Bank's actions called improper

By Ross Kerber and Beth Healy, The Boston Globe

March 14, 2009

A top executive of OneUnited Bank of Boston "improperly" used the auspices of a minority banking association to secure a meeting last September with the US Treasury, at which the bank reportedly sought $50 million in aid for itself, the group's president said yesterday.

Robert Cooper, senior counsel of OneUnited, requested the meeting in a letter written on stationery of the National Bankers Association and directed to then-Treasury Secretary Henry Paulson. Cooper was the chairman-elect of the group at the time, and said in the letter he was writing "on behalf" of the association to discuss help for minority-owned banks whose investments in Fannie Mae and Freddie Mac were nearly wiped out when the government took over the ailing institutions just days before.

But the Sept. 9 meeting with top Treasury officials instead became a venue where Cooper's boss, OneUnited chief executive Kevin Cohee, requested up to $50 million to cover the bank's own losses in Freddie and Fannie, The New York Times reported yesterday. The Times quoted several of the former Bush administration's Treasury officials who attended the meeting as being disturbed by Cohee's request for OneUnited aid.

Michael Grant, the National Bankers Association's president, said yesterday that neither he nor the group's chairman at the time knew Cooper had used the association's stationery to request the meeting, and objected to the action.

"It was inappropriate. Now the board has to make a decision about what to do about it," Grant said in a telephone interview yesterday. The board will discuss the OneUnited matter at a regular meeting next week, Grant added.

Cooper and Cohee did not respond to repeated requests for comment yesterday.

OneUnited reported in its most recent financial statements that it lost $57.4 million on securities in 2008, resulting in a net loss for the year of $29 million. The statements do not specify how much of those losses were due to Freddie and Fannie.

However, the losses set off a chain of events at OneUnited: The bank's capital levels were below those required by regulators, and the Federal Deposit Insurance Corp. and state regulators in late October issued a cease-and-desist order requiring it to improve its finances.

The regulators also found that OneUnited had failed to provide adequate supervision and gave senior executives "excessive compensation, fees and benefits." It was directed to get rid of a Porsche SUV and an oceanfront home in Santa Monica, Calif., the bank paid for Cohee to use.

Just after the FDIC order in late October, Congress adopted a favorable tax measure for banks hurt by the government takeover of Freddie and Fannie.

OneUnited denied the allegations in the FDIC order. But it eventually raised additional funds from its existing stockholders, $20 million according to its most recent financial statements, and ended 2008 with its capital at sufficient levels.

"Our shareholders stepped up. We didn't go crying to anybody," Cohee said in an interview with the Globe in January about the Freddie and Fannie losses.

OneUnited did not receive special aid for the Freddie and Fannie losses, nor did the Treasury adopt a broader program to help minority-owned banks, as Cooper had requested in his letter.

In December, OneUnited received $12 million in taxpayer funds under the Treasury's extraordinary program to take stakes in US banks to stimulate lending, one of hundreds of institutions to do so. US Representative Barney Frank, chairman of the House Committee on Financial Services, has acknowledged he asked Treasury officials to consider adding OneUnited to the list of banks receiving the government aid.

The Sept. 9 meeting with Treasury officials was noteworthy for another reason: The New York Times reported it was requested by Los Angeles Congresswoman Maxine Waters, whose husband was a former board member and stockholder of OneUnited.

Though based in Boston, OneUnited under Cohee does much of its lending in the Los Angeles area, where it had acquired two minority-owned banks.

In a statement yesterday, Waters said she helped arrange the Treasury meeting on behalf of the National Bankers Association, at the request of Cooper.

"It is important to clarify that this meeting was requested and scheduled on behalf of the NBA, not on behalf of OneUnited Bank as press reports suggest," Waters said in her statement. Waters did not attend the meeting.

Cooper, the OneUnited senior counsel, followed the September meeting with another letter the next day on National Bankers Association stationery with a revised request for the government to help minority-owned banks with their Freddie and Fannie losses.

OneUnited has previously stirred the pot within the minority banking community. In 2000, Cohee launched a hostile - and eventually unsuccessful - bid to take over New York's largest black-owned lender, Carver Bancorp, a rare event in the closely-knit world of minority bankers.