If anyone thinks the TARP program under Henry Paulson’s guidance was not steered by political influence, think again.
According to the Wall Street Journal politicians in Washington, some of the same ones who have been on a Paulson TARP bash recently, received what some may call special treatment for banks in their districts.
…in December OneUnited got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.
Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank.
Frank was not the only politician who intervened.
Several Ohio banks received funds after Ohio’s congressional delegation complained bitterly about the treatment of Cleveland-based National City Corp., which regulators forced into a merger rather than provide with cash. And in Alabama, the state’s top banking official says a windfall there — five banks are slated to receive funds — is testament to the influence of two powerful Alabama lawmakers who sit on key congressional committees.
Rep. Spencer Bachus and Senator Richard Shelby have been no slouches in getting money for their home state of Alabama.
Trabo Reed, Alabama’s deputy banking superintendent, wrote a letter to Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, complaining that the government had dragged its feet and kept banks and state officials in the dark. The letter didn’t specifically cite Colonial (which had no comment).
Rep. Bachus’s office forwarded the letter to the heads of bank regulatory agencies and asked them to examine the situation. Since the letter was forwarded, two more Alabama banks have received TARP funding. Five Alabama banks, including Colonial, are slated to collect a total of about $4.2 billion.
In all, about 50 state-chartered Alabama banks applied, according to state banking superintendent John Harrison. He says his office helped shepherd them through the process, figuring that “the more applied, the more had the chance to get it.”
Mr. Harrison says that in addition to Rep. Bachus, Alabama Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, “has been a big proponent for Alabama state-chartered banks…and he was really concerned that the TARP money went here.” The banking official added: “We’re blessed with a U.S. senator that was on the banking committee and Spencer Bachus being the ranking Republican” on the House panel. “I think [the Treasury] got the message.”
The offices of both Bachus and Shelby say they have not intervened.
As we have heard of the past few days, perception can be just as damning as reality. The problem is that members of both the House of Representatives and the Senate have been elected to represent their districts or states and that representation seems to be put ahead of the good of the country.
So, when the Senate and House chastise witnesses concerning “transparency” perhaps they believe it does not apply to them. We are left to hope that the transparency of the new White House is real and that it can find its way to the Capitol.
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