Senator Menendez (D-NJ), in a letter to The Fed, urged the approval of a bank sale where the chief officers were major campaign donors. I know, nothing new to see here, just move along. They are all bloodsucking parasites that need to be kicked to the curb, and soon.
This also reminds me of my own public servant, Sen. Daniel Inouye, whose ‘staff’ made a few phone calls and magically, Central Pacific Bank was bailed out.
Sen. Daniel K. Inouye’s staff contacted federal regulators last fall to ask about the bailout application of an ailing Hawaii bank that he had helped to establish and where he has invested the bulk of his personal wealth.
The bank, Central Pacific Financial, was an unlikely candidate for a program designed by the Treasury Department to bolster healthy banks. The firm’s losses were depleting its capital reserves. Its primary regulator, the Federal Deposit Insurance Corp., already had decided that it didn’t meet the criteria for receiving a favorable recommendation and had forwarded the application to a council that reviewed marginal cases, according to agency documents.Two weeks after the inquiry from Inouye’s office, Central Pacific announced that the Treasury would inject $135 million.
WASHINGTON—Sen. Robert Menendez of New Jersey urged the Federal Reserve last July to approve an acquisition to save a struggling bank in his state. He didn’t mention that the bank’s chairman and vice chairman were big contributors to his political campaign.
If the acquisition had been approved, it would have prevented the two executives from losing what was left of their investments in the bank.
In his letter to the Fed July 21, Mr. Menendez said there was a strong likelihood that First BankAmericano, of Elizabeth, N.J., would fail in three days, which would “send yet another negative message to consumers and investors and further impact our fragile economy.” The one-page letter, obtained by The Wall Street Journal under the Freedom of Information Act, urged Fed Chairman Ben Bernanke to approve a sale of the bank to JJR Bank Holding Co. of Brick, N.J.
The Fed didn’t act on the request from Mr. Menendez, a Democrat, and First BankAmericano, which was closely held, failed July 31.
While lawmakers routinely forward requests from constituents to government agencies, it is rare for them to make specific requests along the lines of this letter asking specific actions, bank attorneys and congressional aides said. One reason is to avoid any appearance of trying to influence the regulatory process for political ends.
The chairman of First BankAmericano at the time of the letter, Joseph Ginarte, is a high-profile attorney with offices in New York and New Jersey. He has given a total of about $30,000 to Mr. Menendez and his political-action committee since 1999, according to federal records.
The vice chairman of the bank was Raymond Lesniak, a New Jersey state senator and local political heavyweight. He also has given generously to Mr. Menendez’s campaign coffers. In 2006, Mr. Lesniak held a fund-raiser at his home for the senator featuring former President Bill Clinton, according to news reports at the time.
When the bank failed, the shareholders, many of them board members, lost their investments. Had the acquisition been approved, Messrs. Ginarte and Lesniak still would have lost a large chunk of their investment but not all, according to First BankAmericano’s former chief executive, Holly Bakke. The size and value of their investments couldn’t be learned.
Mr. Menendez’s statement is a matter of semantics:
In a written statement, Mr. Menendez said helping the community bank, which mostly served Hispanics, was the right thing to do. “If any New Jersey constituent—regardless if it is a family or a local community bank—comes to me seeking assistance with a legitimate federal matter, not only is it important to help, I was elected to help,” he said. “Telling them ‘no’ would be abdicating my responsibility.”
An aide to the senator said the political contributions didn’t influence the decision to write the letter. The aide called its language a mistake, saying it should have stopped short of asking the Fed to take specific action.