The NEW YORK TIMES and the WALL STREET JOURNAL are reporting a seemingly improper role California Rep. Maxine Waters—one of my congressional heroes—played in getting bailout cash for Boston-based OneUnited Bank. OneUnited is one of the nation’s largest minority-owned banks.
Waters reportedly brokered a September 2008 meeting at Treasury for the bank, in which its chief executive, Kevin Cohee, took the unusual step of asking for $50 million in bailout money—not proposing a big-picture policy change on smaller, community-owned banks, but just straight up asking for cash. Now it turns out Waters’ husband had previously served on OneUnited’s board and, rather than accept compensation, purchased at least a quarter million dollars in its stock that he may or may not still own. We don’t know because Waters refuses to answer the question. But here’s the part that makes me cringe, from the TIMES story:
In addition, [OneUnited] had been criticized by regulators in 2007 for failing to lend enough money to lower-income residents in Miami. And the Federal Deposit Insurance Corporation admonished the institution in October 2008 for, among other things, providing Mr. Cohee with a Porsche S.U.V., a $6.4 million beachfront compound in Santa Monica, Calif., with views of the Pacific, and a pool and spa
All while the bank is in financial trouble—such that it needs bailout cash. Sigh. Could it be that Wall Street’s white titans don’t have the market cornered on greed and predation?
It should be said that, absent Cohee’s excess and the lending questions (the bank’s record in Mass. has also been criticized), the story is arguably much ado about nothing. OneUnited was in financial trouble because it owned $50 million in Fannie Mae and Freddie Mac stock that, after the federal takeover, became wallpaper. The bank was undercapitalized, and that’s what the TARP money is supposed to fix. It ultimately got just $12 million, after meeting requirements that it raise $20 million in private capital.
Further, from her post on the House Financial Services Committee Rep. Waters has been an outspoken advocate of community-owned banks and public policies that support them. This is a great thing, and she may have believed herself to be pushing a Treasury meeting for the National Bankers Association, which represents black-owned banks, not just for OneUnited.
During this time, Ms. Waters asked Henry M. Paulson, then the Treasury secretary, to host a meeting of Treasury representatives and executives of minority-owned banks suffering from Fannie and Freddie losses, the officials said.
OneUnited officials had separately been pressing for such a meeting, requesting it on behalf of the National Bankers Association, which represents minority-owned banks. Its incoming chairman was a OneUnited executive, Robert Cooper. But it was only after Ms. Waters intervened that the session was approved, Treasury officials said.
So maybe OneUnited played Waters, and turned something designed for the collective good into its own gain. And Rep. Barney Frank had been pushing for helping the bank as well, under the rubric of supporting minority-owned banks. But when her husband’s on the board—why?—and the bank is under scrutiny for not actually lending to poor people and the chief executive is driving around his coastal estate in a Porsche, it doesn’t feel right. We need more, not less public support of local institutions that serve rather than prey upon our neighborhoods. That’s already a tough fight to win, and this sort of thing isn’t helpful.