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Call from Inouye's office raises conflict of interest question

By Associated Press

POSTED: 01:41 p.m. HST, Jul 01, 2009

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WASHINGTON >> Hardly a bank bailout hearing goes by in Congress without a lawmaker raising a question on behalf of constituent banks that have applied for federal assistance from the government’s financial bailout fund.

Now, the case of Sen. Daniel Inouye and his office’s inquiry to a federal regulator regarding a Hawaii bank is drawing new attention to the role lawmakers are playing in the government’s decisions on how to divvy up the $700 billion Troubled Asset Relief Program.

Constituent service or undue influence?

In Inouye’s case, the Hawaii Democrat was also one of the founders of the bank, Central Pacific Financial. And while he holds no official position with it, he is a shareholder who has watched the value of his stock in the bank drop precipitously.

According to Inouye’s office, a legislative assistant placed a call last fall to the Federal Deposit Insurance Corp., the bank’s regulator, to ask whether the agency had received the bank’s application for TARP money.

The inquiry by Inouye’s office was first reported Tuesday by The Washington Post.

In a statement, Inouye said his aide simply left a voicemail message with the FDIC and did not speak to anyone at the agency.

“This single phone call was the entire extent of my staff’s contact with regard to Central Pacific Bank, to any outside agency,” Inouye’s statement said.

Inouye’s office said an FDIC official called back days later and left a voicemail message saying the application was still under review.

The bank announced in December that its application for $135 million in TARP funds had been approved.

“We did not ask for any preferential treatment in this process,” bank spokesman Andrew Rosen said Wednesday. He said the bank briefed Hawaii’s congressional delegation about its application “as a normal course of business.”

Rosen said that thanks to the additional capital the bank this year is on track to exceed the amount of home loans it originated last year.

Numerous lawmakers have pressed regulators and the Treasury Department to act on the applications of banks that serve their districts or communities. The Ohio congressional delegation complained loudly last year when Treasury declined to give TARP funds to National City Bank, a longtime Cleveland institution.

OneUnited of Massachusetts received $12 million in federal funds in December after Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, contacted regulators and included in legislation a provision that assisted the bank. Before that, Rep. Maxine Waters, D-Calif., had organized a meeting with regulators and executives of minority-owned banks, including OneUnited, a bank in which Waters’ husband has invested.

WASHINGTON >> Hardly a bank bailout hearing goes by in Congress without a lawmaker raising a question on behalf of constituent banks that have applied for federal assistance from the government’s financial bailout fund.


Now, the case of Sen. Daniel Inouye and his office’s inquiry to a federal regulator regarding a Hawaii bank is drawing new attention to the role lawmakers are playing in the government’s decisions on how to divvy up the $700 billion Troubled Asset Relief Program.

Constituent service or undue influence?

In Inouye’s case, the Hawaii Democrat was also one of the founders of the bank, Central Pacific Financial. And while he holds no official position with it, he is a shareholder who has watched the value of his stock in the bank drop precipitously.

According to Inouye’s office, a legislative assistant placed a call last fall to the Federal Deposit Insurance Corp., the bank’s regulator, to ask whether the agency had received the bank’s application for TARP money.

The inquiry by Inouye’s office was first reported Tuesday by The Washington Post.

In a statement, Inouye said his aide simply left a voicemail message with the FDIC and did not speak to anyone at the agency.

“This single phone call was the entire extent of my staff’s contact with regard to Central Pacific Bank, to any outside agency,” Inouye’s statement said.

Inouye’s office said an FDIC official called back days later and left a voicemail message saying the application was still under review.

The bank announced in December that its application for $135 million in TARP funds had been approved.

“We did not ask for any preferential treatment in this process,” bank spokesman Andrew Rosen said Wednesday. He said the bank briefed Hawaii’s congressional delegation about its application “as a normal course of business.”

Rosen said that thanks to the additional capital the bank this year is on track to exceed the amount of home loans it originated last year.

Numerous lawmakers have pressed regulators and the Treasury Department to act on the applications of banks that serve their districts or communities. The Ohio congressional delegation complained loudly last year when Treasury declined to give TARP funds to National City Bank, a longtime Cleveland institution.

OneUnited of Massachusetts received $12 million in federal funds in December after Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, contacted regulators and included in legislation a provision that assisted the bank. Before that, Rep. Maxine Waters, D-Calif., had organized a meeting with regulators and executives of minority-owned banks, including OneUnited, a bank in which Waters’ husband has invested.

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