Federal examiners protested help for politically connected bank, e-mails show

A decision in late 2008 by top officials of the Federal Deposit Insurance Corp. to help a politically connected bank in Boston left federal bank examiners there angry enough that some called it a “travesty of justice,” according to internal e-mails obtained by The Washington Post.

The chairman of OneUnited Bank, a friend of Rep. Maxine Waters (D-Calif.), had rendered it insolvent through lavish spending and bad investments, according to the examiners’ written accounts. But by the end of 2008, after Waters had arranged a key Treasury Department meeting for the bank, it won a bailout loan and a unique exemption from the FDIC’s accounting rules.

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• Gallery: Maxine Waters’ career in photos
• OneUnited received even more special treatment than disclosed
• Graphic: OneUnited through the fall of 2008
• Cohee at OneUnited, bank in Maxine Waters case, has checkered record

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• Feaver: Waters, OneUnited Bank and Ethics Committee

“There are some really good people expressing very strong opinions regarding what they view as a travesty of justice regarding the special treatment this institution is receiving,” John M. Lane, acting regional director, warned in a March 2009 e-mail to Christopher J. Spoth, a senior FDIC consumer protection official.

The claim that OneUnited benefited from assistance organized by Waters — whose husband held substantial stock in it — lies at the heart of unresolved House Ethics Committee charges. A special subcommittee alleged last spring that Waters’s actions related to the bank had brought discredit to the House, a claim that she has rejected.

The ethics charges were to be heard at a special hearing deferred last fall by then-Chairman Zoe Lofgren, a fellow California Democrat, partly on grounds that it was too close to the election. Rep. Jo Bonner (Ala.) the panel’s senior Republican, protested that decision, saying at a closed meeting Sept. 23 that “if, God forbid, this thing goes into the 112th Congress, I just think we are stained for life in terms of our inability to get this thing done,” according to a transcript.

A spokesman for Bonner, the committee chairman since January, declined to comment on whether or when the planned Waters hearing might be scheduled. Three key staff members involved in the probe left amid controversy over the soundness of the investigation and have yet to be replaced. But House Speaker John A. Boehner (R-Ohio) recently designated a new pool of members to serve on investigative subcommittees, a spokesman said.

The outlines of OneUnited’s difficulties and those of its president, Kevin Cohee, are already a matter of public record. But the depth of the bank’s troubles, its alleged resistance to making repairs and the FDIC officials’ dissent over the wisdom of its bailout are detailed in the e-mails, as well as in interviews with some of those involved.

In the period leading up to the bank’s crisis, a regional FDIC official said, Cohee “has apparently made accusations that examiners are biased at every exam,” stopping just short of calling them racist.

FDIC officials said that he resisted disclosing his decision to invest $50 million in Fannie Mae and Freddie Mac stock in early 2008 — or about 130 percent of the bank’s core working capital. When they subsequently pressed Cohee to sell the stock, he refused, the officials said.