Posted on October 6, 2010

The Troubling Bailout of OneUnited Bank

Editorial, Washington Post, October 5, 2010

{snip} A minority-owned institution with close ties to Rep. Maxine Waters (D-Calif.) of the House Financial Services Committee, OneUnited got $12 million from the Troubled Assets Relief Program in December 2008, thanks in part to a provision inserted in the TARP bill by the committee’s chairman, Rep. Barney Frank (D-Mass.). OneUnited has since failed to pay the government the $900,000 it owes {snip}.

Ms. Waters now faces a House investigation on charges she improperly aided OneUnited, whose past directors include her husband; she denies it. {snip} Aware of Ms. Waters’s potential conflict of interest, he [Barney Frank] told her to steer clear of the bank’s plea for aid and said he was “taking care of it.” {snip} All his bill did, Mr. Frank says, was give such banks a shot at TARP cash: Funding them or not was Treasury’s call.

{snip} But OneUnited specialized in serving itself. Indeed, the Federal Deposit Insurance Corp. cracked down on a top officer’s use of bank funds for a Porsche and a couple of mansions. Other regulators had consistently noted OneUnited’s failure to meet community credit needs. Mr. Frank says he knew none of this–but he also made no effort to check OneUnited out beyond what he learned from Ms. Waters and others lobbying on its behalf.

{snip} Internal e-mails make clear they [TARP officials] believed Mr. Frank and Ms. Waters were interested in OneUnited, in part because Ms. Waters had sought aid prior to Mr. Frank’s intervention and in part because Mr. Frank’s staff called after the TARP bill passed. A TARP inspector general later confirmed that OneUnited was shown “greater flexibility” than others but found no proof of improper favoritism, a conclusion Treasury officials endorse. {snip}

So a dodgy bank with little going for it except access to powerful members of Congress gets $12 million for no evident public purpose and with little chance taxpayers will ever see that money again. {snip}