Sunday, March 13, 2011

Memory Lane: Walker, M&I and the Museum Bailout

Scott Walker's extreme agenda against the middle-class brought a national focus on the special interests that helped fund his deceptive campaign for governor. Many people are paying particular attention to the top executives at M&I Bank that gave Walker tens of thousands of dollars. M&I finds itself at the center of protests, boycotts, and online activism. While they have repeatedly issued the same talking points, activists are refusing to suspend reality to accept their spin.

Most people are citing the big campaign donations by top M&I executives to Walker's most recent campaign, however the relationship goes back further. Given all of this attention, it might be useful to take a quick walk down memory lane.

Although some executives at M&I bank contributed more modestly to Walker earlier, it seems that the big money and fundraisers didn't really kick into full gear until 2005. The Wisconsin Democracy Campaign's database shows some of the following contributions:
  • At least 6 contributions in all of the years before 2005 (starting with 1993 which is when Walker was first elected to the state legislature)
  • At least 51 contributions during 2005
  • At least 136 contributions from 2006 through Walker's 2010 campaign for governor.

The year 2005 was also when the Milwaukee Journal Sentinel exposed a financial crisis at Milwaukee's Public Museum. They found that executives at the museum were withdrawing large amounts from its endowment fund just to keep the operating budget going. At the time that the paper identified the crisis the endowment fund had been nearly depleted. According to MJS reports the endowment money was invested by the M&I Trust Co. and was withdrawn from accounts at the M&I Bank. The Milwaukee Journal Sentinel also reported here that a top executive was on the museum board at the time:

Mark Furlong, president of the M&I Corp., was a member of the Milwaukee Public Museum Board during the time of Gaouette's alleged actions. Furlong has since left the museum board. He did not return a call seeking comment Wednesday.

Even though the museum had been partially privatized in 1992, Milwaukee County still owned the property and the collections that were in it. So the county still helped subsidize it. In 2005 after the crisis was revealed, Milwaukee County further agreed to guarantee $5 million in short-term museum loans. In 2007 then-County Executive Scott Walker approved a $39 million taxpayer funded bailout plan for the museum. At the time Supervisor John Weishan, one of the opponents of the bailout, said that "this is a bailout of a private group. It's not a bailout of our museum." Under the plan M&I and the other bank involved agreed to more manageable terms but Milwaukee County did much of the heavy lifting including locking into some of these long-term obligations:

  • The county was to spend $3.5 million a year for 10 years on operating subsidies, or about $9.6 million more than taxpayers would have paid under the previous lease terms.
  • In addition the county would give the museum another $4 million over five years starting in 2008 to pay for deferred maintenance on the building, or $400,000 more than the county spent on average for the previous five years.

Because of this deal the museum avoided bankruptcy but some observers also looked at it as a taxpayer funded bailout of the major creditors, which included M&I Bank.

UPDATE: Here is an interesting look at Scott Walker, M&I and the Wisconsin Bankers Association

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