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E-Mails Show Treasury Knew Bank Championed by 2 Lawmakers Was Weak

Treasury gave $12 million in bailout money to OneUnited bank, championed by two lawmakers, even though it knew the bank was weak and had a spotty record of lending to low-income homeowners, internal e-mails show.

Prior to giving a $12 million piece of the bailout to OneUnited bank, the Treasury Department knew the bank was weak and had a spotty record of lending to low-income homeowners, according to internal Treasury e-mails obtained by Judicial Watch, a conservative watchdog group.

This is hardly the first time the feds learned of problems at OneUnited, the minority-owned bank that was championed by Reps. Maxine Waters and Barney Frank. Waters, whose husband had a financial stake in the bank, currently faces ethics charges for the assistance she provided to it.

Just two months before the bank’s bailout, regulators at the FDIC had accused OneUnited of unsound banking practices and excessive executive perks, which included a Porsche SUV that was registered to the bank but listed at the address of the bank’s CEO.

The e-mails show that around the time of the bailout, the Treasury and the FDIC had been communicating about OneUnited, and the Treasury knew that in both Massachusetts and Florida, the bank’s lending record was, based on Community Reinvestment Act ratings, troubled at best. Here’s The Hill, explaining:

One e-mail produced from the FOIA request sent from former Treasury Senior Adviser Michael Scott to Director of the Office of Financial Institutions Mario Ugoletti is dated Sept. 15, 2008, months before banks were selected to receive bailout funds. The e-mail cites a 2004 evaluation criticizing the bank’s service to the state of Massachusetts. The report noted that in 2002 and 2003, the bank administered just one loan.  

… "In Florida, the institution received a CRA rating of ‘Substantial Noncompliance,’ which also represented the subordinate rating for the Lending Test…”

The e-mails also include some internal Treasury correspondence in the lead-up to the September 2008 meeting between Treasury officials and OneUnited executives who were representing the National Bankers Association, a trade association for minority-owned banks.

As we’ve noted, Rep. Waters, D-Calif., is accused of having violated House ethics rules when she helped arrange this meeting, at which much of the discussion focused on the plight of OneUnited. (The meeting, as the e-mails show, was also attended by Waters’ chief of staff, Mikael Moore, who is also her grandson.)

Waters’ husband, Sidney Williams, had at least a half million dollars’ worth of investments in the bank in 2007, and was a board member at the time of the meeting.

Waters has maintained that the case against her has no merit, and her involvement was driven by a desire to help minority banks, not to protect her husband’s financial stake. Waters currently awaits public hearing that will likely not occur until after midterm elections.

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