Carney will be at a forum for candidates for Governor at Macalester College today, at 6:30 PM, at 1600 Grand Avenue.  About 400 people and 10 candidates are expected to attend. 

1/26/10 Update: because Carney has not yet filed at the Board of Campaign Finance (not required, he hasn't spent $100 yet), he was not permitted to participate in the forum.

Contact: Bob Carney Jr. -- (612)-824-4479 (home and business) -- bob@republicancontract.com

For immediate release                                                                              

Minneapolis, MN, January 25, 2010 -- Minneapolis Moderate Progressive Republican candidate for Governor Bob Carney Jr. released financial information today, as background for his campaign.

"DFL candidate and former Senator Mark Dayton decided to release some information he thought voters had a right to know.  I am doing the same thing," Carney said.

Background

Carney is an independent business person.  Last June, he was set to close on a refinancing with Wells Fargo, to finance the launch of a new business: Formvalu, Inc., contract manufacturing and marketing new, patent pending heavy construction systems Carney has developed for forming cast-in-place bridge decks and other elevated concrete slabs.  Carney is an inventor, with six U.S. patents, and a background including science, math, and business.  Carney graduated from Macalester College with a core in physics (between a major and a minor).

"On June 5th, the day I was set to close, Wells Fargo cancelled the closing," Carney said. "Wells Fargo knew throughout this process that I was relying on the refinancing, and the business I was launching, for my income, including start-up cash out proceeds.  Of course, as an independent business person, I am not eligible for unemployment.  The bank's decision has created a very serious cash flow problem for me.  As reported in the Star Tribune's 'Hot Dish Politics', I've had to do things like discontinue cell phone service.  I am continuing to talk with Wells Fargo and one other bank, working both to complete a refinancing, and also to avoid foreclosure if a refinancing is not completed," Carney said.

Under pressure, but far from "under water"

Carney owns a house on an undivided double lot near lake Harriet in south Minneapolis.  The double lot includes a south buildable lot.  "I've been told by the City that I should be able to divide this.  An experienced realtor I am working with has told me it should be worth between $250,000 and $300,000.  My total debt in all forms, including mortgage and credit cards, is about $200,000.  My debt to assets ratio is about 30%.  However, this process has been very hard on my credit rating," Carney said.

Carney would like to avoid dividing and selling the south lot if possible.  Interest rates are close to what they were when the refinancing was scheduled to be completed last June.  If a refinancing is completed along the lines of the original plan, his total payment, based on Wells Fargo's numbers from the cancelled refinancing, would be about $2,000, including the mortgage payment, escrowed taxes, and insurance.

"Other than the $2,000/mo mortgage payment, I would have no debt of any kind.  If necessary, I can knock out an egress, live in the basement, and rent the rest of the house.  I've got all the information on the rental tool I need to knock out the wall section -- I can do that in one day.  There is no risk to the bank based on the mortgage as security.  Wells Fargo gave me every indication through the process that the refinancing was a done deal.  As part of this process, I have a June 20, 2009 e-mail from Wells Fargo, fifteen days after the closing was cancelled, stating (emphasis added): 'We are going to get this done Bob. I do appreciate your patience throughout this entire process.'  I believe Wells Fargo has caused me some serious harm, and that if necessary I should 'be made whole' based on the legal principle of detrimental reliance.  I would prefer to work things out with Wells Fargo -- I'm continuing to do that -- but I'm also not ruling out any legal options," Carney said. 

An example of a bigger problem?

Carney has been told by another banker that regulations have changed in the last year, leaving banks little or no discretion to consider a "surplus" of equity as an offset to a lack of immediate cash flow.

"My situation is unusual in two ways -- the unusually favorable debt to assets ratio, and the fact I can sell the south lot.  However, I am also representative of many independent business people, and some people who have lost jobs with companies.  There are millions of people with significant home equity -- equity that has been considered 'bankable' in the past -- and with the ability to launch and grow small businesses.  But because banks are restricted by regulators from loaning based on a cushion of equity, many people who could launch a small business are denied the start up cash needed," Carney said. 

"I will be raising this issue during both my current campaign, and in my future political activity," Carney said.  "Small business has always been the driver of job growth.  Small businesses grow by hiring people locally -- big business grows by downsizing and off-shoring.  It's just crazy to let banks shovel out billions in bonuses while starving small businesses of the capital needed to grow and to hire people," Carney said.

Carney will continue with his campaign no matter what

"I am continuing to work on my refinancing issue.  From now to November I am ready/willing/able to devote 30 or 40 hours a week to work on refinancing and the things I need to do to move forward with my business," Carney said.  "However, if push comes to shove, I believe strongly that the 'process' issues I am raising in this campaign, particularly my challenges to the 'Republican establishment', are so important that I will not stop this campaign under any circumstances.  The Republican party has become 'unrepublican' -- unallotment is an illegal and unconstitutional attack on the Legislative branch of government, and I'm not convinced the DFLers will fully and properly consider the impeachment option unless they're pushed," Carney said. 

"It may be a healthy dose of reality for other candidates for Governor, of all parties, to be confronted by someone such as myself, in the situation I'm in.  I don't see any of the parties addressing our serious unemployment problems, or our country's failure to support the small business sector with prudent and needed bank financing," Carney concluded.