... A deeper problem for Congress. But a growing catastrophe for the country.
How far should Congress go to help a bank that's in trouble if it's not Goldman Sachs, JP Morgan, or another major bank that has enormous influence in Washington? But which is a bank which a) might not make it anyway, but b) whose ownership is non-white, struggling, and perhaps overdue for special consideration? The trouble is, the bank management had been behaving irresponsibly. So this was a business failure, not an example of class or race discrimination. Right?
Much as I hate to say it, I think the problem here lies not so much in the office of Maxine Walters as in that of Barney Frank. Leave aside (!) the undoubted influence of Paulson and Geithner on two administrations on behalf of Goldman Sachs. It remains that Barney Frank, after cautioning Walters that she would be stepping over the line if she interceded on behalf of OneUnited because of her personal involvement, should not have interceded himself.
OneUnited didn’t go through the same door as the other banks, so it's not too surprising that it got bailout money despite being weak.
Strength and weakness were calculated based on banks’ ratio of Tier 1 capital (that’s equity and disclosed reserves) to total assets. The FDIC requires banks to have at least a Tier 1 ratio of 3 or 4 percent ..., depending on their classification. According to the Investigative Reporting Workshop, OneUnited’s Tier 1 ratio was just 1.8 percent ... in the quarter before it received bailout money.
OneUnited representatives did not comment ... for the Investigative Reporting Workshop story. Frank has said he has “no regrets ... ” about helping the bank.
But despite its $12 million influx of federal cash, the bank still ranks among the worst of those bailed out. The bailout money has not been repaid, and OneUnited “has not yet met” all the goals of the corrective plan set forth by federal and state regulators, according to the Investigative Reporting Workshop.
Unlike most of the other banks, ... OneUnited’s financial troubles were “not primarily due to bad loans” or subprime lending, but were instead due to its Fannie Mae and Freddie Mac investments. ...Pro Publica
Compared to just about everything else that led up to bank failures -- a crash of the financial system, a severe recession, highly partisan politics, and persistent and virulent racism in the nation -- the matter of OneUnited is small potatoes. But when you look at it in the context of bank bailouts, it surely proves that we no longer have the guts to deal with the over-riding corruption of our country, preferring instead to go after very minor players. The minor players pay a price, but it's nothing like the price we're going to pay for avoiding the systemic disease.
