Justice Watch Lawsuit Raises Serious Questions on TARP Decisions

Our activist friends over at Justice Watch are just getting started. Recently, they filed a lawsuit against the US Treasury to "obtain records related to evaluation procedures used by the government to determine which financial institutions received funds from TARP." The focus of the inquiry is a potentially iniquitous $12 million cash injection provided to Boston-based OneUnited Bank, at the urging of Barney Frank.

The original FOIA had been filed on January 23, 2009, and here were the primary items of information sought: [click to enlarge]

Judicial Watch concludes:

As reported in the January 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide funds to healthy banks to jump-start lending. Not only was OneUnited Bank in massive financial turmoil, but it was also "under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use." Congressman Frank admitted he spoke to a "federal regulator" and Treasury granted the funds.

"TARP has created a whole new form of earmarking, where politicians lobby to receive mass cash infusions for special interests in their states. OneUnited Bank did not appear to be a suitable candidate for federal assistance until Barney Frank intervened and shook loose a $12 million TARP grant. The American people deserve to know if Congressman Frank's intervention improperly colored the decision to give precious tax dollars to his hometown bank," said Judicial Watch President Tom Fitton.

Zero Hedge welcomes this initiative to expose ever increasing and costly behind the scenes dealings, especially of a variety that should be made public under the auspices of the Freedom Of Information Act. The implications, such as the ensuing fallout if it is indeed demonstrated subsequent to the disclosure gleaned from this lawsuit that Barney Frank acted improperly, should hopefully be grounds for elimination of ongoing kickbacks arising from the abuse of taxpayer funding to prop the fringes of the Zombied financial system. As has been the case with Colonial, Guaranty and Corus, the perpetuation of the viability fallacy lasts only so long, and the final cost to the US taxpayer is not only much greater in the end, but carries the acute risk of impacting confidence in the financial system - the very thing that the FDIC and comparable organizations has been trying to foster since the crisis began.

hat tip hedging in

Comments

[Stock Marke...:]

This article is excellent and makes we want to puke in disgust. He is on CNBC at least once a week "fighting the good fight".

It is a sad state of our politicians to do this kind of stuff in this time of crisis.

Aug 18 02:07 PM

[Roger Knights:]

Typo: The headline and first line should read "Judicial Watch."

Aug 18 02:11 PM

[Roger Knights:]

Typo: The headline and first line should read "Judicial Watch."

Aug 18 02:11 PM

[TradingHelp...:]

Rock on Tyler. Keep on fighting the good fight.

Aug 18 02:12 PM

[Jasper M:]

While the bottom line in this case is relatively modest, the precedent should be important.
I think it is an indictment of the electorate of Barney Frank's district that he feels safe enough to indulge in this kind of nonsense.

I am no gay basher, but some people are a discredit to their inclination. I think this man threatens to do for gay rights what our president seems fated to do for race relations - set them back 50 years.

Aug 18 02:22 PM

[Moon Kil Woong:]

$12 million in TARP sadly is pretty much meaningless and sounds like a witch hunt more than a honest attempt to find out the greater injustices in TARP lending which is in the billions of dollars. The only reason this comes to one's attention is it's allegation against Barney Frank which until disclosure is only that.

Certainly in TARP there are rats. But I smell much bigger ones than that and they start with Paulson, GS, and the Bush Jr. Administration that founded the program. Such filing for disclosure should include all decisions not one. Undoubtedly, Republicans and Democrats got into the feeding free funds fest that was TARP after the dole started. The whole mess should fall under Freedom of Information or should I say freedom of incrimination laws.

Furthermore, if you disqualify TARP to anyone who is not solvent there is just about no one who didn't qualify more than Citibank and most certainly AIG.

Aug 18 08:28 PM

[lower98th:]

Wouldn't it be nice to see ALL the fraudulent insider self-dealing fully investigated? If history is any indication, public demand for justice will be assuaged by the token prosecution of isolated individuals largely disassociated from a corporate power base. Madoff and Stanford both fit this profile, and there will be others. To quote one frustrated government official, "we're hell on widows and orphans."

Aug 19 07:03 AM

[John Galt:]

Why isn't Barney Frank in jail?

Forget throwing him out of office, put that crook in JAIL and throw away the key!

Aug 19 09:04 AM

[Burton A. J...:]

So, if you are a banker in Massachusetts and want to write some subprime mortgages, sell them off to Fannie or Freddie, and have the US Treasury pick up any losses along the way, call Barney. Don't forget to put something in the pot, boy.

Obamacare, anyone?

Burton A. Johnson, MD, JD
Burton A. Johnson Portfolio Management, Inc.

Aug 19 12:22 PM

[Burton A. J...:]

So, if you are a banker in Massachusetts and want to write some subprime mortgages, sell them off to Fannie or Freddie, and have the US Treasury pick up any losses along the way, call Barney. Don't forget to put something in the pot, boy.

Obamacare, anyone?

Burton A. Johnson, MD, JD
Burton A. Johnson Portfolio Management, Inc.

Aug 19 12:24 PM