California Rep. Maxine Waters, a member of the House financial services committee and the Congressional Black Caucus, has come under fire this week for allegedly using her influence to help OneUnited Bank, an institution in which she and her husband have held a financial interest, receive bailout funds. Until early last year, the congresswoman’s husband, Stanley Williams, served on the bank’s board and still owns stock in it.
According to news reports published Thursday, Waters arranged a September meeting between bankers and Treasury officials who expected the discussion to center on the losses minority banks had suffered after the federal takeover of Fannie Mae and Freddie Mac. Treasury officials have said they were taken by surprise when the bank’s chief executive, Kevin Cohee, used the meeting as an opportunity to focus on its own needs and requested $50 million. The bank did receive an infusion of $12 million in December as part of the Troubled Asset Relief Program, but in a statement issued by her office, Waters contends that her role has been largely exaggerated.
“I have been an outspoken advocate for minority communities and businesses in California and nationally for decades,â€ Waters said in the statement. “Recent press reports have raised questions about my advocacy on behalf of minority banks. Ultimately, however, these articles have revealed one thing: I am indeed an advocate for minority banks.â€
OneUnited, which is based in Boston and has branches in Los Angeles and Miami, is one of the nation’s largest black-owned banks and was heavily invested in both Fannie and Freddie. It suffered a $54.3 million loss, recording a $44.7 million net loss for the nine months that ended Sept. 30, 2008 and a negative equity balance of $6.6 million. In November the FDIC issued a cease and desist order to the bank, citing inadequate level of capital, speculative investment practices, and operating without sufficient liquidity among the reasons.
Friday morning, Waters, who had been silent on the matter, began fighting back. In her statement she said the National Bankers Association, a trade association for minority-owned banks, actually requested the meeting to discuss their concerns regarding the unfolding financial crisis and contacted Treasury directly. Waters followed up on the request, asking Secretary Henry Paulson to take the meeting, which she did not attend. She also issued copies of the NBA’s initial request and a follow-up letter the association sent to Treasury after the meeting.
Waters added that Treasury and the Federal Deposit Insurance Corporation determined which bans would receive TARP funds. “Although both my supporters and detractors often refer to me as influential, the truth is that I had no influence on what Bush administration officials in the Treasury Department or other departments did,â€ she said.
One news report also indicated that financial services chairman Rep. Barney Frank told Waters to “stay out of itâ€ when she was seeking to aid the bank, hinting that it was in regard to the Treasury meeting. Frank’s spokesman Steven A