‘Deadbeat’: Banking crisis puts Kim Brimer and his bad loans back in the spotlight

By Matt Pulle | Thursday, September 25th, 2008

A struggling bank makes loans to a prominent businessman who offers flimsy excuses on why he can’t pay back his debt. The gentleman than begs a federal agency for a helping hand, claiming he can’t come up with the money.

No, it’s not a scene ripped from today’s headlines — this was in 1993, and the prominent, wealthy man asking for a government bailout was Republican state legislator Kim Brimer, now proclaimed by business groups as a “champion for free enterprise.”

The feds’ recent multibillion-dollar prop of Wall Street banks — about which President Bush addressed the nation on Wednesday –- has stirred outrage among Republicans, Democrats and everyone else who doesn’t owe Hank Paulson a Christmas card. It’s also given Brimer’s Democratic challenger, Wendy Davis, a prime opportunity to link her opponent to the country’s worst financial crisis in 75 years.

That the Fort Worth Republican has a history of sleazy financial dealings — the state senator was lambasted earlier this summer for using campaign money to flip an Austin condo for his wife — only helps make her point.

“In my conversations with the residents of Tarrant County, I am consistently hearing from families who are hurting financially and are worried about the country’s current financial crisis,” Davis says. “They want representation that will act in their best interests, not someone like my opponent, who has consistently used his office and the taxpayers to enrich himself.”

Hitting up a frat brother for a loan

In early 1989, Kenneth “Kim” Brimer, then a freshman state representative from Arlington, was struggling to pay off expenses from his first electoral triumph a few months earlier. Fortunately, he was friends with some of the board members at Commonwealth Bank, who secured him a $24,000 note.

“I’m familiar with Commonwealth’s board members,” the state rep would later told the Dallas Business Journal. “Chris Carol (a former director) is a former fraternity brother of mine.”

But within a year, Brimer’s buddies were out of a job as Commonwealth Bank, saddled with one too many bad debts, went under. By that time, the lawmaker’s loan had matured, but he hadn’t paid off the balance yet.

The FDIC then assumed the lawmaker’s debt. But Brimer, who would soon become the president of an insurance agency, asked for more time. He also implied, rather shamelessly, in fact, that the FDIC should help him pay for an attorney if he had to challenge the loan.

“I will tell you up front, the only cash I can gather is $5,000,” he wrote in a 1990 letter to the FDIC that was dug up recently by the Davis campaign. “I don’t want to have to pay legal fees too.”

The language in that letter is key. Brimer here is acknowledging that he is responsible for the loan — not his campaign. So, why does that distinction matter?

Around this time, the Cadle Co., an Ohio-based investment firm, purchased Brimer’s loan and changed the terms, infuriating the lawmaker. Here he claimed that the loan should be tackled by his campaign — and not his personal funds.

“My attorney and I are dealing in good faith, but will not be intimidated by a company that paid $3800 for a $24,000 campaign debt owed by my campaign and not me personally,” he wrote to the Cadle Co. in 1992. “My campaign has a five figure balance in it. When the right agreement is reached, I will authorize my campaign treasurer to settle it.’

But the right agreement never was reached. The firm wound up suing the state lawmaker and won a $23,000 judgment.

The head of the bank, Dan Cadle, in turn excoriated the lawmaker and said that Brimer threatened him with unfavorable legislation if he didn’t agree to a settlement. Brimer would later take Cadle to court for defamation.

“Ken Brimer is suing us for calling him a ‘deadbeat,’ which is absolutely true,” Cadle told the Dallas Business Journal. “He is a deadbeat. He doesn’t pay his debts. In this particular case, he borrowed money from a bank — Commonwealth Bank — that he knew was going to fail. And he stated in his deposition that he had no intention of paying it back.” (Photo at left: Brimer’s 1992 letter.)

In fact, the paper later pointed out that Brimer explained that while he borrowed the money, he didn’t feel obligated to pay it back because the note incorrectly named him, instead of his company, Celebrity Homes Inc. He also added that that the interest rate was wrong.

But Brimer’s business partner at Celebrity Homes threw him under the bus, telling the Dallas Business Journal that the two never discussed taking out a loan to pay off campaign debts. He said that their company simply does not borrow money but relies on a trust.

Brimer had trouble with other lenders as well. At around the beginning of 1989, the lawmaker took out a loan from BancTexas. A year later, BancTexas would also collapse and the FDIC transferred some of its assets to Hibernia National Bank.

On June 1991, a year and a half after Brimer took out his campaign loan, the lender demanded the lawmaker settle it. At that point, Brimer had only paid back a fraction — less than $3,000 — even though the loan had matured.

Two years later, Comerica Bank, which had recently gobbled up Hibernia, took the state lawmaker to court asking him to settle the balance of the loan — plus another $14,000 in interest that accumulated after it matured, along with attorney’s fees. The two parties later came to an undisclosed agreement.

‘But Mom, it wasn’t my fault.’

The saga of Brimer’s unpaid loans can be rather confusing. But the basics are clear: Brimer struggled to pay back two loans from banks that ultimately flopped: And, in at least one case, the state lawmaker, who’s fashioned a career trying to lessen government’s role in the private sector, pleaded with the FDIC for help. It just doesn’t look good.

Like a nervous teenager explaining to his parents how he wrecked the family car, Brimer couldn’t seem to settle on one story. Just who was responsible for his loans, anyway? His company, campaign, or the man himself? At one point, Brimer pointed to all three parties.

But at the time the state representative was admitting to seeking out loans from friends, while being called a “deadbeat” by investment banks, Brimer was an entrenched incumbent. Nobody loomed as a real challenge. So those bad notes largely fell on deaf ears.

In 2004, Brimer was elected to the open Senate seat in District 10 and firmed up his stature as one of the most powerful lawmakers in Austin. Observers laud his ability to pass legislation, particularly measures intended to spur economic development. In recent years, the Texas Association of Builders recognized him as its “Property Rights Protector of the Year,” while the Texas Association of Business proudly named him a “Champion of Free Enterprise.”

And, in an irony that is almost Shakespearean, among the biggest contributors to Brimer’s last three campaigns are — wait for it — banks. We’re not making this up. Commercial lenders donated $39,500 to Brimer in his elections between 1998 and 2006, according to data from the nonpartisan National Institute on Money in State Politics.

Still, in a rapidly changing political landscape, Brimer won’t be able to coast to another re-election. For the first time in years, the incumbent faces a determined challenger in Davis, a former Fort Worth councilmember and a Harvard law grad. Brimer also has to contend with an invigorated Tarrant County Democratic Party that’s all too eager to capitalize on an old story now that the timing is right.

“Texas taxpayers are concerned right now about being forced to pay for other people’s bad loans, says Steve Maxwell, the Tarrant County Democratic Party chairman. “When they learn that Kim Brimer tried to force them to foot the bill for his own defaulted campaign loans, there will be one more reason to make certain he is not re-elected.”

What? Me worry?

Texas Watchdog tried repeatedly to contact Brimer for comment, but no avail. So far, the incumbent has run a rather lazy re-election campaign even though polls show a close race. Yet at press time, his official campaign Web site was still listed as “under construction,” less than six weeks from election day.

Brimer, who almost never mentions Davis by name, also filed a lawsuit against the challenger, claiming she failed to resign from her council seat before she mounted a run for a higher office — a requirement under state law. In fact, members of the Fort Worth Professional Firefighters’ Association, which conveniently enough shares a political consultant with the incumbent, launched the first court challenge to Davis’ campaign. A judge threw out their complaint, and when Brimer authored a nearly identical lawsuit, he got rejected, too. He is appealing that decision, using $17,000 of his campaign funds to pay for his Houston lawyer.

Of course, this time around Brimer won’t have to take out a loan. A lawmaker with 20 years in Austin, Brimer has $1.4 million in campaign cash on hand, according to his latest finance report. Interestingly, the same man who had to secure a note to pay off the cost of politics now uses his contributors’ cash to pay for luxury items, including a $700 monthly auto lease. Sounds like a champion of free enterprise — at least by today’s standards.