Fast-Growing Commerce Bancorp Counts On Political Ties
By Clint Riley
05/21/2003
KRTBN Knight-Ridder Tribune Business News: Hackensack Record
May 21-With help from taxpayers and government deregulation, Commerce Bancorp has expanded into one of the nation's
fastest-growing suppliers of financial services - and New Jersey's most impressive political benefactor since the
Pennsylvania Railroad controlled politicians and public policy a century ago.
Few of the thousands of new customers flocking to Commerce's big red C realize that this $17.7 billion-a-year financial powerhouse is run by a corporate syndicate whose members wield an astonishing breadth of influence over New Jersey's elected officials, the public policy they make, and the taxpayer dollars they spend.
No other bank, bond underwriter, or insurance broker operating in New Jersey has doled out more campaign cash, received more no-bid government contracts, or employed more of the state's politically connected figures in the last five years.
At least five county political bosses, a former acting governor, two former state Senate presidents, and dozens of state and local public officials have received both personal income and campaign contributions from Commerce Bancorp.
Critics of the bank's practices say Commerce has shrewdly exploited regulations that allow banks to peddle insurance and buy and sell securities for any client - including government - and has taken advantage of fragmented oversight of financial institutions and public officials in New Jersey.
CEO Vernon W. Hill II and his associates insist they are breaking no laws, that their courtship of politicians is inevitable in the natural course of community-oriented business. They boast that Commerce's remarkable growth is the result of innovative banking practices, attention to customer service, and investment in local communities.
In an interview with The Record, Hill defended the bank's political activities as vital to community involvement.
"We care about public issues. We are a giant employer in this state," he said. "We feel it is our obligation to be involved in the political process" in towns where Commerce has branches.
But three weeks ago, amid questions about Commerce business practices raised by investors and reporters, the bank curbed that political involvement. On April 29, Hill told investors that Commerce would suspend political donations in New Jersey until legislators decide whether to stiffen regulations on contributions from government contractors like the bank.
The announcement came as federal regulators scrutinize the bank, and as watchdog groups and banking rivals claim that Commerce's success is due at least in part to its generosity toward well-placed politicians and an impressive array of interlocking relationships with government insiders.
Their concerns are supported by the results of an eight-month investigation by The Record, which found that the corporation's aggressive business practices and pursuit of political connections give its leaders extraordinary influence over billions of dollars in public money.
Consider: Commerce's employee political action committee, Compac NJ, distributed almost $1.65 million to New Jersey candidates for state and local office over the last five years, much of it pumped into political funds in counties and towns where Commerce then reaped millions of dollars in banking, bond, and insurance business. Some donations appeared to skirt federal securities rules intended to block influence over municipal finances.
Commerce is unusually enmeshed in local finances. At the end of 2002, it held $1.8 billion in New Jersey taxpayer money. That sum is almost 20 percent of the $9.5 billion in government deposits held by private banks; the $9.5 billion is separate from the state's $11 billion cash management fund, which is held in a Morgan Stanley Dean Witter trust. Commerce is involved in government insurance contracts in nearly every municipality. And it has become the dominant player in buying and selling government debt, last year underwriting one-third of all bonds issued in the state. The remaining bond business was split among 44 other banks and investment houses.
In New Jersey counties and municipalities where party bosses and local political leaders have financial ties to the bank, Commerce obtains a sizable portion of government banking, underwriting, and financial advisory work without formal competitive bidding.
Last year, two-thirds of all long-term bonds underwritten primarily by Commerce were not put out for bid, compared with less than half of those handled by its nearest competitor, Wachovia Securities. Commerce was the primary underwriter in 64 negotiated bond deals (out of 94 deals), a total more than four times the 15 no-bid deals underwritten by Wachovia (out of 33 deals). The Commerce no-bid deals were worth $1.5 billion; Wachovia's were worth $392 million.
New Jersey is fertile soil for suppliers of bonds, bank accounts, insurance, financial advice, and other government services. Every time one of the 21 counties, 566 municipalities, 614 school districts, or dozens of quasi-governmental authorities such as the Bergen County Utilities Authority opens a bank account, borrows money for streets or schools, or seeks insurance for its workers, it must find a provider and draw up a contract.
In a competitive banking market such as New Jersey's, many financial experts say formal bidding can help lower costs. New Jersey jurisdictions, however, show little consistency in how they award contracts. Some local officials who opt for "no-bid" or negotiated contracts argue that taxpayers are better served when trusted local professionals arrange the deals. Others say certain deals are "professional services" and thus are exempt from bidding under New Jersey public contract law.
It is amid this unevenness that Commerce thrives, its interlocking political and financial relationships giving the bank an overwhelming edge in negotiating government work.
Hill says Commerce is just doing what its many governmental customers want.
"It's not our choice whether the municipalities go competitive or non-competitive," he says. "It's theirs."
Whoever makes the call, taxpayers typically end up paying higher fees in no-bid deals, especially when the contracts go to suppliers that make political contributions, says Robert B. Lamb, a professor at New York University's Stern School of Business.
"The cost is added into the pricing," says Lamb, author of such finance industry standards as "Municipal Bonds" and "Handbook of Municipal Securities and Public Finance."
"Your money buys you a seat at the table for a negotiated deal. Whoever has the politicians either gets the deals that would have gone to other firms at a cheaper price, gets deals more often, or they establish relationships for future deals."
The uneven playing field rankles rival bankers from Cape May to Bergen County. They voice respect for Hill's banking innovations but are uneasy with some of his more bruising methods, such as offering a $5,000 bonus to any manager responsible for shutting down a competing branch. Their concerns were such that none would be identified by name, fearing Hill would turn his political and financial might against them.
"In polite society," says one banker in South Jersey, "we compete with our fellow bankers, and if we lose, we accept the share of the market that we are left with. Not 'Genghis Khan' Hill. He has to have it all."
"There is no sense of fair play in the way Vernon plays the game," echoes a North Jersey banker. "He's way out of the box. Vernon thinks he can do whatever he wants. They may not say it in the open, but most bankers think Vernon and Commerce are protected."
Hill dismissed such comments as "whining." He also challenged recent media emphasis on Commerce's political connections and its share of government-related business, arguing that such business is but a small fraction of the bank's entire portfolio.
"You should be writing about this as a New Jersey success story," he declared.
But to some veteran political observers, Commerce Bancorp's swelling influence is worthy of public attention.
"This is remarkable even for New Jersey," says Larry Sabato, the nationally known director of the Center for Politics at the University of Virginia. "It is about as much raw power that can exist under the rule of law in 2003."
Sabato, author of "Dirty Little Secrets: The Resurgence of Corruption in American Politics," says such a concentration of power should concern New Jersey's citizens.
"It's important that people have faith that their government is representing them and not just the elite," he says. "When private money and government power gets concentrated in the hands of a few, we end up with government of, by, and for the powerful."
That was the situation almost 100 years ago when muckraking journalist Lincoln Steffens reported that businessmen and their lawyers had turned New Jersey into "a great commercial concern."
His McClure's magazine expose, "New Jersey: A Traitor State," singled out the Pennsylvania Railroad Corp. for using financial and political might to make lapdogs of legislators and local politicians who helped protect its rail monopoly.
Perhaps not since those robber baron days has one corporation managed to employ more political chiefs, state and local public officials, and politically connected lawyers for private business in New Jersey than Commerce Bancorp.
To hear Hill tell it, Commerce's business ambitions are not much different than the railroad's.
"We want 100 percent of every deposit - in every town, every county, every school district," he says.
Commerce's stunning growth - two-thirds of its 225 branches in New Jersey, New York, Pennsylvania, and Delaware did not exist six years ago - is a tribute to Vernon W. Hill II.
In 1973, the 27-year-old business graduate of The Wharton School at the University of Pennsylvania opened a single office along a Burlington County highway and made himself a banker.
Today, Hill says he doesn't consider himself a banker. He's a retailer, he says, the same as Wal-Mart and Burger King. And like Sam Walton and Burger King, Hill - who co-owns at least 42 Burger King franchises - builds look-alike bank branches at a breathless pace. In 1996, Commerce had no branches in the northern counties of Bergen, Passaic, Morris, Essex, Union, Monmouth, Middlesex, Somerset, Hunterdon, and Mercer. Today, it has 78, with more on drawing boards.
Commerce bills itself as "America's Most Convenient Bank." It is open seven days a week and offers such services as door-greeters and coin-counting machines.
In the last five years, Commerce has grown by more than 500 percent.
Commerce had fewer than 800 employees a decade ago. Now it employs more than 6,800 people in four states. In 2002 alone, Commerce's total assets grew from $12.3 billion to $17.7 billion, making it the 44th largest banking institution in the nation.
"This is the most successful, different bank model in America," Hill says. "We're retailers who happen to sell bank products."
Commerce's success has made Hill's company a Wall Street darling. Over 10 years, Commerce stock rose more than 1,200 percent, more than such corporate behemoths as General Electric and Microsoft, although the share price has leveled off recently amid investor concerns about bank expenses, large insider loans, and questionable political donations.
Only a few months ago, it seemed Commerce could do no wrong. In November, its stock was trading $8 higher than the current share price, and bank executives were often found shoulder to shoulder with the state's prominent political figures.
At the New Jersey State League of Municipalities' annual meeting in Atlantic City in November, Commerce executives threw a lavish dinner party at Caesars Hotel Casino. The guests included Governor McGreevey and Assembly Speaker Albio Sires. After dinner, Hill joined 3,500 state and local government officials and their families at an invitation-only Beach Boys concert put on by the bank.
Although it is common practice for bankers to court politicians, few banks have amassed the kind of politically connected team that now serves Commerce in its executive suites and on assorted boards of directors.
Hill, 57, has forged political contacts with the same speed and verve he uses to build bank branches.
Many of the men gathered around him are a reflection of Hill himself: part Republican, part Democrat, and all business.
Hill is a registered Republican. But in the late 1980s, chafing at the influence of North Jersey power brokers in Trenton, he became one of Democrat Jim Florio's biggest fund-raisers when the South Jersey congressman sought the governorship.
"Geography is more important than philosophy," Hill explained 14 years ago in New Jersey Success magazine.
Now, some of Florio's closest backers are Hill allies, helping him expand Commerce's financial and political empire in many directions. Some of the key relationships, now grown tangled and overlapping, can be traced back to the corridors of Commerce's gleaming six-story headquarters in Cherry Hill.
During the Florio years, one of the building's tenants was Keystone National Insurance, owned by George E. Norcross III, then chairman of the Camden County Democratic Committee, one of the state's biggest sources of cash for Democrats. Another building tenant was the law firm Parker, McCay & Criscuolo, whose managing director is Norcross' brother Philip, one of the state's top government bond lawyers.
A turning point for Hill's ambitions came in 1996, after lawmakers and the U.S. Supreme Court allowed banks to sell insurance. On Nov. 15 of that year, Commerce bought both Keystone National Insurance and Buckelew & Associates, a Toms River insurance agency owned by Joseph E. Buckelew, then chairman of the Ocean County Republican Committee.
Barely two years later, Commerce was transformed. The addition of two huge subsidiaries, Commerce Insurance Services and Commerce Capital Markets, made it much more than an average bank.
Today, George Norcross, 47, and Buckelew, 74, sit on Commerce Bancorp's main 13-member board of directors and are two of the company's largest stockholders. Norcross is also chief executive officer of Commerce Insurance Services, and a top adviser to McGreevey and other prominent state Democrats. Buckelew, a major Republican fund-raiser, is president of the bank's Shore division.
Philip Norcross, meanwhile, is Commerce Bancorp's campaign finance lawyer, and Robert C. Beck, his partner at Parker, McCay, is secretary of Commerce's board of directors.
Last year, Parker, McCay counseled dozens of towns, school districts, and government authorities in bond deals worth $340 million, a portion of which had Commerce as underwriter or financial adviser.
The 1996 purchase of George Norcross' and Buckelew's insurance companies - and the installation of the two political heavyweights in Hill's executive suites - gave Commerce an immediate one-two political punch. Overall spending by Compac NJ exploded, to almost $654,000 last year from $72,000 in 1996.
Compac NJ's donations, however, are only a fraction of the campaign dollars connected to Commerce. Since 1997, bank executives, board members, lobbyists, and consultants on Commerce's payroll have conservatively helped raise an additional $10 million for New Jersey politicians through dozens of political funds.
An example is First Jersey PAC, headed by George Norcross. In one recent 18-month period, First Jersey PAC gave $408,500 to county parties and candidates and $489,400 to candidates running for the Assembly and state Senate.
A review by The Record of political donations by other banks operating in New Jersey shows that none has come close to Commerce.
In 2002, for example, Compac NJ gave more than $250,000 to politicians and funds in New Jersey. By comparison, employee PACs for competitors such as First Union/Wachovia and the Trust Company of New Jersey each gave about $25,000.
All but $20,000 of Compac NJ's 2002 donations were at the county and municipal levels, vital to the rapidly expanding Commerce because that's where it obtains zoning variances to build new branches and the bulk of its billions in government deposits, insurance, and bonds.
Indeed, Commerce's expansion has run on a parallel track to the bank's political donations. Since 1997, Commerce's total assets have grown from $2.9 billion to $17.7 billion by the end of 2002. Its overall government deposits have risen from less than $500 million to more than $2.5 billion.
More than $1.8 billion of those government deposits belong to New Jersey taxpayers.
The foundation of Commerce's power is capital - both the monetary and political varieties - and the ability to grant access to it.
Simply put, Commerce and its leaders have what others crave. Politicians want campaign dollars, lawyers need billable hours, and developers seek financing and subsidies for the sewers and highway ramps that will help their projects sell.
Commerce's extraordinary reach allows its executives and board members to bring politicians, lawyers, and developers together for mutual benefit.
For watchdog groups, however, the interlocking political and financial relationships between policymakers and Commerce executives and board members, including private business deals, raise a vital question: Can officeholders with ties to both the bank and the public be counted on to make decisions on behalf of the people they represent, rather than to benefit those who supply them with campaign cash and personal income?
A sampling of the kinds of Commerce connections that are raising concern among rivals, regulators, and public advocates:
- The business deal: Assembly Majority Leader Joseph J. Roberts Jr., D-Camden, is a Commerce shareholder. He also is a business partner with two Commerce board members, George Norcross and William A. Schwartz Jr.
In March 2002, Commerce provided a $32.5 million line of credit to an investment group controlled by Roberts, Schwartz, George Norcross, and Philip Norcross, the bank's campaign finance lawyer. That enabled the partners to buy U.S. Vision, the nation's sixth-largest retailer of eyeglasses and contact lenses, where Schwartz is CEO.
The Securities and Exchange Commission is reviewing, among other things, whether Commerce shareholders should have been told about the insider loan and potential conflicts between the bank and the investment group, according to federal sources familiar with the review.
Arthur Makadon, a lawyer who represents Commerce Bancorp and George Norcross, says there was nothing improper about the credit or how the bank disclosed it.
At the time of the U.S. Vision transaction, he says, national banks were exempt from securities law that required publicly traded companies to tell shareholders about insider loans. Congress has since banned such insider loans - except for national banks.
Furthermore, Makadon says, his clients have not been informed of any review or inquiry. An SEC spokesman says agency policy is to neither confirm nor deny the existence of any inquiry.
In March, critics attacked Roberts for using his authority over the legislative agenda to push a bill that could have benefited U.S. Vision. The bill would have allowed optometrists to perform laser eye surgery. Roberts vowed to sell his 17 percent stake in U.S. Vision if the company ever got into laser surgery, but the bill was withdrawn before a vote.
- The public appointments: New Jersey has 8 million residents. So what are the odds that three of its most prominent public bodies would each be headed by a Commerce board member last year?
Commerce board member Harvey A. Holzberg was appointed by McGreevey as chairman of the University of Medicine and Dentistry of New Jersey, which oversees the state's medical education and has ties to more than 200 hospitals and health-care institutions.
Commerce board member Jerold L. Zaro was appointed by McGreevey as chairman of the New Jersey Highway Authority, the $200 million agency that oversees the Garden State Parkway.
Commerce board member Joseph E. Buckelew was chairman of the New Jersey Sports and Exposition Authority, the agency overseeing the $1.3 billion redevelopment of the Meadowlands sports complex. He was appointed by McGreevey's predecessor, acting Gov. Donald T. DiFrancesco.
Buckelew, a Republican fund-raiser, and Zaro, a Democratic fund-raiser, served seven years together on the Highway Authority board until DiFrancesco tapped Buckelew for the Meadowlands post. They also are partners in several commercial real estate development ventures around the state.
DiFrancesco, whose political funds received $20,600 from Compac NJ while he served as Senate president, joined Buckelew, Zaro, and Holzberg at Commerce less than three months after he left the governor's office.
- The pitch to developers: James R. Napolitano wears three hats.
He is an attorney with DeCotiis, Fitzpatrick, Cole & Wisler, a Teaneck firm that handles business for dozens of local governments and state agencies.
He is vice chairman of the Hackensack Economic Development Commission, whose nine appointed members assist the city's Planning Board with zoning and redevelopment issues.
And he is president of the Commerce Bank/North division, based in Ramsey.
A year ago, Napolitano apparently became confused about just which hat he was wearing. In May 2002, writing on Commerce Bank letterhead, complete with the red C, he invited some of the state's most prominent developers to attend a meeting with Hackensack city officials. The letter began "Re: Redevelopment Opportunities - Hackensack."
"In particular, the City would like to know what you envision Hackensack's current residential market to be and the type of rezoning and redevelopment assistance that you believe would be necessary," Napolitano wrote.
The stationery identified him as the bank's regional president. Nothing in the letter indicated his role with the Hackensack Economic Development Commission.
Contacted this month, Napolitano said he didn't recall the letter or see a reason to question his multiple interests. "I sit on lots of boards and I do it to help out the community," Napolitano said.
- The 'pay-to-play' bond deals: "Pay to play" is how much of New Jersey's government business gets done. In pay to play's most basic form, entities that depend on government work give campaign contributions to people who might help them get those contracts.
Widespread acceptance of the practice has become "ethically corrosive and economically costly," says Harry Pozycki, executive director of Common Cause New Jersey.
"It's legalized bribery," says Pozycki, a former chairman of the Middlesex County Democratic Committee. "The pay-to-play system has infected our government in New Jersey. The players have become so addicted to it."
Commerce is only one of many players, but its leaders are among the masters.
Consider bond deals struck in three counties - Gloucester, Mercer, and Ocean - in the space of eight months last year.
In his successful 2001 campaign for state Senate, Democrat Stephen Sweeney - already director of the Gloucester County Board of Freeholders - raised $1.8 million, a state record for a legislative race. His opponent, incumbent Raymond Zane, raised just under $711,000.
The man behind much of Sweeney's money was his boyhood friend, George Norcross.
In February 2002, barely four months after Sweeney's victory, Gloucester County and the Gloucester County Utilities Authority each completed no-bid agreements with Commerce Capital Markets to refinance bond debts of $11 million and $4.7 million, respectively.
On the county bond issue, Commerce shared a $68,000 underwriting fee with Salomon Smith Barney. It made approximately $30,000 on the utilities authority's bond.
The same month, Compac NJ contributed $9,250 to the Gloucester County Executive Committee.
Furthermore, each bond deal was legally blessed by a law firm with close allegiances to Commerce. Parker, McCay & Criscuolo - whose lead bond lawyer, Philip Norcross, is Commerce's campaign finance lawyer - made $26,500 on the county deal. Blank Rome LLP, Commerce's corporate counsel, made $40,000 on the utilities authority deal.
Both law firms contributed heavily to political funds benefiting county Democrats and Sweeney. From 1998 through 2002, Parker, McCay gave $52,500 to the Gloucester County Democratic Committee, and Blank Rome gave $41,500. Parker, McCay gave $9,800 to Sweeney's 2001 campaign, and Blank Rome contributed $7,500.
Sweeney did not return a reporter's call seeking comment.
Zane, the man Sweeney defeated, was not shy when drawing conclusions about his opponent's backers. In an interview after his loss, Zane said, "This business of raising a million dollars for a $49,000 legislative seat is nonsense. This was a major investment by people who look to gain personally."
Commerce also was active in Mercer County.
From February 2000 to April 2002, Compac NJ donated $9,650 to the campaign fund of Hamilton Township Mayor Glen Gilmore.
In late 2001, Gilmore, a Democrat, and the all-Democratic council repealed an ordinance that prohibited giving no-bid contracts to firms that contribute more than $2,500 to local politicians and political parties, saying the ordinance was unconstitutional.
On March 4, 2002, the township completed just such a no-bid deal, refinancing $7.4 million in debt with Commerce Capital, which was paid a fee of almost $40,000.
The mayor defends the ordinance change. Noting that most law firms, engineers, and other vendors are big political contributors in Hamilton Township and Mercer County, he says that without the change, "I would suspect there would be many professional organizations that would not have been permitted to do business with the township."
The third example occurred in October 2002, when Ocean County's all-Republican Board of Freeholders refinanced $55.5 million in long-term debt. The no-bid deal earned Commerce Capital, which handled almost half the bonding, a good share of the $150,000 in underwriting fees.
Less than a week later, Compac NJ mailed two checks totaling $10,500 to the Ocean County Republican Finance Committee, whose chairman is George Gilmore, head of the Toms River law firm that represented Commerce in the bond deal. He is not related to Hamilton Township's Glen Gilmore.
"I would emphatically deny there's a connection between campaign contributions and government work in Ocean County," George Gilmore says. "They [Commerce] have been very successful because of their friendly service."
With Gilmore, that friendly service extends to a personal level as well: "If I need any insurance, I'm going to call Joe Buckelew. There's a comfort level there."
Assemblyman David Russo, R-Ridgewood, says Commerce's activities around the state appear even to surpass traditional pay to play.
"This is not exactly pay to play," says Russo, who a decade ago advocated tighter regulation of companies entrusted with public funds. "Why would you have to pay? It's like they've made everybody a partner. They're all stakeholders."
- The door to the governor's office: In Trenton, access is everything.
Two Commerce insiders have enjoyed access of the most prized variety. State House employees say they've seen George Norcross and John A. Lynch enter McGreevey's office through a restricted private entrance. In the past year, Norcross and Lynch also have attended private political strategy meetings at Drumthwacket, the governor's official residence.
The three men knew each other well before McGreevey became governor.
Lynch, a former mayor of New Brunswick and former state Senate president, is McGreevey's longtime political mentor, the force who helped guide McGreevey into the governor's office. Lynch has served on the regional Commerce/Central board since at least 2001.
A sizable chunk of the $68.2 million campaign war chest that helped McGreevey gain office was raised by George Norcross, who also delivered key South Jersey votes. He became a Commerce executive in 1997, and joined Commerce Bancorp's main board of directors in March 2002.
"Every insider conversation in Trenton starts with those two names," says political scientist David Rebovich, director of The Rider Institute for New Jersey Politics. "Lynch and Norcross helped make Jim McGreevey a viable statewide candidate."
Trenton insiders consider Norcross and Lynch the Democratic bosses of South and Central New Jersey, respectively, and it's no secret they can get the governor's ear. Even after the 2001 election, Lynch and Norcross continued to advise McGreevey, even on whom he should appoint to key posts, prompting the governor's office to make several public denials of their influence. Both men were known to have attended key meetings on such sensitive matters as replacing Sen. Robert G. Torricelli and state police Superintendent Joseph Santiago.
"This is the worst-kept secret in New Jersey politics, which has led folks to wonder whether the governor is really calling the shots," Rebovich says.
Norcross, who attended the interview at The Record with Hill, declined to characterize the nature of his association with McGreevey. Lynch did not return a reporter's phone call. Micah Rasmussen, the governor's spokesman, also declined to describe the two men's relationship with McGreevey.
Norcross, Lynch, and Commerce CEO Hill are among 36 business leaders appointed by McGreevey to Prosperity New Jersey, a state-funded group that brings together public and private sectors to discuss how government can assist business.
Trustees include the governor, his top Cabinet officers, and such business heavyweights as the presidents of Johnson & Johnson, Continental Airlines, Pfizer Inc., and Merck & Co. Commerce is the only company with more than one representative.
- Campaign cash in North Jersey: Bergen County Democrats spent more than $4 million last year to win control of county government. It was the most expensive county executive's race in New Jersey history.
The biggest portion of that money can be traced directly to the Central and South Jersey fund-raising machines controlled by Commerce Bank insiders Norcross and Lynch.
The money enabled Dennis McNerney, a municipal finance banker, to overwhelm state Sen. Henry P. McNamara, a retired car dealer, in the race for county executive.
McNamara has a theory why so much outside money flowed to his opponent: McNamara had fiercely opposed proposals to build a $355 million sports arena in Newark and redevelop the Meadowlands - plans pushed by virtually every power broker in the state, including Democrats Norcross and Lynch and Republicans Buckelew and DiFrancesco.
McNerney opposed the Newark arena in private but enthusiastically embraced Meadowlands redevelopment, which could pave the way to build a new arena.
Both projects would offer Commerce and other financial services providers opportunities to make millions of dollars in fees from developers, contractors, engineers, and, of course, government.
"The public has to start becoming aware of what is happening when any party will spend $4 million for a $100,000 job," McNamara says. "They didn't make that kind of investment without looking for a return."
The man who ran McNerney's campaign dismisses the notion that campaign contributors were making business investments.
"People contributed to the Bergen County Democrats and Dennis McNerney because they shared his vision for the county," says Bill Maer, now a consultant to the county Democrats. "They thought he would bring young, refreshing leadership to county government."
From Main Street to Wall Street, taxpayers and investors are losing patience with the insider privileges enjoyed by the politicians they elect and the companies in which they invest.
"The public is OK with winning and losing as long as everyone is playing by the rules and the rules aren't being manipulated," says Frank Narvan, a consultant to the non-profit Ethics Resource Center in Washington, D.C.
"The role of government is to serve the public interest. What the public wants to know is, are the public officials making decisions in my best interest?"
In one poll this year, 77 percent of New Jerseyans believed there was political corruption in the state. Respondents also believed that about half the state's politicians were corrupt.
A second survey, dealing with corporate governance, found that almost 75 percent of respondents felt they could not trust corporate CEOs.
Facing ever-tougher questioning about company practices, Hill tried to reassure investors gathered last month at the Waldorf-Astoria hotel in New York.
"As no one has ever tried to build a major bank this way before, don't be surprised if we make a few errors, a few falls, a few stumbles along the way," Hill said.
He acknowledged that "the climate is changing" for political giving by government contractors.
"What meets the law may not be the current accepted practice," Hill said.
The governor and legislators have promised strict new laws for campaign financing, government contracts, and ethics, but critics complain there are few signs that anyone is willing to expend the political capital necessary to make real reforms.
As it stands, the officeholders Commerce woos can legally hold multiple public positions, limit their disclosure of potential conflicts of interest, and hand out contracts without competition.
And the critics say the lawmakers who might toughen standards have little reason to challenge a system that benefits insiders both politically and financially.
Some business and political leaders "believe if it's legal and the rules don't prohibit it, it must be OK," Narvan says, adding that he considers such conduct "the lowest level of behavior individuals should be following."
Former state Sen. William Schluter, who once headed the Legislature's Joint Committee on Ethical Standards and now teaches reform politics at Rutgers University, says he is appalled that New Jersey lawmakers and the public are permitting Commerce to wield such influence.
"I am outraged that government is being taken away from people and the public be damned," Schluter says. "This is power. It is raw power and it is the determining factor in government decisions."