By Mark Waite

An interview with Byron Georgiou, a Democratic candidate for the U.S. Senate in the 2012 election didn’t turn out to be another run-of-the-mill chat with an underdog politician.

Georgiou imparted his thought-provoking views about being one of two Nevadans who served on the 10-member Financial Crisis Inquiry Committee. The committee held 19 nationally-publicized hearings, heard testimony from 700 witnesses and reviewed millions of pages of documents before submitting their report to President Obama in January.

It wasn’t hard to go from that position to a decision to get involved in politics.

“The things I learned in the course of this commission work I found extremely distressing. I think that the private sector mistakes that were made and the improprieties that were perpetrated in the course of the securitization of mortgages for example, that brought us to both an unprecedented housing bubble and an unprecedented collapse were inexcusable and to this day really no one has been held accountable. There was really a profound lack of accountability in this whole process,” Georgiou said.

He blamed mortgage brokers who were paid a percentage whether the mortgage was ever paid back as well as underwriters for financial firms who bought the mortgages and got paid without regard to whether the securities performed as intended.

Georgiou said a central issue faced by the committee was: How did the country in 2008 end up with a dilemma of either allowing the financial system to collapse or bail out Wall Street and the big banks that caused the crisis with billions of dollars of taxpayer money?

“Frankly, the sitting members of the Senate and House of both political parties are overly beholden to the big banks on Wall Street. They rely on them to finance their campaigns. They rely on them for advice on how to act and I think the citizens of Nevada are sick and tired of it,” Georgiou said.

He sounds like the typical politicians when he notes Nevadans have the highest unemployment rate, highest rate of home foreclosure, personal bankruptcy filings, highest rate of top to bottom housing prices and highest percentage of underwater homeowners.

“In order for us to move out of this situation of economic gridlock, we really need to write down the mortgage debt, the principal amount of the mortgage debt down to the value of the home so people can have some choice other than their current choices,” Georgiou said.

By “we” he means the banks that are holding the debt. “The debt has to be written down and we have to figure out what the best and most effective method of doing so is.”

“This economy in America has always thrived because middle class people had money to spend to stimulate the economy,” he said. “Well, right now people don’t have it for a whole combination of reasons.”

Deregulation of the financial industry in the Clinton and Bush administrations and the failure of the Securities and Exchange Commission to police investment banks led to the economic disaster, Georgiou said. Investment banks were allowed to leverage assets tremendously, he said.

“If you have $1 of capital for every $40 of assets that you have on your balance sheet, all you have to do is your assets have to move 3 percent from 100 percent to 97 percent in value and you’re bankrupt basically and that’s really what happened to all the major investment banks,” he said.

Georgiou ran unsuccessfully for a Nevada Congressional seat in 1990 and 1992. He was a co-founder of the law firm of Georgiou, Tosdal, Levine and Smith. Georgiou was a legal affairs secretary to California Gov. Edmund G. Brown Jr. from 1980 to 1983.

His company, Georgiou Enterprises, includes interests ranging from all-electric powered vehicles in North Las Vegas to a home builder in Dayton, to providing information technology and electronic health records for doctors.

But he’s proudest of recovering $7 billion, or 30 percent of their investments, for Enron investors.

“I did a lot of work in my life that required standing up to the established interests and one of the things I don’t see happening in Washington is very much of that,” Georgiou said. “I just don’t see how we can expect that if we leave the same people in charge who presided over this mess for the last 20, 30 years how can we expect anything different to occur? Both of my opponents in this race are career politicians who have been in Washington a long time and were in elected office before that. I don’t see anywhere where it is written in the Constitution where anybody intended you have to be a career public official to run for office.”

Georgiou didn’t want to dwell on criticism by U.S. Sen. Harry Reid, D-Nev. that he later regretted placing Georgiou on the Financial Crisis Inquiry Commission. Reid told the Stephens Media Group he was misled about Georgiou’s credentials, including his failed Congressional bids, as well as lawsuits filed against him and liens on his property during the appointment process. Most of those matters were resolved.

Georgiou said Reid changed his view because he’s supporting Berkley in the race. Some Democrats would rather have Berkley in an uncontested primary to save her resources for the general election against Republican U.S. Sen. Dean Heller.

Georgiou joined Obama in riling against the income tax and estate tax cuts for millionaires and billionaires enacted during the George W. Bush administration that led to such a huge deficit.

“It seems to me putting Social Security and Medicare on the chopping block while we seem to have found plenty of money to bail out the big banks on Wall Street seems to me to be preposterous,” he said.

Georgiou said he had voted against the Bush tax cuts, adding his Democratic opponent voted for it. He said Berkley also supported the Wall Street bailout.

“I believe in the general economic notion that if you take risks in a business, if you succeed you’re entitled to the upside and if you fail you’re accountable for the downside, not to turn to taxpayers to be bailed out on the downside,” he said.

While he’s a Democrat running in a Republican county, Georgiou said that last statement is a philosophy that will appeal to the many Libertarian-minded residents of the state.

“A lot of people don’t even realize what we continue to do. We continue to lend money at the discount window to the big banks at 50 basis points, half a percentage point, and they lend it back to the government to buy treasury securities at 3 percent. It’s basically welfare for the bankers,” Georgiou said.

The nation has come out of past recessions based in part on the stimulus housing construction provides, he said. Sadly, that additional housing is not going to happen while there’s this large overhang of foreclosures.

“The real wages for the middle class have been essentially stagnant at a time when wages and earnings for the wealthy segment of our society have increased dramatically and that’s not sustainable in the long haul because America’s strength has been the strength of the middle class,” Georgiou said.

The government should let the Bush tax cuts expire for the millionaires and billionaires at the least, he said, they should probably revamp the entire tax code.

When it comes to the Obama health care plan, Georgiou thinks the insurance needs to be mandatory to be broadly based.

It’s still 11 months until the primary and 16 months to the general election. Georgiou said he will finance a lot of his candidacy from his own money.