Amid heightened concerns over his private fund-raising activities, William D. Hassett said he resigned last week as chairman of the New York State Dormitory Authority to devote more time to his real estate business.
Hassett, who has served almost a quarter century in New York State government under three governors, wrote Gov. Mario M. Cuomo on Thursday to submit his resignation. Cuomo appointed Hassett in 1985.
In a telephone interview, Hassett said he rewed largely to devote more time to several business opportunities, including his real estate business, Hassett Properties Inc.
"The real estate market is not what you would call vibrant, but it is returning and I am taking on some new things," Hassett said. "Nine years with the authority is enough." The dormitory authority is one of the largest issuers of tax-exempt bonds in New York State.
But Hassett said an "additional factor" prompting his resignation is the growing concern voiced by regulatory and municipal market officials over his role as a fund-raiser for the Hazelden Foundation, a nonprofit group that provides alcohol and substance abuse treatment.
Since 1989, Hassett has served as one of the chief New York City-area policymakers and fund-raisers for Hazelden. As chairman of Hazelden's New York advisory committee, Hassett helped raise almost $6 million to help the foundation establish a halfway house in Manhattan, often asking Wall Street and municipal bond executives for contributions. Hassett doesn't receive a salary for his work with Hazelden or the authority.
At issue for Hassett are regulatory and private municipal market efforts to restrict the contributions, campaign or otherwise, made by municipal bond executives to state and local officials running for office, and in Hassett's case, officials who also raise money for charities.
Regulations have been proposed by both the Municipal Securities Rulemaking Board, the market self-regulatory agency, and by a group of the largest bond firms in the business. The bond group is led by Frank Zarb, vice president and chief executive officer at Primerica Corp., the holding company for Smith Barney Shearson.
Most of the efforts have targeted campaign contributions, but in recent weeks, charitable contributions have also come under scrutiny.
On Nov. 29, the MSRB wrote aides to New York City Mayor-elect Rudolph W. Giuiliani that the board's rule regulating gifts and gratuities may prevent municipal bond executives from contributing to the transition team's fund-raising efforts.
Under the MSRB's Rule G-20, no municipal securities broker or dealer shall give "any thing of service or value, including gratuities, in excess of $100 per year . . . if such payments or services are in relation to the municipal securities activities of the employer of the recipient of the payment or service." Recently the board said that it may add more teeth to G-20, a rule many Wall Street executives have called weak and rarely if ever enforced.
On Wednesday, a group of the market's largest firms finalized a voluntary ban of campaign contributions, set to go into effect Jan. 1. The private ban appears to be tougher than the MSRB's current gifts rule. Under the voluntary initiative "contributions to a charity would be considered a political contribution if made to, through, in the name of, or to a fund controlled by a state or local candidate or official."
Although Hassett is not directly involved in underwriter selections for the authority, as chairman of the agency he and the board must provide final approval for bond issues and authority underwriter selections.
Among municipal bond executives, Hassett is described as an aggressive fund-raiser. The executives said that he continued to solicit contributions during the summer after the issue erupted in a series of alleged bond market scandals, some of which involved the role of campiagn contributions.
In June, for example, Hassett helped raise $750,000 during a black-tie reception at Hazelden's second annual awards dinner. Co-chairmen of the event included Zarb of Smith Barney; Stephen Friedman, senior partner and chairman of Goldman, Sachs & Co.; and Donald B. Marron, chairman and chief executive officer of PaineWebber Inc.
Hassett said at least one firm during that time said it would not provide contributions to Hazelden, and "in retrospect that might have been the case" with other firms. But he said at no time did he think his role presented an ethical problem. Hassett said both positions are pro bono, and that his role in underwriter selections for the authority is non-existent.
"It just seems outrageous that for doing two bits of public service that somehow this is wrong," Hassett said. "The selection process is very professional and very meritorious."
Hassett said he has discussed the situation with firms participating in the voluntary accord. "Some people in that group said it was not a problem. Some others in the industry said they may feel uncomfortable" with requests for contributions.
Christopher Taylor, executive director of the MSRB, said Hassett's situation "was brought to our attention." Taylor refused to comment directly on the issue. "All that I'm going to tell you is what we are telling" the market, Taylor said. "People ought to be sensitive to questions of conflict of interest."