Inside the FDIC, however, officials immediately connected Paulson’s decision with Waters’s family ties to the bank. “Evidently Kevin has called Maxine Waters. . . . (Is it her husband who is on the board?) . . . to complain about our mistreatment of the bank,” Doreen Eberly, then regional director, wrote to Boston area director Daniel Frye on Sept. 9. “Yes, husband of Maxine,” Frye replied.
Waters’s husband, Sidney Williams, served on OneUnited’s board from 2004 until April 2008. Waters, who served on or chaired a House Financial Services subcommittee through this period, held some bank stock for a time but sold it before these events. Her husband’s holdings were valued at $350,000 in June 2008.
At the outset of the FDIC’s deliberations, Frye told a senior official in Washington that OneUnited’s appeal for help was “going nowhere I hope.” Because Cohee had made bad investments, Frye added in a Sept. 12 e-mail, “there is no reason to talk about moral hazard if it does.”
None of the other regional or Washington officials, in e-mails written before the FDIC’s decision to help, said they were opposed outright. But several described it as a dangerous precedent. Serena Owens, the FDIC’s associate director for supervision, separately warned top officials that OneUnited’s management and board “have consistently demonstrated an inability or unwillingness to address criticisms and recommendations of examiners,” raising issues of trust, according to an Oct. 15, 2008 e-mail.One e-mail dated Sept. 29 makes clear that top FDIC officials believed that members of the Congressional Black Caucus would try to stymie the administration’s Troubled Asset Relief Program bill authorizing a broad bailout of many financial institutions if it lacked a provision specifically helping OneUnited. Such a provision, added by Rep. Barney Frank (D-Mass.), the Financial Services Committee chairman, was later cited by the FDIC as a justification for its assistance.
Lane said in his March 2009 e-mail that he told complaining staff members that “there are often external issues at work that we do not have control over and the board or the treasury has to take all factors into consideration.”
Eberly wrote in March 2009 that although “the CEO’s treatment of our examiners and his public utterances about the whole situation are distasteful to everyone,” the agency could — under the bailout deal — pressure Cohee into signing a cease-and-desist order curbing his expenses and allowing more oversight.
“Confidential internal staff discussions aside . . . [OneUnited] was ultimately required to raise capital . . . and address its management issues,” FDIC spokesman Andrew Gray said Friday. He said the agency had followed “interagency guidance to provide flexibility” for banks affected by the devaluation of Fannie and Freddie stock.
In a previously undisclosed June 2009 report, FDIC Inspector General Jon T. Rymer concluded that the agency’s five-member board should have reviewed OneUnited’s requests for an accounting rule exemption more carefully, according to three sources who have seen it.
Rymer specifically faulted the board for relying on unaudited claims by the bank underpinning the accounting rule exemption request, including its projection of future earnings. But he said he did not find evidence that politics had swayed the agency’s decision making.
“My thinking is this,” Spoth wrote in an e-mail to the acting regional director on Oct. 28, as the agency wrapped up its deliberations on OneUnited and prepared to pass key paperwork on the potential loan bailout to the Treasury. “We did what we could to avert failure. . . . We got the corrective program that we needed. . . . If the UST makes an investment, that’s their call. What a country.”