these people are screwing the AMERICAN taxpayer
and getting away with it
BARNEY FRANK STRIKES AGAIN
Last seen running political interference for Fannie Mae and Freddie Mac as they pumped up and then popped the multi-trillion dollar housing bubble, Congressman Barney Frank (D-Mass.) is now making sure that our tax dollars are bailing out an inept but politically connected bank in his home state:
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.
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.
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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.
The TARP bail-out program is beginning to look like nothing but a political scam — on a grandiose scale. The government takes hundreds of billions of our money and then doles it out to political cronies like OneUnited Bank. Meanwhile, less well connected banks like National City are thrown to the wolves — and thousands of people lose their jobs.
With unintentional irony Frank pinpoints the cause of this entire mess:
“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.
Frank’s escapades provide further proof of Ronald Reagan’s maxim that the most terrifying words in the English language are, “I’m from the government and I’m here to help.”
Since federal action (with Barney Frank as its #1 cheerleader) put us “into the dumper,” the Feds and Frank should get their grubby, incompetent hands off the economy and our wallets. Both will recover far quicker and more efficiently on their own than they will with any number of politically directed federal bail-outs or “stimulus” packages.