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Maxine Waters: First Chapter in Larger Story?

Maxine Waters and OneUnited: Minority and Community-Owned Banks Owe Treasury Missing Dividends

The House Ethics Committee is not the only group focusing on misuse of TARP monies. A Special IG Task Force (SIG TARP) in Washington is currently hiring investigators to focus on mostly minority and community-owned banks that have stopped paying dividends to the government– $188,980 million in missing dividends so far.

This is not good news.

The latest Quarterly SIG TARP Report to Congress (pages 77-81) lists 104 financial institutions that  received millions in TARP funds but that are longer paying dividends – a red flag that can mean an institution may have turned out the lights and hung out the “Closed for Business” sign after receiving government bailout money. In a worst-case scenario, bank managers and executives linked to these institutions could also be MIA.

While the Report is carefully worded—it notes, for instance, that some of the banks listed have ‘only missed one payment,’ and that 15 financial institutions (QFI) have caught up since the list was published, that fact is that nearly one-third of the banks listed have missed 3 or more dividend payments—Saigon National Bank, which received $1.5 million in TARP assistance, has missed dividend payments over 5 quarters.

Other institutions may be in arrears over fewer quarters but remain on the hook for significant amounts owed:

($ Thousands)

CIT Group Inc.           58,250.

First Bancorp              15,000.

First Banks, Inc.          12,074.5

Popular, Inc.                11,687.5

Pacific Cap Bancorp   9,031.7

The Report makes a distinction between cumulative and non-cumulative  dividends—missing dividends from Saigon National Bank, for example are non-cumulative. The distinction between the two terms however, turns not so much on the distinction between owing and not owing, but on the difference between owing and collecting: since non-cumulative dividends are not guaranteed, shareholders are out of luck in regard to their legal retreival. $5.2 million out of the total $188,980 million in missing dividends fall into this category.

The Report also notes that when an institution misses 6 quarterly payments to the government, Treasury has the right to appoint two members to the institution’s board of directors, an eventuality the government appears to anticipate.

California Representative Maxine Waters (D-CA), who led the charge to ensure minority and community-owned banks got their share of TARP funds, says that these banks were “…not too big to fail, but too small to be noticed.”  

Not anymore, it seems.

Waters says the meetings her office arranged with Treasury officials were meant to ensure that TARP funds were eventually released to these weak but deserving banks, including $12 million to OneUnited Bank, in which Water’s husband Sidney Williams owns considerable stock. According to Waters, the OneUnited representative who attended the meeting with Treasury executives spoke for every minority-owned bank represented by the National Bankers Association, not just for OneUnited.

As of March 31, 2010, OneUnited had racked up 4 missed dividend payments totaling a little more than $603 thousand. On August 17, 2010, the Wall Street Journal reported that OneUnited had chalked up its sixth consecutive missed payment to Treasury.

A full list (2009) of minority banks that received TARP funds  is also available at several sites and discussion about connections between some of these banks and “TARP Hanky-Panky” is already making its way, via both partisan and mainstream blogging, across the webscape.  

David Knowles, reporting for AOL News Surge Desk, lists some of these Tarp recipients and the amounts Treasury sent their way: 

Broadway Federal Bank
A black-owned bank in Los Angeles received $9 million in TARP funds.

Citizens Trust Bank
The nation’s fifth-largest African-American-owned bank got $7.3 million from the Treasury Department.

Saigon National Bank
Catering to Southern California’s Vietnamese immigrant population, the bank received $1.5 million in TARP assistance.

First Independence Bank
Based in Detroit, this bank received $3.2 million in TARP money.

Liberty Bank and Trust
The New Orleans based bank, which caters to individuals and minority-owned businesses, accepted just over $218,000 from the Treasury.

The Special IG Task Force charged with tracing missing dividends is currently recruiting and hiring financial investigators, many of whom are former federal agents, to work in DC, Atlanta, New York, Los Angeles, San Francisco and other financial centers.

 The Maxine Waters story may be only the first chapter in a much larger volume.    











Kathleen Millar

Kathleen Millar began her career in public affairs working for Lyn Nofziger, White House Communications Director. She has gone on to write about a wide range of enforcement and security issues for DHS, for the US Department of the Treasury (Customs & Border Patrol), for Senator Olympia Snowe (R-ME), then a Member of the Senate Intelligence Committee, and for top law enforcement officials in the United States and abroad.

A Founding Member of the Department of Homeland Security, Millar was also the deputy spokesperson-senior writer for the United Nations Office on Drugs and Crime in Vienna, Austria. She has authored numerous speeches, articles and opeds under her own and client bylines, and her work, focusing on trafficking, terrorism, border and national security, has appeared in both national and international outlets, including The Washington Post, The Washington Times, The International Herald Tribune, The Financial Times, and Vital Speeches of the Day.

Kathleen Millar holds an MA from Georgetown University and was the recipient of a United Nations Fellowship, International Affairs, Oxford. She is a member of the Georgetown University Alumni Association, Women in International Security (GU), the Women’s Foreign Policy Group, and the American News Women’s Club in Washington, DC. Kathleen Millar is currently teaching and writing about efforts to combat transnational organized crime.