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Maxine Waters under scrutiny for bank ties

The Los Angeles congresswoman's husband had ties to OneUnited Bank, which received bailout funds. She helped set up a meeting last fall with the bank and Treasury officials.

March 13, 2009|Richard Simon and E. Scott Reckard

WASHINGTON AND LOS ANGELES — Rep. Maxine Waters, one of Los Angeles' most enduring liberal politicians, has come under scrutiny because of bailout funds that went to a bank in which her husband had owned stock and served on the board.

Waters was a senior member of the congressional committee dealing with the financial crisis when OneUnited Bank -- one of the nation's largest minority-owned institutions -- received $12 million in bailout funds.

Her husband, Sidney Williams, served on the bank board until early last year and held at least $500,000 in investments in the bank in 2007, the most recent year for which public financial disclosure statements are available.

A month before Congress enacted the bailout program, Waters helped set up a meeting between the chief executive of the bank, representatives of other financial institutions and Treasury officials.

"When a member of the financial services committee calls, you pay special attention," said Jeb Mason, who was a high-ranking Treasury official last fall.

He said that the September meeting was billed as a broad discussion by minority-owned banks of the problems they faced but that it ended up a discussion of one bank's problems. He said he only recently learned of Waters' husband's ties to OneUnited and would have liked to have known about them. He added, however, that the connection didn't influence the department.

OneUnited did not receive any federal money at that time, but by mid-December, it had received $12 million in bailout funds.

Waters did not respond to requests for comment.

House Financial Services Committee Chairman Barney Frank (D-Mass.) said in an interview Thursday that he advised Waters last fall to "stay out of it" because he knew her husband had served on the bank board.

Frank said Waters was concerned about the plight of minority-owned banks, as was he.

"She acknowledged that 'Sidney had been on the board. I could have a conflict here,' " Frank said. "I said, 'Fine, just stay out of it, I'll deal with it.' "

Noting that OneUnited is based in Boston, he said, "I wasn't, as chairman of the banking committee, not going to do all I could to keep the only black-owned bank in my area alive."

Frank said he was unaware of any contacts Waters may have had with Treasury.

OneUnited Chief Executive Kevin Cohee and Treasury officials said the bank was scrutinized before it received any bailout money.

In late October, the bank's regulator, the Federal Deposit Insurance Corp., chastised the bank for being undercapitalized and operating in an overly risky manner. The agency also criticized the bank's "payment of excessive compensation, fees and benefits" to senior executives.

Cohee said his bank -- which was heavily invested in Fannie Mae and Freddie Mac -- received federal funds only after it strengthened itself.

It raised $20 million from private shareholders and passed muster with the FDIC, he said.

Treasury spokesman Andrew Williams declined to discuss details of how OneUnited received the bailout but said the award resulted from the same "strict procedure" followed in the Troubled Asset Relief Program.

"The TARP investment decisions are based on merit," he said, with funds available only to banks that apply to their chief regulator -- the FDIC, in OneUnited's case -- and win approval.

An FDIC spokesman declined comment on OneUnited or any bank it regulates.

Cohee said numerous representatives from minority-owned banks and from the government attended the September meeting, which was set up to air their complaints that their investments in Fannie and Freddie preferred stock had been devastated when the government seized control of the giant mortgage companies.

Waters, a South Los Angeles political fixture who won election to the state Assembly in 1976 and to Congress in 1990, has previously come under scrutiny for activities that benefited her family financially.

The Los Angeles Times in 2004 reported that her family members made more than $1 million by doing business with companies, candidates and causes that the congresswoman helped.

Her husband is a former professional football linebacker turned Mercedes-Benz salesman, who in 1993 was named U.S. ambassador to the Bahamas by President Clinton.

Waters' most recent financial disclosure statement, filed in May, shows that her husband had two major investments in OneUnited Bank in 2007, each for $250,000 to $500,000.

One is a dividend-bearing investment, almost certainly stock in the bank, that returned dividends of $15,000 to $50,000 in 2007.

The other investment returned interest of $5,000 to $15,000, the statement shows, but does not further describe it.

Cohee contributed $4,000 to Waters' campaign fund between 2002 and 2005.

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richard.simon@latimes.com

scott.reckard@latimes.com

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Times staff writer Ralph Vartabedian contributed to this report.

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