Journalism in the Public Interest

Email Warned That Bank Up For Bailout Was ‘Disastrous’

Anonymous tip warned Treasury that United Commercial Bank was troubled, but the bank still got almost $300 million. Now the bank has failed and two executives are facing criminal charges.


The U.S. Treasury Department had just announced preliminary approval of $299 million in taxpayer support for California’s United Commercial Bank when the email landed.

“Wow… you guys are either making a big statement with this one or your ‘gatekeeper’ is incompetent,” warned the anonymous missive, sent in October 2008 to the Treasury and obtained by ProPublica through a Freedom of Information Act request. “This is one of the worst loan portfolios in the country run by one of the worst CEOs (and a lying CEO at that).”

The warning went unheeded. Treasury pushed ahead and provided United Commercial Bank with funds under a part of the Troubled Asset Relief Program that was aimed at bolstering healthy banks.

But within months of getting bailout funds, things began to unravel. The bank disclosed publicly in May 2009 that it was restating its 2008 financial reports. It announced in July it would stop paying dividends on its stocks, including the shares bought by Treasury. In September, the bank’s audit committee wrapped up an internal investigation that found “deliberate and improper actions and omissions” by certain bank officials. And in November 2009, United Commercial Bank became the first bailout recipient to fail, wiping out Treasury’s investment of almost $300 million.

Another bank, Florida-based U.S. Century, went into a similar slide right after receiving TARP funds, as we recently reported. That bank is now on the verge of collapse, weighed down by poor-performing loans, some of them to insiders. (No executives at U.S. Century have been accused of wrongdoing.) While no emails warning the government against the Florida bank have surfaced, it was also approved for bailout funds — $50.2 million — despite red flags.

In the case of California’s United Commercial Bank, former executives now face civil and criminal charges. Federal officials also are moving to bar former CEO Thomas Wu and nine other former executives from the banking industry altogether, citing their “personal dishonesty” and “a pattern of misconduct.” Two former executives — though notably, not the CEO — are the first senior executives at a bailed-out bank to face criminal charges. They are accused of hiding the bank’s loan losses from investors, auditors and regulators.

When the anonymous tip reached the Treasury, timestamps on the email chain show that it was quickly forwarded to upper-level Treasury officials, including Neel Kashkari, who was then Assistant Treasury Secretary and in charge of TARP. (A spokesman for the investment management giant PIMCO, Kashkari’s current employer, said he was traveling and unavailable for comment.) Other Treasury officials pulled the bank’s securities filings, which disclosed that the bank’s auditor, PricewaterhouseCoopers, declined to continue on as its auditor.

The email was also forwarded to several FDIC officials with a note that said, “We were provided the following feedback on UCBH,” United Commercial Bank’s parent company. “Thought you should be aware. Let us know if you received similar feedback and how/if you are responding.” The Treasury Department funded the bank only after its primary regulator certified it was financially viable. That regulator was the FDIC.

“You always have to take anything you’re hearing from outside with a grain of salt,” said former Treasury official Jeb Mason, who noted that people giving negative feedback could have a short bet against the institution and therefore a financial interest in seeing it fail. “The best thing anyone at Treasury could reasonably do is pass that input along to examiners who are paid to make these judgments regarding an individual institution’s health.”

Both the Treasury Department and the FDIC declined comment on United Commercial Bank and how the email warning was investigated. A 2010 report by the FDIC’s inspector general, however, provides some clues.

“The FDIC and the Treasury considered the e-mail,” the report said. “But because the e-mail was from an anonymous source, its allegations were unsubstantiated, and UCBH met the Treasury’s eligibility criteria, [the FDIC’s Division of Supervision and Consumer Protection] did not change its recommendation decision.”

And yet, the report also noted that the FDIC “was aware of certain negative information” about United Commercial Bank. If the agency had acted in 2008 to start giving the bank a more intensive type of review typically reserved for more complex institutions, the report said, “the FDIC may have had additional information upon which to base its October 2008 funding recommendation.”

TARP’s bank programs as a whole are now turning a profit—though the same can’t be said of other parts of TARP or the overall bailout, which includes the takeover of Fannie Mae and Freddie Mac. So far, 14 out of the 707 banks receiving Capital Purchase Program money — the program that funded United Commercial Bank — have failed, according to a Treasury official. That’s roughly 2 percent.

Barry Schmittou

Oct. 20, 2011, 11:20 a.m.

Please help to get a Federal or local grand jury to seek prosecution of crimes like these.

Please forward the evidence I’ve filed in Federal Court as seen by pasting :

The evidence includes :

(1) Wachovia Bank laundered $378 billion for Mexican drug cartels that are responsible for 35,000 murders. No one was prosecuted !!

(2) Bank of America, American Express Bank International and Western Union also laundered drug money and no one was prosecuted.

(3) AIG, JP Morgan Chase, MetLife, Prudential, Unum, rigged huge bids and no one was prosecuted!!

The next two paragraphs are exact quotes from the Court filing (linked above) that describes identical crimes that are being committed by multiple insurance companies that made huge contributions to Obama and Bush and spend millions lobbying every year :

“Warning President Obama of Mass Suicides, Deaths and Endangerment in Five Different Types of Insurance Caused By Obama’s Campaign Contributors at Multiple Insurance Companies That Ignore Multiple Sclerosis, Brain lesions, Cardiac Conditions of Many Patients, and Cause So Many Suicides of Injured Workers

WFAA – TV in Dallas Texas Wrote :

“a remarkable number of Texans committed suicide because they could no longer endure the pain caused by their injuries and they had been repeatedly turned down for worker’s comp care.”

(end of quote)

The Court document linked above also has links to official government documents that prove AIG, JP Morgan Chase, MetLife, and Prudential committed multiple frauds.

The Feds will not prosecute any of this and the Court denied my request for a Special Prosecutor.

I am trying to get someone on Federal or local grand juries to seek prosecution as seen at :

There is some overlap with the overwhelming evidence seen at the links. I’ve had surgery on both eyes but am working on a more succinct version.

I am still shocked by the fact Wachovia Bank laundered $378 billion for Mexican drug cartels that are responsible for 35,000 murders. Obama prosecuted no one !! Bush prosecuted no one at AIG when they rigged huge bids to increase their sales of workers comp policies, while at the same time numerous injured workers committed suicide because they could not get their injuries treated (as seen in the quotes above)

When you read stories you wonder—why are banks unhappy of the new regulation ? If you can’t be trusted to do the right thing then you have to be watched—it’s sad but that’s the truth—Our country is lost—
How do we acquire good values ? if it;s not at church then where ??

This issue is another SOLYNDRA.  This issue needs another FULL BLOWN INVESTIGATION.  Good reporting!  Keep it up.

Stephanie Palmer

Oct. 20, 2011, 1:37 p.m.

Please tell me that the executives are going to prison for what they’ve done. Maybe they will be the first of many. I can only hope.

Quote:  Federal officials also are moving to bar former CEO Thomas Wu and nine other former executives from the banking industry altogether, citing their “personal dishonesty” and “a pattern of misconduct.”

I daresay that almost all of the big banks as well as much of Wall Street can be judged to meet those criteria.

But what do you expect, after eight years of a Republican Administration featuring a top law enforcement official - the Attorney General of the United States of America - whose claim to fame in American history is saying some variation of “I do not recall.” 72 times before a Senate hearing? 

If you want “Business-with-a-capital-B” in America to be honest, then you vote honest people into government; i.e., you never, ever vote Republican.  You won’t get 100% honesty out of the Democrats, but at least you won’t have an America whose “pattern of misconduct” starts at the very top.

The question:  How much would it really hurt America (America, not just the top 0.1%) if we broke the big banks up and plowed Wall Street under?  About as much as if we razed D.C.‘s “K” Street and turned it into a park, IMHO. 

Congress would surely function better; there would be literally hundreds of lawmakers who would have the time to do their jobs if they were not constantly meeting with banking’s, Wall Street’s, and “K” Street’s lobbyists.

A really interesting character to interview would be Dennis Wu.  UCBH’s problems were a long time coming.  Wu was CFO and should know quite a bit about the books.  He is now reachable at

Here is his bio:

Mr. Dennis Wu served as the Chief Financial Officer and Executive Vice President of UCBH Holdings Inc. and its subsidiary United Commercial Bank from June 9, 2005 to March 3, 2008. Mr. Wu served as a Principal Accounting Officer of UCBH Holdings Inc. until March 3, 2008. He has a 37-year career at Deloitte & Touche LLP where he served as a National Managing Partner for its Chinese Services Group since June 2000. He served as a Partner of Deloitte from 1979 to 2004 and help to grew its Chinese Services Group into a seamless entity within Deloittes global structure. Mr. Wu served as a Partner-In-Charge of Deloitte’s Enterprise Group in Northern California which includes its banking, savings and loans, securities brokerage, insurance, real estate, health-care, and not-for-profit clients. He has been a Director of Recology (Formerly, Norcal Waste Systems, Inc) since July 2008 and Solar Power, Inc. since July 2011. Mr. Wu served as a Director of UCBH Holdings Inc. and United Commercial Bank since May 19, 2005.

Anonymous again

Oct. 24, 2011, 12:56 a.m.

Interesting birds of feather are on this list:

Particularly interesting birds would Sycip and Fong to discuss lending policy to “friends and family” and the international transfers of flight capital from Asia to the U.S.

Bonnie Russell

Oct. 24, 2011, 9:21 a.m.

Seems as if the nation is only now learning some thugs wear Brooks Brothers suits.  Shame on Americans for falling asleep at the wheel.

By the way, I first wrote about the physicians pimping drug companies in 2010

So almost a year later is mainstream media cathing up.  Duh.

This article is part of an ongoing investigation:
Eye on the Bailout

Eye on the Bailout

As big banks return their TARP money, Fannie Mae and Freddie Mac continue to be a drain.

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