, host:
And all of the attention on the subprime mortgage market is pinched to one of the Democratic presidential candidates. John Edwards has spent part of his campaign day in Iowa apologizing for his investment in two subprime lending companies. The Wall Street Journal reported this morning that those lenders have begun foreclosing on mortgage holders in a New Orleans neighborhood devastated by Hurricane Katrina.
NPR's Peter Overby reports.
PETER OVERBY: Edwards is running as a defender of poor and middle-class America versus wealthy corporate powers. He launched his bid last December 28th in New Orleans' flood-ravaged Lower Ninth Ward.
Mr. JOHN EDWARDS (Former Democratic Senator; Democratic Presidential Candidate): New Orleans, in so many ways, shows the two Americas that I have talked about in the past and something that I feel very personally.
OVERBY: But Edwards' personal investment strategy has tripped up his campaign. One of his biggest holdings is in Fortress Investment Group. That's a private equity fund, which hired Edwards as a consultant in 2005 and 2006. Fortress owned stakes in two subprime lenders, Green Tree Servicing and Nationstar. The Wall Street Journal found that the two lenders have begun foreclosure proceedings against a total of 34 homeowners in New Orleans's Ninth Ward. Edwards says that he, quote, "will not have my family's money invested in those firms."
Campaign spokesman Eric Schultz says Edwards doesn't condemn all subprime lenders but has no use for predatory lending practices. So Schultz says the candidate has a two-pronged response.
Mr. ERIC SCHULTZ (John Edwards's Campaign Spokesman): Cleansing his portfolio of any investments that may have ties to these practices. He's also personally committing to helping people who've lost their homes.
OVERBY: The campaign says it doesn't yet know how long the portfolio cleansing will take. And the personal commitment to the mortgage holders is just in the talking stage. It could take the form of a fundraising event or a partnership with a local non-profit group. This isn't the first time an investment has posed a problem for Edwards. Last spring, The Washington Post reported that Green Tree sent a threatening letter to a 67-year-old homeowner in New Orleans.
Edwards says he spoke to Fortress about it at the time and Fortress promised to change its practices. The campaign now says it failed to follow up on that.
Peter Overby, NPR News, Washington.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.