Minnesota Attorney General (AG) Keith Ellison’s office is intervening in a lawsuit between Bremer Bank and its parent, the Otto Bremer Trust (OBT). The AG’s office is conducting an investigation, according to Ellison, because of the “broad authority we have under the law to make sure that charitable trust assets are used for the public good.”
Late last year, OBT’s three trustees transferred almost 40 percent of Bremer stock to investors, who are attempting to replace Bremer’s board of directors and exploring whether to sell Bremer to another bank. That has Bremer’s current leadership pushing back in a lawsuit, which claims the trustees weren’t acting in the interest of the trust when making that sale to investors.
The lawsuit by the current Bremer Bank leadership accuses the trustees of trying to enrich themselves through the sale—through management fees, that must be approved by a court. And Bremer points out that trustees have been highly compensated, and are subject to little oversight. The trustees counter that the sale makes business sense. Bremer Bank is under competitive pressure and has been underperforming. The trustees accuse the current board of being too stodgy, and needing a shakeup.
Both sides say they welcome the AG’s intervention, and the trustees believe absolutely no wrongdoing was done.
Other political involvement with Bremer
This isn’t the only political involvement Bremer Bank has had lately. St. Paul just launched a program to give a measly $50 to children for college. Instead of using the state of Minnesota’s college fund, which will at least increase with the stock market, and faster than inflation, St. Paul Democrat Mayor Melvin Carter has opted to use Bremer Bank saving accounts that pay around 1 percent per year.
That means that in inflation-adjusted, or real, terms, the $50 will be worth much less by the time children can withdraw it. Instead of buying a book, it might buy a sandwich.
The big beneficiary of this setup is Bremer Bank. It gets deposits that can’t be touched for years, and that it only has to pay a small interest rate on. It also gets free marketing to every parent that has a child in St. Paul. And it plans on encouraging parents to add more to the savings-accounts—which will have a negative after-inflation return—under the guise of “financial education.”
It just so happens that Erin Daddy, Chief Marketing Officer for Bremer Bank, worked as chief of staff for Melvin Carter’s Democratic predecessor, and has fundraised for Carter. Daddy was even selected by Carter to be on the committee that eventually chose Bremer savings accounts to be the program’s “savings” vehicle.
Given there is state money involved in the overall program, maybe the Legislative Auditor should take notice?
Willis Krumholz
Willis L. Krumholz is a fellow at Defense Priorities. He holds a JD and MBA degree from the University of St. Thomas, and works in the financial services industry. The views expressed are those of the author only. You can follow Willis on Twitter @WillKrumholz.
