For all their railing against the evils of big bad banks, Democrats aren’t shy about jumping into bed with them when the price is right. And they don’t much care whether taxpayers lose out in the process. Rep. Barney Frank, Massachusetts Democrat, and his cohort Rep. Maxine Waters, California Democrat, are leaders in making support for delinquent banks into a respectable progressive cause.
OneUnited Bank, based in Mr. Frank’s home state, landed more than $12 million in Troubled Asset Relief Program money last winter thanks to the congressman’s insertion of language into the bill that gives the bank special consideration. Mrs. Waters, whose congressional campaigns benefited from OneUnited executives’ donations of more than $12,000, also helped the bank by arranging a meeting between bank executives and government officials shortly before the bailout bill’s passage.
Congressional financial-disclosure forms showed Mrs. Waters had up to $500,000 worth of stock in the company until 2004 and that her husband, Sidney Williams, was an investor who profited to the tune of $250,000 from a related bank merger. Mr. Williams also served on the bank’s board until early 2008.
But the sweetheart deals aren’t the worst of the bank-bailout story. Now OneUnited, which, as a decidedly unhealthy bank never even met the criteria for bailout funds in the first place, is failing to pay interest on its government handout - and it probably never will.
In November, the bank missed its third dividend payment in a row. Not counting the most recent sum it failed to fork over, the bank now owes the U.S. government more than $300,000. But because OneUnited has no holding company, it is not bound to pay dividends at all, which means it is essentially getting an interest-free loan, courtesy of Mr. Frank and Mrs. Waters.
Central Pacific Financial of Hawaii, which also has missed multiple dividend payments, was the only bank besides OneUnited to get funds from the bill following questionable congressional intervention. In July, it reported a loss of $146 million - due in large part to investments in the collapsing California housing market - and before receiving federal aid had been told by its primary regulator it did not meet standards for receiving help. A federal funds injection looked far from likely for Central Pacific - until Sen. Daniel K. Inouye, Hawaii Democrat and one of the bank’s founders, made a call to federal regulators. Two weeks later, the bank announced Treasury would give it $135 million.
The moral of the story is simple: When Democrats rail about the evils of unregulated business and the need for federal controls, remember that this is what they have in mind.