Treasury Emails Suggest Rep. Barney Frank Called Former Treasury Secretary Paulson to Obtain TARP Cash for OneUnited Bank
MARCH 31, 2010
Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that new documents suggest Rep. Barney Frank (D-MA) personally called former Treasury Secretary Henry Paulson regarding a cash infusion from the government’s Troubled Asset Relief Program (TARP) for the Boston-based OneUnited Bank. On November 25, 2008, following Frank’s intervention, the Treasury Department awarded $12,063,000 in bailout funds to OneUnited, which is located in Frank’s district. According to the Wall Street Journal, Frank publicly admitted he spoke to a “federal regulator” regarding OneUnited, but “he didn’t remember which federal regulator he spoke with.”
The documents, obtained by Judicial Watch in response to a Freedom of Information Act (FOIA) lawsuit filed against Treasury, include correspondence between Frank and Treasury as well as internal Treasury emails referencing attempts by Frank and Rep. Maxine Waters (D-CA), whose husband, Sidney Williams, served on the OneUnited Board of Directors, to intervene on behalf of the Massachusetts Bank. Williams resigned shortly after Waters approached federal regulators regarding the OneUnited TARP grant.
An October 17, 2008, email from former Deputy Assistant Secretary for Banking and Finance King Mueller to former Assistant Treasury Secretary Neel Kashkari and other Treasury officials references the contact between Frank and Paulson:
“Just spoke w/ Jim [Segel] in BF’s [Barney Frank’s] office. This is about One United Bank (a minority owned bank in BF’s district). Maxine Waters is interested in the bank as well, Treas[ury] and others met w/ them (minority bankers assoc) last month per the Water’s request. They were a big holder in f/f preferred. BF is interested and may call HMP [Henry Paulson] again about this. FDIC is their primary federal regulator.”[Emphasis added.]
An October 16, 2008, email from Kashkari to former Deputy Assistant Secretary for Appropriations and Management Peter Dugas: “Peter, Jim Siegel [sic] from Frank’s office called a few times-can one of you follow-up with him?” Segel serves as Frank’s Chief Counsel. Paulson’s October 2008 calendar, which has been released separately, details calls from Frank on October 2, 3, 7, 9, 13, and 17.
With respect to Rep. Waters, the documents include a January 13, 2009, email from Brookly McLaughlin, Treasury’s Deputy Assistant Secretary for Public Affairs, expressing surprise at Waters’ apparent conflict of interest: “Further to email below, WSJ [Wall Street Journal] tells me:…Apparently this bank is the only one that has gotten money through section 103-6 of the EESA law. And Maxine Waters’ husband is on the board of the bank. ??????”
“This is exactly the kind of corrupt deal-making we can expect when the federal government decides to throw massive amounts of taxpayer dollars at private institutions,” said Judicial Watch President Tom Fitton. “And it appears Barney Frank has been dishonest regarding his intervention on behalf of OneUnited. Frank stated publicly he could not remember the name of the bureaucrat he contacted about OneUnited, and now we learn this nameless bureaucrat was almost certainly none other than the Secretary of the Treasury. Who is Frank kidding? This looks like another Keating Five-type scandal. This still-burgeoning scandal calls into question whether Rep. Frank should remain head of the powerful House Financial Services Committee. No wonder the Obama Treasury Department stonewalled the release of these documents.”
Without the intervention of Frank and Waters, OneUnited would seem an unlikely recipient of TARP funds. As reported in the January 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide funds to healthy banks in order to jump-start lending. Not only was OneUnited Bank in massive financial turmoil, but it was also “under attack from its regulators for allegations of poor lending practices and executive pay abuses, including owning a Porsche for its executives’ use.” The bank continues to flounder and is one of the few financial institutions to have not paid dividends to the federal government in exchange for the TARP cash infusion.