The effort to approve public financing for part of a new Milwaukee Bucks arena made for a lot of strange bedfellows.
A press conference announcing the funding plan featured Gov. Scott Walker flanked by Democratic Milwaukee County Executive Chris Abele and Milwaukee Mayor Tom Barrett, whom Walker defeated in two gubernatorial elections. And as the deal worked its way through the Legislature, unsteady partnerships forged between Assembly Speaker Robin Vos, R-Rochester, and Minority Leader Peter Barca, D-Kenosha. Some lawmakers supported the plan, and others opposed it, but partisan affiliations rarely predicted a legislator's position — resulting in one of the Legislature's few contentious votes not drawn by party lines.
What was infrequently mentioned throughout the debate was one of the deal's inconvenient truths for the governor's nascent presidential campaign: the Bucks' new co-owners are major Democratic donors, actively backing Walker's ultimate target should he win the GOP nomination.
Edens and Marc Lasry, both New York hedge fund managers, bought the team from former Democratic Sen. Herb Kohl last year. Part of the deal was to keep the Bucks in Wisconsin, with a new arena by 2017. Bucks president Peter Feigin warned legislators throughout the public funding debate that without the new arena, the NBA would buy the team and sell it to a city like Seattle or Las Vegas.
But Edens' and Lasry's politics weren't alone in giving people pause about Walker's collaborating with them.
In January, protesters in Milwaukee called Edens a "slumlord," urging Walker, Barrett and other elected officials not to do business with him.
Edens' Fortress Investment Group owns a majority stake in mortgage services company Nationstar Mortgage. Protesters said the company is responsible for hundreds of dilapidated properties in Milwaukee, but the company said it only services them for investors and doesn't own them.
On Wednesday, the day Walker signed the Bucks bill into law, the Wall Street Journal published a feature on Edens, calling him the "new king of subprime lending."
Subprime loans are offered at a higher interest rate than the prime rate offered for traditional loans. Generally, subprime lenders serve borrowers who have been turned down by traditional lenders because of low credit ratings or other indications that they're likely to default on repayment.
"(Fortress's) majority stake in subprime lender Springleaf Holdings Inc. has ballooned in value to $3.5 billion — putting the firm’s gain at more than 27 times Fortress’s original investment of $124 million in 2010. Buying the stake was Mr. Edens’s idea," according to the WSJ article. "Fortress also has turned around its $1 billion investment in Nationstar Mortgage Holdings Inc., led by Mr. Edens in 2006 but soon worthless, into $350 million in paper and actual gains. Nationstar collects payments on home loans, about 20% of which are subprime."
Those gains have personally benefited Edens to the tune of about $200 million, the WSJ reported.
"It’s not how I want my epitaph to read,” Edens said of being labeled the 'subprime king,' "but it’s not a shameful thing helping people finance themselves. It’s not a bad thing."