JULY 01, 2009
A failing Hawaiian bank that didn’t qualify for a federal bailout still got a $135 million government infusion thanks to the intervention of an eight-term United States Senator who has the bulk of his personal wealth invested in the folding institution he also founded.
The bank (Central Pacific Financial) did not meet the criteria for a Treasury Department bailout designed to help healthier financial institutions because its losses were depleting its capital reserves and it was already in the hands of the Federal Deposit Insurance Corporation (FDIC).
But a powerful veteran Democratic lawmaker, who happens to chair the Senate Appropriations Committee, has a huge financial stake in the bank and he used his influence to assure it didn’t go under. Senator Daniel Inouye, who brags about being the senate’s third most-senior member and a World War II combat veteran, pressured federal regulators into bailing out his precious bank.
The story was first reported by an investigative journalism group and subsequently published by a major U.S. newspaper. It reveals the lawmaker’s ownership of shares in the bank worth up to $700,000, which represents at least two-thirds of his total assets.
Other lawmakers have helped banks in their jurisdictions get federal aid under the government’s massive bailout measure (Troubled Assets Relief Program, or TARP) but none intervened on behalf of a financial institution in which he or she owned shares. Not only does Senator Inouye have a huge financial stake in Central Pacific Bank, he founded it, along with a group of World War II veterans, in 1954.
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