01 Mar 2009 Maxine Waters’ Leaky Argument Can’t Wash Away Banking Scandal Dirt, by Kevin Martin
Banks pushed risky loans to people who could not afford them. Homeownership was promoted as a right for all instead of one for those who saved.
Since the mortgage bubble burst, leaving many in financial trouble, a lot of anger has been directed at banks and the bankers involved.
Lawmakers are worked up in a lather, but this should not remove them from scrutiny. In the case of Congresswoman Maxine Waters (D-CA), criticism of her involvement in one aspect of this crisis is extremely justified.
Yet she is playing the race card to defend herself. That’s just wrong.
More facts are needed about Waters’ intervention on behalf of a bank she and her husband invested in and on whose board her husband once served.
What is reported is that this influential member of Congress used race to help – and later to bail out – the black-owned OneUnited Bank.
Back in 2001, the black-owned Boston Bank of Commerce acquired a company partially-owned by Sidney White, a former professional football player, former ambassador and husband of Waters. White became a board member of the bank. He was not paid for his service, but he did become an investor.
In 2002, Waters sought Federal Deposit Insurance Corporation (FDIC) intervention to stop a merger of minority-owned Family Bank in Los Angeles with a non-minority bank. She said it was to preserve its black ownership. When the FDIC refused to block the sale, a grassroots campaign – which included Waters – pressured Family Bank to sell itself to her husband’s bank. This created OneUnited Bank.
Waters briefly invested in OneUnited. In May of 2008, Waters reported that her husband had between $500,000 and $1,000,000 invested in the bank at the end of 2007. He left the board in April of 2008.
OneUnited seems to have strayed from its roots. FDIC regulators criticized OneUnited in October of 2008 for providing CEO Kevin Cohee with a Porsche SUV and a $6.4 million beachfront home in Santa Monica, California. In 2007, the bank had been similarly criticized for not lending enough to lower-income residents in Miami, where it has an office.
In response, Cohee implied that challenging the bank’s commitment to community and its funding of an opulent lifestyle for him was racist.
When Fannie Mae and Freddie Mac were taken over by the government and minority-owned banks were virtually wiped out by bad loans last year, Waters pressured Treasury Department staff to meet with the National Bankers Association (NBA), which claims to advocate for minority- and women-owned financial institutions. Also at the meeting were staff members representing Waters, House Financial Services Committee Chairman Barney Frank (D-MA) and Senator John Kerry (D-MA).
But NBA chairman Robert P. Cooper happens to be the senior counsel for OneUnited. Cohee also showed up for the meeting. What was allegedly portrayed to Treasury as a meeting on generalities was instead described as a full-court press for OneUnited. An anonymous Treasury staffer at the meeting told the New York Times: “They wanted money – cash… That is why they were there. It was very, very explicit.”
They wanted $50 million for OneUnited in bailout money. Two weeks later, they got $12.1 million. About the meeting turning into a personal appeal for funds, former Treasury Department staffer Stephen Lineberry told the Times, “I don’t remember that ever happening before.”
Waters brushes off allegations that this was a congressionally-engineered taxpayer shakedown, saying this was merely an example of her commitment to black-owned banks.
Too many lawmakers intervene in business affairs for their own gain.
If Congresswoman Waters did so in this case, she should not be able to deal her way out of trouble by playing the race card.
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Published by The National Center for Public Policy Research. Reprints permitted provided source is credited. New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21 or the National Center for Public Policy Research.