We Get The Money, You Keep The Change Presents: Maxine Waters, The Poor Black People Advocate

Wall Street Journal:

Waters Helped Bank Whose Stock She Owned

California Democrat Has Championed Minority-Owned One United on Capitol Hill and Criticized Its Government Regulators

By SUSAN SCHMIDT

WASHINGTON -- When Rep. Barney Frank was looking to aid a Boston-based lender last fall, the Massachusetts Democrat urged Maxine Waters, a colleague on the House Financial Services Committee, to "stay out of it," he says.

The reason: Ms. Waters, a longtime congresswoman from California, had close ties to the minority-owned institution, OneUnited Bank.

Ms. Waters and her husband have both held financial stakes in the bank. Until recently, her husband was a director. At the same time, Ms. Waters has publicly boosted OneUnited's executives and criticized its government regulators during congressional hearings. Last fall, she helped secure the bank a meeting with Treasury officials.


Her involvement isn't new. Ms. Waters has detailed her financial ties in a series of federal disclosure forms and has been vocal in public in support of the bank. Those ties, however, have received little public attention. Nor is it well known how the influential lawmaker has over the years acted to support the bank and its executives.

Such potential conflicts of interest are more serious as the banking system's crisis has led the government to take an increasingly active role in overseeing financial institutions, including OneUnited. The financial-services committee on which Ms. Waters sits oversees banking issues, and the lawmaker is a potential future chairman.

Representatives of the bank and Ms. Waters didn't return calls seeking comment. Ms. Waters's congressional staff didn't respond to written questions about her and her husband's relationship with the bank.

Sheila Krumholz, executive director of the Center for Responsive Politics, a watchdog group, says Ms. Waters should have recused herself from any matters involving the bank. If her support helped OneUnited, "it was a disservice to her constituents," Ms. Krumholz says.

Ms. Waters, who represents inner-city Los Angeles, hasn't made a secret of her family's financial interest in OneUnited. Referring to her family's investment, she said in 2007 during a congressional hearing that for African-Americans, "the test of your commitment to economic expansion and development and support for business is whether or not you put your money where your mouth is."

OneUnited's executives have donated $12,500 to Ms. Waters's election campaigns.



Through a series of acquisitions, OneUnited grew to become what it says is the largest African-American-owned bank in the country. It once counted the late Motown Records boss Jheryl Busby as a vice chairman.

Ms. Waters and her husband, Sidney Williams, were investors in two African-American owned California banks that merged with other lenders in 2002 to form OneUnited. Congressional financial-disclosure forms show Ms. Waters acquired OneUnited stock worth between $250,000 and $500,000 in March 2004, as did Mr. Williams. Mr. Williams joined the board of OneUnited that year.

Each sold shares in September 2004 -- including Ms. Waters's entire stake -- but Mr. Williams continued to hold varying amount of the company's stock. In the lawmaker's most recent financial-disclosure form, dated May 2008 and covering the prior year, Ms. Waters reported that her husband held between $250,000 and $500,000 worth of the bank's stock.


Getty ImagesMr. Williams also received interest payments from a separate holding at the bank, also worth between $250,000 and $500,000. The 2008 form doesn't specify what that is. Mr. Williams stepped down from the bank's board last spring. It couldn't be learned whether he still owns stock in the bank. Mr. Williams didn't return calls seeking comment.

At a hearing on minority lending in 2007, Ms. Waters criticized regulators for not doing enough to help minority banks stave off mergers with non-minority institutions. The lawmaker said she had contacted the Federal Deposit Insurance Corp. in 2002 over such concerns and "I was told that there was nothing that could be done."

In her 2007 remarks, Ms. Waters alluded to two banks, Independence Bank of Washington, D.C., and "another bank that was about to be acquired by a major white bank out of Illinois."

Ms. Waters didn't mention that OneUnited had been an unsuccessful suitor of Independence, which had been taken over several years earlier. The second bank, which she didn't name, appears to have been Family Savings Bank of Los Angeles. In 2002, that bank backed out of a merger agreement with FBOP Bank of Oak Brook, Ill., and shortly afterward was acquired by OneUnited.

News reports at the time credited the intervention of Ms. Waters and others for Family Savings's change of heart.

At the hearing, Ms. Waters praised OneUnited's senior counsel, Robert P. Cooper, as "typical of the young, brilliant minds that have been amassed at OneUnited Bank."

OneUnited's minority-lending record is mixed. The bank received "outstanding" Community Reinvestment Act ratings for lending in Los Angeles. It has weak ratings in Massachusetts and failed to meet minimum standards in Florida.

In January, Ms. Waters acknowledged she made a call to the Treasury on OneUnited's behalf. The bank's capital, which was heavily invested in shares of Fannie Mae and Freddie Mac, was all but wiped out with the federal takeover of the two mortgage giants, and the bank was seeking help from regulators.

OneUnited eventually secured bailout funds under the government's $700 billion Troubled Asset Relief Program, which was set up later that month.

In a brief interview in January, Ms. Waters said she was unaware the bank received $12 million of TARP money, which arrived in December. OneUnited was "just a small" bank, she said.

A provision designed to aid OneUnited was written into the federal bailout legislation by Mr. Frank, who is chairman of the financial-services panel. Mr. Frank has said he inserted the provision to help the only African-American owned bank in his home state. He said in an interview that Ms. Waters's interest "had zero impact on the outcome because I would have done it anyway."

In October, regulators demanded that OneUnited raise fresh capital and name an independent board. The bank was ordered to stop paying for a Porsche used by one of its executives and its chairman's $6.4 million beachfront home in Pacific Palisades, Calif., a luxury enclave between Malibu and Santa Monica.

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Where Is That Waiver Pen? Obama Needs To Break It Out. AGAIN.

Hard to believe some people are still dumb enough to defend the Obamessiah.

New Health Czar Challenges Obama's Ethics Reforms

By Philip Klein

Nancy-Ann Min DeParle, who President Obama appointed as director of the White House Office of Health Care Reform on Monday, took home at least $2.4 million in 2006 and 2007 from serving on the corporate boards of health-care companies whose businesses she would be in a position to affect in her new position.

Since leaving the Clinton administration in 2001, DeParle has made a fortune by serving on 10 boards in the health-care industry in addition to her lucrative career as a managing director at private equity firm CCMP Capital and a senior adviser at JP Morgan Partners. Her journey from the public sector to the private sector and back again would seem to represent the type of revolving door relationship between Washington and corporate America that President Obama pledged to put an end to during the campaign and in an executive order.

Tom Daschle, who was originally supposed to hold the same "health czar" position in addition to serving as Secretary of Health and Human Services, came under fire after it was revealed that he received $220,000 for giving speeches to health groups over two years. But DeParle's ties to the health-care industry run much deeper.

In just 2006 and 2007 alone, DeParle earned $376,140 in cash and stock from Cerner Corp., according to a TAS analysis of the company's filings with the Securities and Exchange Commission. Cerner is a leader in the field of health information technology, which the Obama administration has made a key part of its health-care agenda. During the same time, she also was awarded $377,319 by DaVita Corp., which specializes in kidney dialysis, and $224,749 from medical device maker Boston Scientific Corp.

In addition, she served on the board of Triad Hospitals from 2001 through its merger with Community Health Systems in 2007. When the $54-per share deal was approved, she was paid $1,059,205 for the stock options she held in Triad and she sold an additional $349,164 in common stock, for a windfall of $1,408,369.

This analysis only scratches the surface on her overall earnings from corporate boards since 2001. The reason is that some corporations did not specify how much each individual board member received in compensation in their filings in a given year.

For instance, at medical device-maker Guidant Corp., where she served from 2001 until its merger with Boston Scientific in 2006, its filings specify that board members would have received a $36,000 annual retainer, plus $3,000 for every meeting attended in person and $1,000 for every telephone meeting. Without knowing which meetings she attended, it's impossible to say precisely how much she would have earned. In addition, at the time of the Boston Scientific merger, she was able to exercise options on 35,000 shares of Guidant stock, allowing her to convert it into shares in the newly formed entity.

This analysis also leaves out any compensation she would have received for her board work in 2008, because that information is not yet available.

Her service also included stints on the board of Specialty Laboratories Inc. from 2001-2004; pharmacy network Accredo Health Group Inc. from 2002-2005; and diagnostic imaging company Medquest Associates Inc. since 2002. In 2008, she also joined the board of Legacy Hospital Partners Inc., which was formed by former Triad executives and mail order pharmacist Medco Health Solutions Inc. (which took over Accredo).

In her new role as the so-called "health czar" DeParle will be tasked with leading the White House efforts on overhauling the system. Asked yesterday whether her extensive board service would present a problem, White House press secretary Robert Gibbs said, "No. I mean, obviously, the White House has confidence in her and her abilities as part of the health care reform effort here." Gibbs said he anticipated she would leave the boards she is currently serving on.

Daschle eventually withdrew his nomination over controversy stemming from his failure to pay taxes in addition to the uproar over his health-care industry income. As a cabinet nominee, he would have faced Senate confirmation, but DeParle will not since the Obama administration split Daschle's dual role, and tapped Kansas Gov. Kathleen Sebelius as Secretary of Health and Human Services.

Shortly after taking office, President Obama issued a widely-touted executive order requiring appointees to take a pledge declaring, "I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts."

As her web of relationships to the medical industry becomes known in greater detail, the administration will be pressed to explain how DeParle could take on overhauling the entire health-care system without violating the spirit, if not the letter, of President Obama's ambitious ethics requirements.

Change?
Definitely. In worse.