Our One-Term President

Via-The American Spectator


By Tom Bethell

It's a good bet right now that Barack Obama will be a one-term president. The enthusiasm that once shielded this hyphenated American has dissipated. His supporters, although still numerous, have discovered that he lacks Bill Clinton's centrist instincts, and even his charm. The anti-Bush mania that swept the country from 2006-09 finally burned itself out.

It's always possible that the Republicans will nominate a dud. That has happened so often that it should even be considered likely. Not since 1980 has there been an outstanding GOP candidate. But at this stage it's too difficult to predict the 2012 nominee, so I'll drop that subject.

Most important from Obama's point of view is the economy. It is still in poor shape and is likely to stay that way. The unemployment picture has not brightened. In California it is 12.6 percent, while in Michigan it is 14.9 percent. In Europe, meanwhile, the economic picture ranges from uncertain to grave and I'll have more to say on that.

I was glad to hear the news media's unofficial position on Obama's prospects the other day when I bumped into an old friend, Jim Barnes, the political correspondent for National Journal. He was at a cocktail party that our esteemed publisher gave for Bob Tyrrell's excellent new book, After the Hangover: The Conservatives' Road to Recovery. I last saw Barnes when he was a researcher at the American Enterprise Institute in the early 1980s. He was nonpartisan then and so he remains today -- as befits the creator of National Journal's Insiders Poll. Sometimes he appears on Gwen Ifill's PBS program Washington Week, which features three or four Washington journalists who help Ms. Ifill frame the conventional wisdom of the week.

When I asked Jim Barnes about Obama's political chances he said he had heard talk of the parallel between the president's position now and that of Ronald Reagan in 1982. Reagan had been in office for a little more than a year and the economy wasn't doing so well then, either. But it recovered strongly in 1983, and of course Reagan easily won reelection. So this was a reason for Obama's supporters to look on the bright side.

A week later I heard the same analysis on Meet the Press from Robert Shrum, a longtime Democratic insider. He worked for Sens. Kennedy, Gore, Kerry, and Kerrey, and for other liberals too numerous to list, but not for Clinton or Obama. (Eventually he was considered jinxed, all eight of his candidates having failed to win the presidency.)

Anyway, Bob Shrum too compared Obama's situation to Reagan's in 1982.

Here's why I think that analogy is wrong. It could even be that our situation is the opposite of what it was in 1982. The economic recession that year was to some extent the inadvertent by-product of the big Reagan tax cut of 1981. That very desirable legislation reduced the top income tax rate to 40 percent, from 70 percent, which is where it had been since the mid-1960s. The 1981 law also allowed tax brackets to be adjusted for inflation, then much higher than it is now. Nominally higher wages were moving taxpayers into higher tax brackets, producing a contraction throughout the economy.

The liberals as usual understood nothing. Ronald Reagan did understand what was going on, however, which is why he became a hero to the "Reagan Democrats." The Reagan tax cut, enacted within months of his becoming president, was one of the most important changes in tax law in the postwar era; it also inspired Margaret Thatcher to enact comparable tax reductions in Britain.

Congress should look under the TARP

Via-Washington Examiner

This is not the first time that Neil Barofsky, special inspector general of the Troubled Asset Relief Program, has harshly criticized the Treasury Department for its utter lack of transparency and accountability in administering the massive federal bank bailout. But in his latest quarterly report to Congress, the independent watchdog warns that total taxpayer support for the financial system increased by another $700 billion during the past year -- with precious little to show for it. Some of that increase went to supply capital to Fannie Mae and Freddie Mac so these quasi-governmental entities could continue guaranteeing mortgages and supposedly stabilize the housing market that they were so instrumental in causing to collapse.

But documents provided under subpoena to Congress show that toxic loan peddler Countrywide Financial provided multiple below-market mortgages to already excessively overpaid Fannie Mae officials, including Jim Johnson, Jamie Gorelick, Dan Mudd and Franklin Raines. "They made billions buying and selling each other's toxic loans," CBS investigative correspondent Sharyl Attkisson reported. Also among Countrywide's beneficiaries was Senate banking committee Chairman Chris Dodd, whose name informally graces the just-passed financial "reform" bill. He saved an estimated $75,000, thanks to a bargain-basement interest rate he got in 2003 from Countrywide.

Another $75 billion has been spent on the Home Affordable Modification Program, which was designed to reduce mortgage payments for an estimated four million people in danger of losing their homes.But Barofsky called HAMP's performance to date "anemic," pointing out that it "failed to put an appreciable dent in foreclosure filings." In fact, only 51,000 desperate homeowners entered the program in June, a one-year low, and less than the number that exited HAMP. "The American people are essentially being asked to shoulder an additional $50 billion of national debt without being told, more than 16 months after the program's announcement, how many people Treasury hopes to actually help stay in their homes ... [adding to] the growing public suspicion that the program is an outright failure," Barofsky said, noting that Treasury "has already jumped into the deep end of the moral hazard pool."

Rep. Darrell Issa, R-Calif., ranking Republican on the House Oversight and Government Reform Committee, charges that the Obama administration is treating TARP "like its own personal slush fund." This is the inevitable result when unaccountable bureaucrats are given secret access to public funds while Congress abrogates its oversight responsibilities. At this point, nothing short of a full-blown public investigation is likely to get at the full truth about this scandal. Unfortunately, that's probably the last thing the current Congress will ever do.

IG report says Obama GM, Chrysler moves needlessly accelerated job losses

Via-Washington Examiner

By: Mark Tapscott

A report to be released tomorrow by the Treasury Department's Special Inspector General for the Toxic Asset Relief Program (SIGTARP) will contend that President Obama's push for General Motors and Chrysler to close thousands of dealerships across the country as part of their government bailouts "may have substantially contributed to the shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls, all based on a theory and without sufficient consideration of the decisions' broader economic impacts."

The SIGTARP report will further contend, according to Rep. Darrell Issa, the ranking minority member of the House Oversight and Government Reform Committee that it is questionable whether the closings were "either necessary for the sake of the companies' economic survival or prudent for the nation's economic recovery."

Issa, who has been a vocal critic of the Obama administration's handling of the GM and Chrysler government takeovers, said the SIGTARP report should "serve as a wake-up call as to the implications of politically-orchestrated bailouts and how putting decisions about private enterprise in the hands of political appointees and bureaucrats can lead to costly and unintended consequences."

The California Republican also said the fothcoming report will say "GM did not consistently follow its stated criteria and that there was little or no documentation of the decision-making process to terminate or retain dealerships with similar profiles, or of the appeals process” and that “making termination decisions with little or no transparency and making a review of many of these decisions impossible…”

The First National Bank Of Obama

The Forbes.com Investor Team discusses Obama's proposed plan to buy up bad investments. And it proposes its own solutions.

The "Bad Bank" idea is gaining currency as a possible solution to the financial crisis. It has the benefit of separating banks from the assets that are forcing them to constantly seek financing from the government and could create a path towards the government's withdrawal from the Troubled Asset Relief Program.

The elegant solution here is that a government-sponsored aggregator bank will buy up toxic assets. It will be mostly taxpayer funded, but some private investors and merchant banks might supply some cash. The Swiss government did this in order to rescue UBS (nyse: UBS - news - people ). The U.S. government did something similar with the Resolution Trust Corporation (RTC) during the savings and loan defaults of the early 1990s.

More...

Complete Original Article from Forbes

Politicians Asked Feds to Prop Up Ailing Bank

Two Illinois congressmen urged the Treasury in October to avoid taking any regulatory action against a struggling bank in their state, illustrating the aggressive efforts some politicians are taking to help hometown lenders during the bank crisis.

In a letter they sent, Democratic Reps. Danny K. Davis and Luis Gutierrez also asked government officials to provide financial aid to National Bank of Commerce, based in the Chicago suburb of Berkeley, Ill.

More...

Complete Original Article from WSJ

Geithner Accused of Lying About Tax Cheating

Art Cashin, one of the talking heads on CNBC, said early on Thursday morning that the stock market was going down in part because of a lack of confidence caused by the failure of the Senate to quickly confirm Timothy Geithner as Treasury Secretary. This was the party line of the Wall Street insiders who have a special interest in getting Geithner confirmed. Later on that day, Geithner was endorsed 18-5 by the Senate Finance Committee. A full Senate vote on the nomination may be held on Monday.

The American people can’t be blamed for thinking that if a tax cheat inspires confidence on Wall Street and can get an overwhelmingly positive vote in a Senate committee, the nation must indeed be headed for financial ruin.

But Geithner not only got caught cheating on his taxes, he is now being accused of lying about his cheating during his confirmation hearing when he attempted to blame the problem on his TurboTax computer software program.

But don’t expect this to be a major issue for business cable network CNBC.

In a major conflict of interest media scandal, General Electric’s media properties, which include CNBC, NBC News and MSNBC, are indirectly benefitting from the Wall Street bailout through a federal loan guarantee of $139 billion extended to GE Capital, the lending arm of GE.

What’s more, GE chairman Jeffrey Immelt is a member of the board of the New York Federal Reserve, headed by one Timothy Geithner. In fact, Immelt may be involved in finding a successor to Geithner as president of the New York Federal Reserve Bank.

When GE Capital got its federal loan guarantee, the story was covered on CNBC by reporter Steve Liesman. A transcript includes the obligatory notation that “GE is the parent company of CNBC” but the video of Liesman breaking the story didn’t mention that.

The mantra, “GE is the parent company of CNBC,” is supposed to protect GE’s media property from any charges of conflict of interest in its coverage of the financial meltdown.

One of CNBC’s most famous and outspoken talking heads, Jim Cramer, did an amazing turnaround, first opposing Geithner and then supporting him. “I’ve given up fighting this,” he blurted out. “Obama loves him.” Cramer said that “the guy got a free pass” and “everybody on Wall Street―all my buddies who lost billions for you, for the American people, told me, ‘Jim, he’s the greatest.’”

“Well, now, everybody has discovered the truth,” he added, alluding to the tax cheating. Cramer said that if he had committed similar offenses, he would be going to jail.

On Capitol Hill, some senators were listening to their constituents, thousands of whom were phoning in protest over the Geithner pick, rather than to CNBC.

“I cannot vote to confirm the nomination based on the record and the need to foster greater accountability in both big government and our financial institutions,” declared Senator Charles Grassley, the top Republican on the committee, in making a point that should have been obvious to other members. He quoted a constituent as saying, “If the man cannot handle his own finances, how is he going to handle the country’s?”

Nevertheless, only four members joined with Grassley in voting against Geithner. They were Senators Jon Kyl of Arizona, Jim Bunning of Kentucky, Pat Roberts of Kansas, and Michael B. Enzi of Wyoming.

“I cannot even believe we are voting on this nomination today,” is how Enzi described the situation. He couldn’t believe a person with tax problems like Geithner could even be considered for the position.

Enzi, the Senate’s only accountant, announced his opposition to Geithner by asking, “How do I explain to my constituents that I voted to confirm someone who will make them pay taxes, but sometimes does not pay his own taxes?”

Enzi called Geithner’s handling of his taxes “negligent behavior” that “deserves more than a simple slap on the wrist or half-hearted apology before a Senate committee.” He explained, “In previous years, nominees for positions that do not oversee tax reporting and collection have been forced to withdraw their nomination” because of similar issues.

All 13 Democrats on the committee voted for him. Five Republicans―Hatch, Snowe, Crapo, Ensign and Cornyn―did so as well.

Senator John Ensign, chairman of the Senate Republican Policy Committee, which is composed of GOP Senate leaders and the chairmen of the Senate’s standing committees, voted for Geithner despite being quoted by the BBC as saying that his switchboard had lit up with calls from constituents asking how someone who’d failed to pay their taxes could be put in charge of the IRS.

Republican Senator Orrin Hatch, once considered a conservative, said he would vote for Geithner because his tax cheating was nothing more than a series of “honest mistakes.”

The Hatch rationale for confirming Geithner reflected the influence of what Politico.com reported was a document of “talking points” originally prepared by the Obama transition office and “distributed to Capitol Hill, K Street and congressional reporters.” The “talking points” were designed to portray Geithner’s problems as “simple mistakes or oversights.”

In his confirmation hearing, however, Geithner dug a deeper hole by falsely suggesting that some of his tax dodging may have stemmed from use of the TurboTax computer software program that helps an individual file his tax returns.

While insisting that “these are my responsibilities, not the tax software’s responsibilities,” he was specifically asked by Grassley, “Did the software prompt you to report income and pay self-employment taxes on your IMF income?” He answered, “Not to my recollection, Senator.”

CNBC reported that shares of TurboTax-maker Intuit “fell to their low on the day on strong volume” after Geithner’s claims but did not include a rebuttal from TurboTax. But officials of the company flatly denied the allegation that their software could or should be blamed for his failure to pay taxes.

Dan Maurer, senior vice president and general manager of TurboTax, issued a statement saying that “Each year, millions of Americans use TurboTax to accurately prepare and file their federal and state tax returns. The software helps taxpayers report their income and find the deductions and credits they’re entitled to claim. TurboTax, and all software and in-person tax preparation services, base their calculations on the information users provide when completing their returns. TurboTax also has built-in error-checking tools that routinely catch common taxpayer mistakes.”

The headline, “Treasury Pick Misfiled Using Off-the-Shelf Tax Software,” over a story by business reporter Frank Ahrens of the Washington Post, suggested that the software was to blame. But inside the article Ahrens quoted an official of an international agency who handles these matters and understands the software as saying that TurboTax sends up a “red flag” in order to catch the “mistakes” that Geithner claims he made.More...

Complete Original Article from AIM

Political Interference Seen in Bank Bailout Decisions

Barney Frank Goes to Bat for Lender, and It Gets an Infusion

Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

More...

Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.

As President Barack Obama's team sets about revising the $700 billion TARP program, following last week's release of the second half of the money, among the issues it faces is widespread dissatisfaction with way the program has been implemented. Treasury Secretary nominee Timothy Geithner, testifying Wednesday at his Senate confirmation hearing, acknowledged "there are serious concerns about transparency and accountability...confusion about the goals of the program, and a deep skepticism about whether we are using the taxpayers' money wisely."

Bankers, regulators and politicians complain of a secretive and opaque process for deciding which banks get cash and which don't. The goal of aiding only banks healthy enough to lend -- laid out by the Treasury when the program began -- clearly seems to have shifted, but in a way that's hard to pin down and that the Treasury has declined to explain. Part of the problem is that some powerful politicians have used their leverage to try to direct federal millions toward banks in their home states.

"It's totally arbitrary," says South Carolina Gov. Mark Sanford. "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," says Gov. Sanford, a Republican.

Several Ohio banks received funds after Ohio's congressional delegation complained bitterly about the treatment of Cleveland-based National City Corp., which regulators forced into a merger rather than provide with cash. And in Alabama, the state's top banking official says a windfall there -- five banks are slated to receive funds -- is testament to the influence of two powerful Alabama lawmakers who sit on key congressional committees.

A link between such lobbying and the release of TARP cash can't be proved. Treasury officials have said that political influence plays no role in the selection process. "The decisions are made by a committee of officials at Treasury based on recommendations and data provided by the regulators through the applications process," said Brookly McLaughlin, who was a spokeswoman for the Treasury until the Bush administration ended on Tuesday.
Restoring Credit Flow

Treasury and Federal Reserve officials have repeatedly said the TARP program was successful in its primary purpose, which was to bring the credit markets back from the precipice.

The task of further restoring credit flow now falls to Mr. Obama's team, which has spoken in favor of pumping more money into banks, as has Fed Chairman Ben Bernanke. The new administration is weighing a range of ideas, including using at least $50 billion of the TARP money to prevent foreclosures, and possibly other measures such as setting up an "aggregator bank" to hold toxic assets now burdening banks' books.

The federal plan to invest in banks was controversial from the start. The Treasury said it would acquire preferred stock in banks, and sometimes warrants for common stock as well, but not any voting or management rights. Within the broad structure known as TARP, this is called the Capital Purchase Program.

At a hastily arranged meeting on Oct. 13, then-Treasury Secretary Henry Paulson basically forced the chiefs of the country's nine biggest banks to accept cash infusions. The government invested $125 billion in the nine. Citigroup Inc. and Bank of America Corp. subsequently returned for more money.

A further $125 billion was committed under the Bush administration to buy stakes in some of the remaining 8,500 U.S. banks and thrift institutions. More than 250 have received cash or commitments so far, totaling about $68 billion. The recipients range from large regional banks to Saigon National, a 12-employee lender catering to Vietnamese-American businesses in Southern California.

The procedure for getting a capital injection is complex. State and federal regulators sometimes complain that even they don't understand how it works.

A bank applies through its federal regulator, which either recommends to the Treasury that the bank receive money or quietly tells the bank to pull its application. A public turndown could be a death sentence because it would tell investors and consumers the government thinks the bank isn't viable.

If the regulator forwards the application, the Treasury decides whether to approve it. If the Treasury's reviewing team is uncertain, it sends the request to a panel of federal regulators to debate the matter.

The results have many in the industry scratching their heads. Two banks in Green Bay, Wis., have received federal investments. But in Arizona, a state hit hard by the housing slump, officials say they are perplexed that a dozen or so state-chartered banks haven't heard back from Treasury about the status of their applications.

Arizona's banking superintendent, Felecia Rotellini, says she is teaming up with local bankers and state legislators who plan to start lobbying Arizona's congressional delegation for help. "Some states are getting better treatment, and we just want it to be a level playing field," Ms. Rotellini says. "I think it's just a question of advocacy. It has to be a congressional voice."

A body set up to monitor the program, the Congressional Oversight Panel, has said the process of allocating money lacks transparency and accountability. The Treasury declines to explain why one bank is chosen for a federal investment and not another. Those that receive federal cash sometimes boast they have a government seal of approval, leaving banks that are shut out facing awkward questions about why they didn't.

In mid-October, days after summoning the nine big-bank executives to Washington to accept aid, the government took a far different approach with Cleveland's National City, which was struggling with soured real-estate loans.

National City executives consulted with their examiners at the Office of the Comptroller of the Currency, which is a division of Treasury, about whether they should apply for a capital injection. Local OCC officials gave them the green light, according to people familiar with the matter.

In Washington, National City got a chillier reception. The company was facing mounting losses stemming in part from its ill-timed purchases of two Florida banks shortly before the state's real-estate market imploded. Comptroller of the Currency John Dugan informed National City executives they shouldn't apply because their bank was too weak. Instead, he told the bank to sell itself. Within a week, it agreed to a $5.6 billion takeover by PNC Financial Services Group Inc. in Pittsburgh. (PNC declined to comment.)

A political firestorm erupted in Ohio when it became clear the government had turned down National City, a 163-year-old bank with deep roots in Cleveland. Ohio's congressional delegation sent dozens of letters to Messrs. Dugan and Paulson and threatened to hold hearings on how the Treasury had supposedly wrecked a bank they said wasn't in immediate danger of collapsing.

Some lawyers, bankers and analysts say the case marked a turning point in the Treasury's handling of capital injections. For one thing, since then, some weak regional banks have pocketed billions of dollars in TARP funds.

In addition, Ohio banks are now faring better. Twelve Ohio banks have subsequently received a total of $7.7 billion in taxpayer funds. In neighboring Michigan -- like Ohio, hurt by the auto-industry slump -- only two banks have had federal infusions and a third has preliminary approval, for infusions totaling $638 million.

Among the Ohio beneficiaries is Huntington Bancshares Inc., of Columbus. It received a $1.4 billion federal investment in November, even though, like National City, it was hurt by souring real-estate loans and the weak regional economy. Amid mounting losses, the bank last week replaced its chief executive.

In Alabama, Colonial BancGroup Inc. asked for Treasury cash in November. With its application blessed by its state regulator and the Federal Deposit Insurance Corp., the Montgomery bank figured it was a shoo-in for funds, say people familiar with the bank.
Real-Estate Loans

But because Colonial was weighed down by real-estate loans, the Treasury sent the bid to its panel for reviewing controversial applications, consisting of four federal regulatory bodies: the FDIC, the Fed, the OCC and the Office of Thrift Supervision. Negotiations lasted several weeks. Eventually, the Treasury gave preliminary approval to Colonial's request for $550 million in capital.

The slow process infuriated Alabama officials. The same day that Colonial announced its application had been approved, Trabo Reed, Alabama's deputy banking superintendent, wrote a letter to Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, complaining that the government had dragged its feet and kept banks and state officials in the dark. The letter didn't specifically cite Colonial (which had no comment).

Rep. Bachus's office forwarded the letter to the heads of bank regulatory agencies and asked them to examine the situation. Since the letter was forwarded, two more Alabama banks have received TARP funding. Five Alabama banks, including Colonial, are slated to collect a total of about $4.2 billion.

In all, about 50 state-chartered Alabama banks applied, according to state banking superintendent John Harrison. He says his office helped shepherd them through the process, figuring that "the more applied, the more had the chance to get it."

Mr. Harrison says that in addition to Rep. Bachus, Alabama Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, "has been a big proponent for Alabama state-chartered banks...and he was really concerned that the TARP money went here." The banking official added: "We're blessed with a U.S. senator that was on the banking committee and Spencer Bachus being the ranking Republican" on the House panel. "I think [the Treasury] got the message."

Aides to Rep. Bachus said he did nothing more than forward Mr. Reed's letter and ask for consideration. Sen. Shelby has consistently opposed the financial-system bailout. His office denied that he was involved in helping Alabama banks get money. "Sen. Shelby has never intervened on anyone's behalf for TARP money," an aide to the lawmaker said.

The bank that Rep. Frank of Massachusetts went to bat for, OneUnited, saw its capital level sink in early September after the U.S. took control of the overextended mortgage giants Fannie Mae and Freddie Mac. OneUnited, a closely held Boston-based lender with offices in Florida and California too, held large amounts of Fannie Mae preferred shares. Their value plunged after the U.S. put Fannie and Freddie into a federal conservatorship, acquired preferred shares in them and took warrants entitling the government to nearly 80% of their common stock.

The moves left OneUnited's capital badly depleted. A measure called "Tier 1 risk-based capital" equaled only 1.88% of assets at the bank, versus a desired level of about 6%. A OneUnited lawyer, Robert Cooper, says he called Rep. Frank and Rep. Maxine Waters of California, both Democrats, to complain that the Treasury's move had hurt the bank.

Rep. Waters heads the House Financial Services subcommittee on housing, and until last spring her husband, Sidney Williams, was a OneUnited director. Rep. Frank, besides heading the Financial Services Committee, has longstanding ties to OneUnited, and recalls having had a deposit account at a predecessor bank in the 1960s.

Later that month, Rep. Frank was intimately involved in crafting the legislation that created the $700 billion financial-system rescue plan. 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.
Porsche for Executives

On Oct. 27, the FDIC and Massachusetts bank regulatory officials, alleging poor lending practices and executive-compensation abuses by OneUnited, slapped it with a strong enforcement action, a cease-and-desist order. Among other things, the officials told the bank to get rid of a 2008 Porsche for executives.

Mr. Cooper, the bank's attorney, dismisses the order as a "hastily cobbled together" action. "What we are talking about is a hiccup, a blip on the screen of an otherwise-stellar enterprise," he says. Asked whether the bank had sold the Porsche, he said only that it was complying with the order.

Mr. Frank -- who has played a leading role in both the initial design of TARP and current planning to revamp it -- says he spoke with a federal regulator and asked that OneUnited be given consideration for TARP money, "without in any way impinging on their general safety and soundness rules." Mr. Frank said he didn't remember which federal regulator he spoke with.

On Dec. 19, OneUnited received $12 million from the Treasury, on condition it raise $20 million from its shareholders, which it did.

Ms. McLaughlin, the spokeswoman for the Bush administration Treasury, said that OneUnited's application was subject to the same review process as other banks faced.

Mr. Frank said he didn't try to interfere with the regulatory process. "We have never told the regulators that they should ease up on them or not order them to do this or that," he said.

He cites the bank's status as the state's only financial institution owned by African-Americans. "We did say, yes, I thought it would have been a social tragedy if the one minority bank in Massachusetts that has been working so hard and had been overextended into housing was to be wiped out by a federal action, the Fannie-Freddie preferred [shares] thing, and that's why I think it was important to try to help them."

Rep. Waters said she was unaware that the bank received money. OneUnited was "just a small" bank, she said.

Complete Original Article