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Waters Bank Was Weakest To Get Bailout $

From American University interns working at MSNBC:

Bank in Maxine Waters case was weakest to get TARP help

Investigative Reporting Workshop, American University

By Wendell Cochran

The bank at the center of a House ethics investigation of U.S. Rep. Maxine Waters was the weakest to receive funds from the government’s Troubled Asset Relief Program at the time of its rescue, according to an analysis by the Investigative Reporting Workshop.

When then-Treasury Secretary Henry Paulson announced creation of the so-called "Capital Purchase Program" in October 2008, he said it was directed at "healthy institutions." Nevertheless OneUnited Bank of Boston received a $12.1 million capital injection from the Treasury Department on Dec. 19, 2008. The money has not been repaid, according to Treasury Department documents.

Also, the banks that received TARP were supposed to be ‘too big too fail.’ Otherwise, why didn’t we bailout out Lehman Brothers and everyone else?

Records show that as of Sept. 30, 2008, the latest quarter before the investment, OneUnited had "Tier 1 capital" of just 1.8 percent of assets. Of the 363 banks that got TARP money in the fourth quarter of 2008, at the height of the financial crisis, that was the lowest Tier 1 ratio.

In fact, none of the 987 banks that got TARP money between October 2008 and December 2009 reported a lower ratio in the quarter before they received federal cash. As of March 31, 2010, 16 TARP banks had lower Tier 1 ratios then OneUnited’s 4.98 percent

The bank had other problems besides its weak capital position. OneUnited is one of only a few banks to be under a federal supervisory enforcement order at the time it received TARP funding.

On Oct. 27, 2008, the Federal Deposit Insurance Corp. and Massachusetts Division of Banks issued a cease-and-desist order to OneUnited. The order, which is still in effect, said the agencies "had reason to believe that the Bank had engaged in unsafe or unsound banking practices and violations of law."

The order cited the bank’s capital position, poor oversight of officers, "excessive" executive compensation, weaknesses in loan underwriting and "speculative investment practices." 

The agencies gave the bank a detailed plan of corrective action. It has not yet met all those goals

OneUnited officials did not respond to e-mail messages and telephone calls seeking comment on this story…

OneUnited Bank’s problems, like those of many banks, are tied to the nation’s housing collapse. But unlike many banks, its losses are not primarily due to bad loans. Indeed, a statement from Chairman and CEO Kevin Cohee on the bank’s website says, "we never participated in subprime lending."

Rather, it invested heavily in securities issued by the Federal National Mortgage Association  and the Federal Home Loan Mortgage Corp. — Fannie Mae and Freddie Mac. The two congressionally chartered companies were taken over by the government in September 2008.

Federal records show that upward of a third of the OneUnited’s investment portfolio was tied to those two shaky institutions.

Which may help explain Ms. Waters’ vehement attacks on any attempts at oversight of Fannie Mae and Freddie Mac.

According to the FDIC report, in the third quarter of 2008, OneUnited had to write off more than $50 million when its investments in Fannie Mae and Freddie Mac stock became virtually worthless after the government takeover, which wiped out shareholder value. Even before the takeover, the stock had lost a large part of its value

Obviously, this is all due to racism.

This article was posted by Steve on Tuesday, August 10th, 2010. Comments are currently closed.

5 Responses to “Waters Bank Was Weakest To Get Bailout $”

  1. AcornsRNutz says:

    Well, I hope these interns didn’t have any real plans of becoming journ-o-lists. Reporting things like this will get you nowhere fast.

  2. oldpuppydixie says:

    You can BET that dem powers that be in the house will be very, very, very hard on Maxine Waters, making it QUITE CLEAR to her that she had better not get caught again!!

  3. proreason says:

    They are like characters from a Dick Tracy or a Batman movie. They don’t even need makeup.

    Maxime, Barney, the Witch, Reid, Schumer, Biden, the Energizer Bunny (Weiner), Rangel, Nadler

    If you had invented them ahead of time you would be hailed as a comic genius.

    And they RULE us. I can’t get over it. I just can’t.

  4. NoNeoCommies says:

    How many of her relatives did the bank have to hire?

    • Right of the People says:

      As many as she could produce. Of course they had to be “show” jobs since you wouldn’t expect anyone related to her to actually work, would you?

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