WASHINGTON - House Financial Services Committee chairman Barney Frank yesterday confirmed a report that he asked a Treasury Department official to consider giving bailout money to Boston's troubled OneUnited Bank - which ended up getting a $12 million federal loan - but Frank said the action was a legitimate effort to protect the only minority-owned bank in Massachusetts.
OneUnited's chief executive officer, Kevin Cohee, said in an interview last night that the bank received no special help and applied for the federal money like any other institution.
"We think it is wonderful, and we truly appreciate that anyone steps up to try to help minority banks," Cohee said, when asked about Frank's involvement. But Cohee said his bank wound up applying for money from the Troubled Asset Relief Program "just like anybody else."
"There was no special program for us, no special pot of money," Cohee said, adding that his bank has been profitable in all but one quarter in the last 10 years and qualified for support on its merits.
Frank, a Newton Democrat, said Cohee came to Washington last fall as Congress was discussing the $700 billion financial rescue package. OneUnited's problems, Frank said, stemmed from its stock holdings in Fannie Mae and Freddie Mac, the quasi-governmental mortgage companies that were taken over by the federal government last year. OneUnited suffered a $51 million loss because of its Fannie Mae and Freddie Mac holdings, Cohee said.
Frank said that the loss was "through no fault" of OneUnited, and that he wanted to help while the bailout bill was being considered last September.
At the time, OneUnited was dealing with an investigation by bank regulators. In October, federal and state regulators entered into a "cease and desist" order with the bank, citing problems with inadequate capital, a failure to provide adequate supervision, and the bank's "excessive compensation, fees, and benefits to its senior executive officers." The bank, for example, was required to stop paying expenses related to a California beach home and to stop providing a bank-owned Porsche SUV to executives.
Cohee said that while the bank signed the order and is abiding by it, he denies all of the charges in it.
http://www.boston.com/news/local/massachusetts/articles/2009/01/23/frank_tried_to_get_hub_bank_a_bailout/
