Federal examiners protested help for politically connected bank, e-mails show

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    Apr 07, 2011 2:49 PM GMT
    http://www.washingtonpost.com/politics/federal-examiners-protested-help-for-politically-connected-bank-e-mails-show/2011/03/31/AF99aloC_story.html

    A decision in late 2008 by top officials of the Federal Deposit Insurance Corp. to help a politically connected bank in Boston left federal bank examiners there angry enough that some called it a “travesty of justice,” according to internal e-mails obtained by The Washington Post.

    The chairman of OneUnited Bank, a friend of Rep. Maxine Waters (D-Calif.), had rendered it insolvent through lavish spending and bad investments, according to the examiners’ written accounts. But by the end of that year, after Waters arranged a key Treasury Department meeting for the bank, it had won a bailout loan and a unique exemption from the FDIC’s accounting rules.

    “There are some really good people expressing very strong opinions regarding what they view as a travesty of justice regarding the special treatment this institution is receiving,” acting regional director John M. Lane warned in a March 2009 e-mail to Christopher J. Spoth, a senior FDIC consumer protection official.

    The claim that OneUnited benefited from assistance organized by Waters — whose husband held substantial stock in it — lies at the heart of unresolved House Ethics Committee charges. A special subcommittee alleged last spring that Waters’s actions related to the bank had brought discredit to the House, a claim that she has rejected.

    The ethics charges were to be heard at a special hearing postponed last fall by then-chairman Zoe Lofgren, a fellow California Democrat, partly on grounds that it was too close to the election. Rep. Jo Bonner (Ala.) the panel’s senior Republican, protested that decision, telling a closed meeting on Sept. 23 that “if, God forbid, this thing goes into the 112th Congress, I just think we are stained for life in terms of our inability to get this thing done,” according to a transcript.
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    Apr 07, 2011 3:12 PM GMT
    And that makes this bank different from all the other (much larger) banks that also won bailouts and other considerations while the former CEO of Goldman Sachs was Treasury Secretary, how?

    Frankly, I wish the whole Waters issue would be dealt with already, but I do not think Congress wants to because it will bring to light the rampant cronyism of the bailouts.
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    Apr 07, 2011 3:36 PM GMT
    Christian73 saidAnd that makes this bank different from all the other (much larger) banks that also won bailouts and other considerations while the former CEO of Goldman Sachs was Treasury Secretary, how?

    Frankly, I wish the whole Waters issue would be dealt with already, but I do not think Congress wants to because it will bring to light the rampant cronyism of the bailouts.


    I agree with you there. This example is however far more blatant than perhaps the wink wink nudge nudge that happened with respect to the bigger banks where there was undoubtedly political influence at play. That said, I can also understand the argument that at least with respect to the bigger banks a better case could be made for systemic risk while in this case, it was to protect the husband/finances of a Congresswoman.
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    Apr 07, 2011 3:42 PM GMT
    riddler78 said
    Christian73 saidAnd that makes this bank different from all the other (much larger) banks that also won bailouts and other considerations while the former CEO of Goldman Sachs was Treasury Secretary, how?

    Frankly, I wish the whole Waters issue would be dealt with already, but I do not think Congress wants to because it will bring to light the rampant cronyism of the bailouts.


    I agree with you there. This example is however far more blatant than perhaps the wink wink nudge nudge that happened with respect to the bigger banks where there was undoubtedly political influence at play. That said, I can also understand the argument that at least with respect to the bigger banks a better case could be made for systemic risk while in this case, it was to protect the husband/finances of a Congresswoman.


    I love our magical bipartisan moments...

    I'm actually not sure she did anything wrong, exactly. Certainly, it looks bad but getting someone a meeting with Treasury doesn't guarantee any action.