Will Genshaft's dual role create conflict?

The USF president will sit on the board of a new bank. It's not an unusual arrangement among public university officials.

It's easy to imagine the sort of conflicts that might arise when University of South Florida president Judy Genshaft begins her new role as a bank director and investor.

Genshaft, whose involvement with the proposed American Commerce Bank was disclosed Tuesday, might one day have to vote on a risky loan to a corporation that financially supports the university. She might find herself talking about university business to a corporate honcho and wonder whether she should mention that her bank is looking for clients.

She could simply discover that her bank duties are distracting her from an education job that cost Florida taxpayers about $375,000 in salary and bonus this year.

But USF and bank officials say they have no problem with Genshaft's new role. She is entitled to it, got permission for it and fully disclosed it. There's an upside, too.

"I see it as a huge positive that she can be in touch with folks that maybe she hasn't met before who can help her in her capacity as a university president," said USF trustee Lee Arnold Jr. who, like Genshaft, is a founding director and investor at American Commerce Bank. "I highly supported it."

USF spokesman Michael Reich noted: "You could probably come up with 1,000 hypotheticals. The bottom line is that she has an obligation to ensure that it is not a conflict of interest, and she has said that she will do that."

Founders of the proposed American Commerce Bank unveiled their game plan and lineup of influential directors to the public Tuesday. After obtaining regulatory approval, the Tampa bank will open with three branches and $100-million in capital, all of it footed by the institution's 11-member board. Chairman and CEO Donald A. Adam, a 70-year-old Texas banker and entrepreneur, will provide more than $91-million of the funds. Genshaft, whose contract with USF allows her to sit on two corporate boards, will invest $135,000, according to an application filed with the Florida Office of Financial Regulation.

She he has plenty of company among her university peers.

According to a recent survey by the Chronicle of Higher Education , half of all public university presidents in the United States sit on the board of at least one for-profit company. So do many university faculty.

University of Delaware president David Roselle, for example, received more than $30,000 in 2004 as a director of the Wilmington Trust Corp., a Delaware bank. Adam, the American Commerce CEO, said the president of Texas A&M University and the chancellor of the Texas university system both sat on the board of his former institution, First American Bank of Bryan, Texas, at one time or another.

Closer to home, University of Central Florida president John Hitt has sat on SunTrust Banks' Central Florida board since 1992, the same year he became UCF president. SunTrust spokeswoman Susie Findell said the fact that Hitt oversees thousands of faculty, students and administrators who could potentially be bank clients "is certainly exciting for us."

Betty Castor, a former Democratic candidate for the U.S. Senate and former USF president, said she sat on a regional advisory board at Bank of America while at USF. She received a "modest" fee for the work and was not expected to drum up business for the bank. USF benefited indirectly from the investment and economic insight she gleaned, Castor added.

Not every president takes the opportunity, however.

Florida Atlantic University president Frank Brogan, a former Florida lieutenant governor, does not serve on any for-profit boards. As with Genshaft and some other Florida university presidents, his contract would require him to seek trustee approval before doing so, spokeswoman Kristine McGrath said.

Neither does University of West Florida president John Cavanaugh, who said he has never been asked to sit on a corporate board. He sees nothing wrong with it, however.

"Because universities teach business ethics and things like that, I think it's actually a good thing to have a university president on the board," said Cavanaugh, who chairs the State University Presidents Association, a coalition of 11 public university presidents in Florida.

University of Florida president Bernie Machen's contract allows him to serve on up to two for-profit boards. He serves on one, said spokesman Steve Orlando. At Florida State University, president T.K. Wetherell's contract allows him to serve on up to two for-profit boards with prior board approval. A spokeswoman was unsure if he does.

Arnold, the USF trustee and Genshaft's fellow bank director, dismissed the idea that Genshaft might be stretching herself thin by joining the American Commerce Bank board. It's her call, he said, and "she's an extremely effective user of time."

In an Oct.31 letter to Dick Beard, chairman of USF's board of trustees, Genshaft said she would spend half a day each month on bank business. She also said the bank's outside directors did not intend to pay themselves any cash fees during the first three years in business.

Genshaft did not reply to an interview request Wednesday.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.