Wednesday, July 01, 2009

Culture of Corruption, Part Thirty

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.

It is, at this point, the only known instance of a U.S. senator intervening with the Treasury Department to get aid to a bank in which he owned shares.

One of the reasons for the "Culture of Corruption" series is to note than in 2005-06, Democrats argued that the majority party in Congress had lost all of their moral bearings, had forgotten, scorned, or ignored the public trust, and had abused their power to line their own pockets and increase their perks. Republicans gave them plenty of ammunition, most notably Randy Cunningham and Bob Ney. (Tom DeLay was indicted, but the case has yet to be brought to a jury, four years later.) Then, with the revelations about Mark Foley, the floodgates opened.

But the temptation of corruption knows no partisan boundary. You'll hear about the Mark Sanfords and John Ensigns and Larry Craigs. The aim here is to call your attention to those emerging scandals, every bit as important if less salacious, just under the radar . . .

07/01 09:41 AM Share