Judicial Watch • Another Unconstitutional Obama Czar?

Another Unconstitutional Obama Czar?

Another Unconstitutional Obama Czar?

SEPTEMBER 17, 2010

September 17, 2010

From the Desk of Judicial Watch President Tom Fitton:

New Waters/Frank Scandal Documents

Remember at the outset of the financial crisis when the government told us only “healthy banks” were going to receive bailout funds? Well apparently that requirement does not apply to banks with friends in high places.

This week we received new documents from the U.S. Department of Treasury about the controversial $12 million bailout grant provided to Boston-based OneUnited Bank.

We got the documents through a Freedom of Information Act (FOIA) lawsuit we filed against Treasury. Included are internal Treasury emails describing the substandard condition of OneUnited prior to the taxpayer funded bailout, which allegedly occurred at the behest of Reps. Maxine Waters and Barney Frank.

Here’s what we found out in a nutshell: OneUnited Bank was in deep trouble due to incompetence and mismanagement. Government officials knew all about it. And yet, they bent the rules for Waters and Frank and “invested” taxpayer funds in the floundering enterprise.

Consider this September 15, 2008, email from former Treasury Senior Advisor Michael Scott to Director of the Office of Financial Institutions Mario Ugoletti. It includes a Community Reinvestment Act (CRA) evaluation administered by the Federal Financial Institutions Examination Council (FFIEC) noting serious issues with OneUnited’s lending practices:

2004 CRA Public Evaluation: While the institution received a CRA rating of “Low Satisfactory” on an overall basis, OneUnited Bank’s CRA rating for Massachusetts was “Needs to Improve” for both the Lending Test and the Investment Test. Under the Lending Test, the report stated that “OUB has done a poor job of meeting the credit needs of its [Boston, MA] assessment area. A review of the 2002 and 2003 HMDA data revealed a total of one loan. There were no reported Community Development Loans (CDL) and any innovative or flexible lending programs were apparently ineffective.” For the Massachusetts Investment Test, the report stated that “the level and complexity of investments within the Boston assessment area is less than satisfactory there were no equity investments or qualified deposits within the assessment area. The low volume of qualified investments within the assessment area is a concern.”

In Florida, the institution received a CRA rating of “Substantial Noncompliance” which also represented the subordinate rating for the Lending Test…

A subsequent 2007 CRA evaluation noted continued problems with OneUnited’s lending program, particularly in Florida.

The documents also include a January 3, 2009, email from Brookly McLaughlin, Treasury’s Deputy Assistant Secretary for Public Affairs, to former Assistant Treasury Secretary Neel Kashkari highlighting Barney Frank’s intervention in the OneUnited Bank bailout and calling attention to significant concerns about the OneUnited transaction:

According to the WSJ [Wall Street Journal] Barney Frank told them that he specifically put section 103-6 in the bill in order to help this particular bank. Apparently this bank also had an issue with a Porsche that the regulators had made them get rid of. The story will run later this week and will highlight three banks that they think raise questions and are not “healthy” banks…

(As I’ve noted previously, according to the January 22, 2009, edition of the Wall Street Journal, Treasury indicated it would only provide bailout funds to healthy banks to jump-start lending.)

Judicial Watch also uncovered a memorandum entitled “Regulatory Financial Highlights” that includes detailed financial information related to OneUnited as well as a summary of information collected by Treasury during its investigation of the bank.

According to these documents, OneUnited sought government assistance in part because the company owned $52 million in Fannie Mae and Freddie Mac stock that was “irrevocably impaired” when the government seized control of the two GSEs. However, as noted by one Treasury email from Michael Scott, OneUnited “purchased their Fannie/Freddie stock in the first quarter of 2008,” long after the problems cited in the government’s two CRA assessments. The official commented, “Interesting, huh?”

Yes, it certainly is…

In light of these documents, I do not think there is any question that, if not for the corrupt intervention by Barney Frank and Maxine Waters, OneUnited would not have gotten a $12 million taxpayer bailout. And this so-called community bank wasn’t actually lending much to the “community” that Frank and Waters were purporting to help.

Today’s Washington Post adds more devastating detail to this scandal (and references documents first obtained by Judicial Watch). The paper reports that regulators knew that OneUnited could not get aid under law. So Frank, for Waters, inserted a provision into the TARP legislation designed to help OneUnited. But that wasn’t enough because the bank was so poorly run. And the rules were bent further:

Still, OneUnited did not meet the normal threshold for obtaining TARP money. As the inspector general for the TARP program, Neil M. Barofsky, said in a 2009 report that referred to OneUnited’s troubles without citing its name, the bank had not met five metrics, indicating it was not adequately capitalized.

Moreover, the FDIC, in a memo to the Treasury Department analyzing its TARP application, warned explicitly that the bank was in a “precarious financial position”…

But a committee of regulators and a group of top Treasury officials then departed from customary practices. They did so even though one Treasury member said that “he was very concerned about this bank,” according to Barofsky’s report.

The report said these reviewers decided that the bank’s viability could be assessed “with applied-for TARP funds taken into account” as an existing capital asset on its balance sheet. In short, the reviewers assessed the bank as though it already had the money, to make it eligible for the aid.

The resulting $12 million boost to OneUnited’s bottom line – again without a penny moving anywhere – finally allowed it to look healthy enough to win the loan…

The Obama administration has thus far produced 639 pages in response to Judicial Watch’s FOIA investigation of the Waters/Frank bailout scandal. But they’re still keeping 203 pages under lock and key. It is not hard to see why.

For politicians, reporters, and political consultants trying to figure out the Tea Party and why so many Americans are angry at Washington corruption – they might want to look at this corrupt mess in TARP uncovered by Judicial Watch.

Constitutional Government Under Assault with New Consumer Czar

There’s a new Wall Street Sheriff in town. Her name is Elizabeth Warren and she’s President Obama’s pick to help set up (control) a brand new Big Government agency called the Bureau of Consumer Financial Protection. (Just so you know, this new agency was the brainchild of the corrupt Fannie and Freddie twins, Barney Frank and Chris Dodd. The laughably named Dodd-Frank Wall Street Reform and Consumer Protection Act effectively gives the federal government control of our nation’s financial sector. (Think of it as Obamacare for Wall Street, the stock market, and credit cards.)

Obama and his allies have been big promoters of Warren, who is the left-wing patron saint of so-called consumer protection.

There’s only one problem. In the dubious tradition of Obama czars, Warren is a leftist radical with a “penchant for provocative statements” and has very little chance of being confirmed by even a Democratic Senate. How anti-business? Well, in a blog she crafted for TPMCafe.com in 2005, Warren said: “…big corporate interests, led by the consumer finance industry, are devouring families and spitting out the bones.”

And that’s just one example.

Even Democrat Senator Chris Dodd, Chairman of the Senate Banking Committee, sees the writing on the wall on a Warren appointment. Dodd has publicly stated that he doubts Warren could muster the votes for confirmation. Many others in Congress agree, even if they won’t say it publicly.

So, how do you think this President plans to “move forward” with this appointment in light of a looming confirmation war? By ignoring the Senate confirmation process! The Obama White House had Warren post a propaganda item today announcing her appointment:

The President asked me, and I enthusiastically agreed, to serve as an Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. He has also asked me to take on the job to get the new CFPB started—right now.

Warren goes on in her statement to push the socialist trope of “leveling the playing field” in the consumer credit market. Obama White House officials are spinning this as an “interim appointment.” But we all know the strategy: Get Warren in the back door, and have her put her stamp on the “creation” of this powerful new agency, while really running it. (Obama calls this an “interim appointment.” We call it a “czar.”) Indeed, Obama’s statement today about the Warren appointment shows that he is essentially giving her the keys to the kingdom of the new government agency.

But our Constitutional Professor-in-Chief needs to heed the Appointments Clause of the US Constitution (Article II, Section 2) states that “officers” of the United States must be appointed by the President with the advice and consent of the Senate. As the Justice Department explained in 2007: A position is an office of the United States if it is “(1) invested by legal authority with a portion of the sovereign powers of the federal Government, and (2) it is ‘continuing.’” Such “sovereign powers” generally involve “binding the Government or third parties for the benefit of the public, such as by administering, executing, or authoritatively interpreting laws.”

It sure seems to me like Ms. Warren is set to act as an officer of the United States. Except her legal authority, since she’s unconfirmed by the U.S. Senate, is null. But, according to Businessweek, Warren will have a “$400 million budget and the power to impose federal rules on mortgages, credit cards, layaway plans and other consumer credit products.”

With this much money and this much power at Warren’s disposal, don’t you think her record ought to be thoroughly examined by Congress? We do. Most Americans do. And the Constitution certainly mandates it. But none of this is of concern to President Obama as he continues to preside over the massive and unprecedented expansion of federal government.

Even the Left has raised hackles about this lawlessness. The notoriously radical Internet site Daily Kos posted an article that highlights the legally dubious nature of Obama’s new czar appointment. The piece, by a supporter of Warren’s, suggests that Obama has no authority to install her.

Judicial Watch has an ongoing, thorough investigation of Obama’s czars. You can read all about it by clicking here. By our count, Obama has appointed 42 czars, with Warren’s appointment perhaps being the most striking example of Obama’s abuse of office, his contempt for Congress, and his disrespect for our republican form of government.

AZ Illegal Immigration Update

As I’ve noted in recent weeks, Judicial Watch is smack-dab in the middle of the nation’s most critical and contentious legal battle – the Obama administration’s full-scale assault on SB 1070, Arizona’s strong, new illegal immigration law.

First, we filed a “Motion to Intervene” on behalf of Arizona State Senator Russell Pearce, who authored the legislation. And we then filed a brief on behalf of Sen. Pearce with the U.S. Court of Appeals for the Ninth Circuit asking the court to lift an injunction granted by the lower court that had put a hold on key components of the law.

Most recently Judicial Watch assisted a national group of state legislators who support the law and want the preliminary injunction lifted.

Here’s a squib from the press release. (And you can read the brief here.)

Pennsylvania State Representative and State Legislators for Legal Immigration (SLLI) founder Daryl Metcalfe announced today that this nationwide coalition of state lawmakers has filed an amicus brief with the United States Ninth Circuit Court of Appeals against the Obama administration’s legal challenge to Arizona’s newly enacted illegal alien apprehension and deportation law (Senate Bill 1070)…

…SLLI’s amicus brief was filed on behalf of the state of Arizona and Governor Jan Brewer with the assistance of Judicial Watch (JudicialWatch.org). Signed by a total of 51 state lawmakers from 24 state legislatures, the brief urges the court to reverse the preliminary injunction granted on July 28, 2010, and allow all the provisions of Senate Bill 1070 to be enforced immediately.

“It is beyond unconscionable for the Obama administration to launch a taxpayer-funded lawsuit against the state of Arizona for passing a common sense law that is in full accordance with Article 4, Section 4 of the U.S. Constitution…,” said Rep. Metcalfe.

Unconscionable, yes, but not unexpected. Obama and his consitutiencies have shown that they are dead set against enforcing the rule of law.

And when the courts don’t work quickly enough, they find another way. If you’ve been reading this column over the last couple of months, you already know about the Obama administration’s various schemes to enact stealth illegal alien amnesty.

For example, The Houston Chronicle published this story on August 24: The Obama Department of Homeland Security is “systematically reviewing thousands of pending immigration cases and moving to dismiss those filed against suspected illegal immigrants who have no serious criminal records…”

And then there was the scandalous Obama administration internal memo outlining a potpourri of “administrative” strategies to grant amnesty without approval by Congress.

(On August 23 Judicial Watch joined a number of other conservative organizations and sent a letter to the president expressing our extreme dissatisfaction with the Obama administration’s unlawful strategy as outlined in the memo.)

But, as it turns out, liberals in Congress, led by Nevada Senator Harry Reid, are still working hard to pass amnesty legislation and render these “administrative” strategies unnecessary. According to CNN:

Senate Majority Leader Harry Reid said Tuesday he will add the DREAM Act, a controversial immigration measure, to a defense policy bill the Senate will take up next week.

The decision means the defense bill, which often passes with bipartisan support, will be home to two major, thorny political issues – the other being the repeal of the military’s “don’t ask, don’t tell” policy.

Reid called the DREAM Act “really important” and said it should be passed because it provides a path to citizenship for young illegal immigrants who go to college or serve in the military. DREAM is an acronym for Development, Relief and Education of Alien Minors Act.

Liberals in Congress know what’s coming. So watch for more desperate moves in the next few weeks to advance the liberal agenda. If you have concerns about the DREAM Act, you can reach your U.S. Senators at (202) 224-3121.

Until next week…



Tom Fitton
President


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