An ethics investigation into Rep. Maxine Waters (D.-Calif.) has found that “connections to prominent people” were a consideration in giving millions of TARP dollars to an unqualified failing bank in which her husband was heavily invested.
Now Rep. Darrell Issa (R.-Calif.), ranking member of the House Committee on Oversight and Government Reform, is investigating the Federal Deposit Insurance Corporation (FDIC) saying that this and other questionable practices “raises concerns that the FDIC may be making decisions based on factors other than protecting the best interests of taxpayers and depositors.”
Waters’ husband, Sidney Williams, served on the board of directors for OneUnited Bank from January 2004 to April 2008 and owned nearly 4,000 shares of its stock worth $352,000 before the value plummeted in September 2008 because the bank was heavily invested in Fannie Mae and Freddie Mac.
“If OneUnited failed, (Waters’) husband’s investment in OneUnited would have been worthless,” said the House Committee on Standards of Official Conduct in finding Waters violated ethical rules.
Although Waters maintains she did not pull any strings or write legislation that ultimately allowed the financially strapped bank to claim $12 million in federal funds, documents show a clear link to Waters and Rep. Barney Frank who quietly inserted language into the TARP bill specifically designed for OneUnited.
|Cartoon courtesy of Brett Noel|
And now, the bank is behind on the six repayments it owes the government for the taxpayer paid loan.
“Decisions by the FDIC should be guided solely by the relevant law and the facts concerning each regulated institution’s financial condition,” Issa told Sheila Bair, chairman of the FDIC in a Sept. 21 letter obtained by HUMAN EVENTS.
“Factors such as ‘public relations’ and the friends of particular bank may have in Washington should play no role in the FDIC’s decisions with respect to any institution it regulates,” Issa said.
Issa gave the FDIC until October 4 to answer numerous questions and to give “a full and complete explanation of any FDIC practice or effort to identify banks that have connections to prominent people or might cause press or public relations problems.”
The purpose of the Troubled Assets Relief Program (TARP) was to assist only stable and viable banks, yet the stability of OneUnited was precarious at best.
According to a September 17 article in the Washington Post, federal regulators expressed concern about the bank’s expenditures that included a Bentley, a Porsche and a self-proclaimed yoga “guru to the stars” who was paid $150 an hour.
“The FDIC was further surprised that the bank, which markets itself as an ally of the most impoverished neighborhoods in Los Angeles, Miami and Boston, appeared to have paid for club memberships and for parties featuring Hollywood celebrities,” the Post said citing sources.
Documents uncovered earlier this month through a Judicial Watch lawsuit show that prior to the bailout, OneUnited Bank received a “less than satisfactory” assessment and problems with its lending practices.
For example, the bank was supposed to help minorities and poor people but a Home Mortgage Disclosure Act review from 2002 through 2003 revealed only one loan had been approved and zero Community Development Loans were reported.
The documents also include a January 3, 2009, email from Brookly McLaughlin, Treasury’s deputy assistant secretary for public affairs, to former Assistant Treasury Secretary Neel Kashkari highlighting Frank’s intervention in the OneUnited Bank bailout and calling attention to significant concerns about the OneUnited transaction, according to Judicial Watch.
“According to the WSJ (Wall Street Journal) Barney Frank told them that he specifically put section 103-6 in the bill in order to help this particular bank,” McLaughlin wrote.
“Apparently this bank also had an issue with a Porsche that the regulators had made them get rid of. The story will run later this week and will highlight three banks that they think raise questions and are not ‘healthy’ banks,” McLaughlin said.
As reported in the Jan. 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide bailout funds to healthy banks to jump-start lending, Judicial Watch said.
“These emails suggest that without the corrupt intervention of Barney Frank and Maxine Waters, OneUnited would not have gotten a $12 million taxpayer bailout,” said Tom Fitton, Judicial Watch president.
“And these documents show that this so-called community bank wasn’t actually lending much to the ‘community’ that Frank and Waters were purporting to help,” Fitton said.
Federal regulators maintain that no political influence was exerted on behalf of the bank.
Waters responded to the ethics charges in an August 13 press conference, and conceded the case was about special access, or rather the lack of access for the disenfranchised.
“This case is not just about me,” Waters said. “This case is also about access. It’s about access for those who are not heard by decision makers, whether it’s having their questions answered or their concerns addressed.”
Waters said her phone call to then-Secretary of the Treasury Hank Paulson was “during the worst economic crisis this nation faced in 80 years was to provide access to the National Bankers Association (NBA), which was concerned about the fact that Treasury had placed Fannie Mae and Freddie Mac into conservatorship.”
“It was represented to me that many minority banks had overleveraged their capital in Fannie and Freddie, and the association wished to know whether or not their members’ capital was lost or if the government was responsible for protecting the capital that they had invested in preferred stock. They had attempted to get a meeting with the Treasury Department, but had received no response. And so, they sought me out to assist them in setting up a meeting,” Waters said.
However, the Ethics Committee says that on Sept. 9, 2008, it was the CEO of OneUnited and its senior counsel, who met with Treasury officials.
“No other representatives from NBA or any other NBA member banks were present,” the Ethics Committee said.
Secretary Paulson granted Waters’ request for the meeting “because she was a member of Congress,” the committee said.
The Ethics Committee chaired by Zoe Lofgren (D.-Calif.) has been unable to reach an agreement as to when Waters’ public trial will be held.
Last week, (Sept. 24) Lofgren instead turned her attention to the plight of illegal immigrants, and shocked lawmakers on both sides of the aisle by calling as a surprise witness, comedian Stephen Colbert.