TARP
The Great American Coverup
Sightings from The Catbird Seat
~ o ~
Definition of tarp - the short form of a big word meaning a coverup constructed
from whole cloth, designed to protect stuff that can't withstand exposure to the elements.
Here is the government's 106 page definition - read and enjoy
CNNMoney.com
June 30, 2009
Hawaii bank got U.S. help
after Inouye’s aide placed call
By Paul Kiel, Pro Publica
WASHINGTON — Sen. Daniel 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.
Many lawmakers have worked to help home-state banks get federal money since the Treasury announced in October that it would invest up to $250 billion in healthy financial firms. But the Inouye inquiry stands apart because of the senator’s ties to Central Pacific. While at least 33 senators own shares in banks that got federal aid, a review of financial disclosures and records obtained from regulatory agencies shows no other instance of the office of a senator intervening on behalf of a bank in which he owned shares.
Inouye, D-Hawaii, declined a request for an interview but acknowledged in a statement that an aide had called the FDIC to ask about Central Pacific’s application. Inouye said he was not attempting to influence the outcome. The statement did not address Inouye’s personal role in the inquiry, including whether he directed the aide to make the call or knew at the time that it had been made.
Even if Inouye were directly involved, it would not violate the rules the Senate sets for itself, experts said.
Both the FDIC and the Treasury said the decision was not affected by the involvement of Inouye’s office.
Inouye reported ownership of Central Pacific shares worth $350,000 to $700,000, some held by his wife, at the end of 2007. The shares represented at least two-thirds of Inouye’s total reported assets. Inouye has requested a delay in filing his annual financial disclosure for 2008, which was due this spring, and he declined to provide the current value of his investment. Since the end of 2007, the bank’s stock has lost 79 percent of its value.
Central Pacific was founded in 1954 by a group of World War II veterans including Inouye who were emerging leaders in Hawaii’s Japanese-American community.
“The time had come to fund a bank that could provide equitable service not only to the Japanese, but to all communities,” Inouye is quoted as saying in an exhibit in the lobby of one of the company’s Honolulu branches. Inouye, who became the bank’s first secretary, said that he initially invested $3,000, the minimum amount possible.
Central Pacific is Hawaii’s fourth-largest bank, holding about 15 percent of the state’s deposits. In recent years, it increasingly used the money to make loans in California, funding several large residential developments. By last year, the bank was facing the consequences of California’s collapsing housing market. In July, Central Pacific reported a quarterly loss of $146 million, matching its total profit in the previous three years.
In October, shortly after the government announced that it would invest billions of dollars in banks to spur new lending, Central Pacific submitted an application under the initiative, called the Troubled Assets Relief Program, or TARP.
The bank faced long odds. More than 1,600 banks submitted applications to the FDIC in the three months after the program was announced, according to a report by the FDIC’s inspector general’s office. The agency forwarded 408 applications to Treasury, which approved only 267, or roughly 16 percent of the total.
Central Pacific’s situation was even bleaker because it was in trouble with the FDIC. Regulators had raised concerns about the bank earlier in the year. The bank would soon sign an agreement with its state regulator and the FDIC requiring it to raise an additional $40 million in capital and to improve its management practices.
After the bank applied for bailout funds, weeks passed. Andrew Rosen, a spokesman for Central Pacific, said that regulators had told the bank that the process would take “some time” because of the glut of applications.
In late November, still waiting for an answer, the bank’s government-affairs officer called Inouye’s office to ask that it check on the status of the application, according to Rosen. (Rosen said in an initial interview that the bank had not contacted Inouye’s office about the application. After Inouye was contacted for this story, Rosen said that he’d been mistaken, that the bank had called Inouye’s office.)
One day after the bank’s request, an Inouye aide called the FDIC’s regional office in San Francisco, which regulates Central Pacific. Inouye said in a statement that the staffer, Van Luong, “simply left a voicemail message seeking to clarify whether Central Pacific Bank’s application for TARP funds had actually been received by the FDIC.” The statement said that the bank was soon notified that the application had been received, “and that closed the matter.”
This single phone call was the entire extent of my staff’s contact with regard to Central Pacific Bank, to any outside agency,” Inouye said.
Internal FDIC e-mails obtained through the Freedom of Information Act show that Luong’s question was referred from San Francisco to FDIC headquarters in Washington. A few days later, Alice Goodman, who heads the FDIC’s office of legislative affairs — and whose office is typically the point of contact for congressional inquiries — called Luong to say that the application “was still under process.”
The internal e-mails show that the application had been forwarded to an inter-agency council headed by the Treasury Department that reviews cases in which a bank did not meet the criteria for a federal investment. Those criteria require banks to demonstrate their viability without the benefit of federal funding.
Shortly after the Inouye staffer’s phone call, the council approved Central Pacific’s application.
So far, more than 600 banks have received federal investments. While some recipients have started to repay aid, the Obama administration announced this spring that it would continue to accept applications from community banks until November. The crush of calls from Capitol Hill on behalf of specific applicants led the Treasury to announce earlier year that it would start releasing a weekly list of congressional inquiries. It has yet to do so.
The question of what role members of Congress have played in influencing the Treasury’s decisions is under review by the special inspector general appointed to oversee the financial rescue program. A spokesman for the special inspector general said a report is expected later this summer.
Such contacts by members and their staff do not violate the rules Congress has established to govern itself. “Congress has never been willing to adopt strong conflict-of-interest rules for its members, but for the most part, has left it up to each member to decide for themselves whether they have a potential conflict of interest,” said Fred Wertheimer, president of Democracy 21, a watchdog group.
The most similar known case comes from the House. Rep. Maxine Waters, D-Calif., arranged a meeting between regulators and OneUnited of Massachusetts, a bank in which her husband held shares. Rep. Barney Frank, D-Mass., who did not own shares in the company, subsequently inserted language into the bailout bill that effectively directed the Treasury to give special consideration to that bank.
The report by the FDIC inspector general found that 26 of the 408 companies whose applications were sent to the Treasury faced enforcement actions as severe as those against Central Pacific. Because the FDIC inspector general did not name these 26 banks, it is unclear how many ultimately won the Treasury’s approval. Nor is it clear whether any other bank used the Treasury money — as Central Pacific did — to address a capital shortfall identified by regulators.
Several financial analysts said they know of no other instances in which Treasury money was used this way. But they said it was impossible to be sure because banks are not required to disclose such regulatory actions, for instance those requiring that firms raise additional capital. Central Pacific had made this disclosure voluntarily.
Andrew Gray, an FDIC spokesman, said the Central Pacific decision was not unique, but he declined to name other banks, citing a policy against commenting on specific institutions.
ProPublica is an independent, nonprofit newsroom that produces investigative journalism in the public interest.
* * *
http://www.voy.com/129276/1412.html
May 15, 2009
Insurers get preliminary
OK for Treasury funds
By JENNIFER MALLOY ZONNAS , AP
The federal government has agreed to extend billions in bailout funds to six major U.S. life insurers, helping them shore up their capital positions in the wake of major investment losses.
The Hartford Financial Services Group Inc. said Thursday that it had been notified by the Treasury Department that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP. Lincoln National Corp. ), which goes by the name Lincoln Financial Group, said it has been initially cleared for a $2.5 billion injection from TARP's Capital Purchase Program.
Allstate Corp. ( ALL - news - people ) of Northbrook, Illinois, Minneapolis-based Ameriprise Financial ( AMP - news - people ) Inc., Principal Financial Group ( PFG - news - people ) Inc. of Des Moines, Iowa, and Prudential Financial Inc. ( PRU - news - people ) of Newark, New Jersey, also are among insurers receiving preliminary investment approval, Treasury spokesman Andrew Williams confirmed. He declined to disclose the amount of investment each company will receive.
The total capital injection into the six companies will be less than $22 billion, The Wall Street Journal reported, citing a person familiar with the situation.
Shares of the insurers were mixed at midday Friday. Shares of Connecticut-based Hartford Financial rose 58 cents, or 3.9 percent, to $15.33, while Lincoln National gained 10 cents to $16.34, Ameriprise added 17 cents to $25.23 and Principal Financial rose 26 cents to $19.13. But shares of Prudential fell 96 cents, or 2.5 percent, to $38.41 and Allstate lost 55 cents, or 2.2 percent, to $24.70.
The $700 billion TARP bailout fund, approved by Congress last year, was originally intended to purchase toxic loans on the books of banks that were inhibiting their ability to make loans. But the fund quickly morphed into a capital backstop fund for banks and was also used by the Treasury Department to make loans to General Motors Corp. Chrysler and insurance giant American International Group Inc. people
Life insurers also requested government aid, worried that their balance sheets had became clogged by illiquid assets and escalating liabilities to policy holders who bought in to this decade's explosion in the variable annuities market.
Life insurers own 18 percent of all corporate bonds, so aiding them is consistent with the bailout program's goal of unclogging credit markets. Insurers also have seen their investment portfolios slammed by declines in stocks, real estate and other financial assets in the last two years. Analysts have warned that some insurers risked falling below necessary capital levels, which is essential to avoiding costly downgrades from ratings agencies.
Related Stories
Insurance companies won backing from the Bush administration last year to be considered for the government's TARP program because some of the companies either owned savings and loans or acquired them to be considered for the bailout program, or were already classified as bank holding companies. The Hartford and Radnor, Pennsylvania-based Lincoln National, two of the largest U.S. life insurers, and several others applied to become thrift holding companies last fall.
Regulators approved applications earlier this year from those two firms. Hartford said in January that it expected to be eligible for between $1.1 billion and $3.4 billion in bailout money.
After a company receives preliminary approval for support from the TARP program, it can take several weeks for the final paperwork to be approved and for the loans to be disbursed.
"These funds would further fortify our capital resources and provide us with additional financial flexibility during one of the most volatile market climates in our nation's history," Ramani Ayer, chairman and chief executive of The Hartford, said in a statement.
"Access to the Treasury's Capital Purchase Program is a means to further enhance the company's financial flexibility and capital in what has continued to be an unprecedented economic environment," said Dennis R. Glass, president and chief executive of Lincoln Financial.
Not all insurers sought U.S. aid, however. MetLife Inc. said last month it would not participate in the Treasury Department's capital purchase program. The New York-based insurer issued the statement in response to widespread speculation that life insurers would seek a federal bailout.
http://www.forbes.com/feeds/ap/2009/05/15/ap6428856.html
LOTS MORE TARP COVERUPS TO COME
FOR MORE NOW...
GO TO
\/
AIG: THE AMERICAN IDOL OF GREED
AXA: BEHIND THE DARKENED BLINDS
BCCI: THE BANK OF CROOKS & CRIMINALS
THE BEAR STEARNS IN THE BUSHES
A CONNECTICUT YANKEE IN KING KAMEHAMEHA’S COURT
CONSECO: BIRDS IN THE TRAILER PARK
THE CIA’S BEHAVIOR CONTROL EXPERIMENTS
CITIGROUP: VAMPIRES IN THE CITY
CONFESSIONS OF A WHISTLEBLOWER
THE NESTS OF C.B. RICHARD ELLIS
THE DIRTY LITTLE SECRETS OF DOW CHEMICAL
DIRTY MONEY, DIRTY POLITICS & BISHOP ESTATE
THE EAGLE HOODED: THE 9-11 COVERUP
THE GREEDY GHOULS OF GLAXOSMITHKLINE
THE BUZZARDS IN THE HALLS OF PUNAHOU
THE INDICTMENT OF GEORGE W. BUSH
INDIANA JIM JONES & THE PEOPLE’S TEMPLE OF DOOM
KAJIMA: BLOOD, BRIBES & BRUTALITY
NESTS OF THE INSURANCE VAMPIRES
PRUDENTIAL: A NEST ON SHAKY GROUND
RON REWALD: FLYING HIGH IN HAWAII
SUKAMTO SIA: THE INDONESIAN CONNECTION
THE NATURE CONSERVANCY OF HAWAII
MARSH & McLENNAN: THE MARSH BIRDS
THE SILENCE OF THE WHISTLEBLOWERS
THE EAGLE HOODED: THE 9-11 COVERUPS
TRANSYLVANIA TRAVELERS AT ST. PAUL
THE VAMPIRES ON JUPITER ISLAND
VULTURES IN THE NATURE CONSERVANCY
VULTURES OF THE SANDWICH ISLES
> ZEROING IN ON ZURICH FINANCIAL SERVICES <
MORE OF THE CATBIRD’S FAVORITE LINKS
FAIR USE NOTICE. This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Latest Update: July 2, 2009
* * * * *
THE CATBIRD SEAT ARCHIVES
The Catbird Seat Archives: 2000-2002
The Catbird Seat Archives: 2002-2007
* * * * *