Yesterday's Wall Street Journal featured a page-one story noting Rep. Barney Frank's support of the troubled OneUnited Bank in Boston. Rep. Frank earmarked $12 million in TARP funds for the bank, already operating under remedial orders from state banking authorities for bad loan practices and excessive compensation, purportedly because the bank invested heavily in FNMA stock which was made worthless by the government takeover. The Journal describes the earmark:
Mr. Frank says that in order to protect OneUnited bank, he inserted into the bill a provision to give special consideration to banks that had less than $1 billion of assets, had been well-capitalized as of June 30, served low- and moderate-income areas, and had taken a capital hit in the federal seizure of Fannie Mae and Freddie Mac.
"I did feel that it was important to frankly try and save them since it was federal action that put them into the dumper," Mr. Frank says.
Treasury says that OneUnited's application for TARP funds was subject to the same review process as other banks faced. The Journal nevertheless quotes South Carolina Governor Mark Sanford explaining the larger forces at play: "If you've got the right lobbyist and the right representative connected to Washington or the right ties to Washington, you get the golden tap on the shoulder." .
Our friend Norm Carpenter writes: "It probably helped that the bank was the only minority owned bank in Massachusetts (!), had Frank as a supporter and one time depositor, and, as a clincher, had the husband of Maxine Waters (D-Calif!!) on its board until last spring." Rep. Waters said she was unaware that the bank received TARP funds. OneUnited was "just a small" bank, she said.
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