Ex-state governor advising lending firm under fire

First published Aug. 23, 2002:

Embattled lending giant Household International has hired Booth Gardner, a former Washington governor, to advise the company as it copes with an attorney general's investigation into its mortgage loan practices in this state.

The investigation was triggered by dozens of complaints from homeowners in Whatcom County and around the state, who say they unwittingly refinanced their mortgages at much higher interest rates with Household International's Household Finance Co. subsidiary, based on misleading statements from company representatives.

"Governor Gardner is providing guidance to Household on ways to work more efficiently with our regulators in Washington," said Household spokeswoman Megan Hayden. "He's guiding us on how to address the issues that have been raised there. We want to do everything we can to make sure we're doing what we can to improve our relationship with our regulator in the state of Washington."

Gardner, governor from 1985 to 1993, has a close political relationship with state Attorney General Christine Gregoire. Gardner made Gregoire a statewide political figure when he named her to head the Department of Ecology in 1988. At the time, Gregoire was a little-known deputy attorney general.

Gardner got some criticism for the appointment at the time because he dropped plans for a nationwide talent search to fill the prominent Ecology post, and because he did not discuss the appointment with environmental groups. But Gregoire earned high marks in the job, and was elected to her present post in 1992 and re-elected in 1996 and 2000.

Gardner said he and Gregoire remain "good friends." The former two-term governor said his current job as an independent consultant inevitably puts him in contact with his old political friends and allies.

"If I turned down every job where I know a prime player like Christine, I'd be out of work," Gardner said.

He said he has spoken to Gregoire only one time about Household, just to mention to her that he had been retained by the company.

"Her eyes rolled back and she said, 'Good luck,'" Gardner said.

Gregoire was out of her office on vacation and unavailable to comment.

Gardner also said he has discussed the state investigation with assistant attorneys general Paul Silver and David Huey, the consumer protection specialists overseeing the probe. Gardner himself is not an attorney, and he said he is not playing any role in negotiating a legal settlement with state regulators.

"I'm not negotiating," he said. "I'm just advising."

He described his role as "providing guidance on ways to work effectively with state governments," helping company officials understand the issues as they are perceived by state regulators.

"It's hard for a company ¼ to understand the mentality of government agencies," Gardner said.

He declined to reveal his fee, but added, "It's not cheap."

Gardner portrayed Household officials as making a sincere effort to remedy past abuses. He also said the company provides an important service by lending money to people who could not get credit elsewhere.

Asked if he thought that Gardner's involvement had placed him in an awkward position, Deputy Attorney General Silver replied, "No, not at all, not the way he approached us."

"He (Gardner) will be attempting to help them translate how state government works, and how to best work with us," Silver said.

In an earlier interview, Silver had described his agency's investigation of Household's lending practices as "robust and very active."

On Thursday, Silver said he could provide no further specifics about the ongoing probe.

But he did say that in any investigation that uncovers evidence of illegality or unfair and deceptive practices, the attorney general's office will require both an injunction to sanction any further abuse, and restitution to compensate damaged consumers.

"We always require those two prongs in our settlements," Silver said.