OneUnited sought Barney Frank's help for TARP funds (still no investigation of the Banking Queen)
Boston’s OneUnited Bank received $12 million in federal rescue funds last month just weeks after regulators issued a cease-and-desist order to overhaul some of its lending and executive compensation practices.
Details of the Federal Deposit Insurance Corp.’s official enforcement action against OneUnited and the bank's pending $12 million infusion were first reported Dec. 5 in a Page 1 article in the Boston Business Journal. The Wall Street Journal reported Thursday that the tiny bank received the bailout money after gaining influential support from Massachusetts congressman and House Financial Services Committee Chairman Barney Frank.
The funds came from the U.S. Treasury’s Troubled Asset Relief Program.
The FDIC’s cease-and-desist order said OneUnited must cut financial ties to a California-based limited liability company that owns a beachfront home in Santa Monica. OneUnited Chairman and CEO Kevin Cohee and his wife, Teri Williams, who also is the bank’s president, control the LLC, according to records with the California Secretary of State’s office.
The bank also pays for a Porsche for Cohee’s personal use.
Cohee and Williams are Chestnut Hill residents who rank as the bank’s largest common shareholders. In early 2007, their limited liability company purchased a $6.4 million Santa Monica home with the help of a bank loan, but not from OneUnited, said the bank’s senior counsel, Robert Patrick Cooper, during an interview last month.
He said Cohee received a housing allowance for the Santa Monica residence because he spends a significant amount of time in Los Angeles, where OneUnited has six branches and most of its assets.
The bank must stop paying any expenses related to 703 Palisades Beach Road LLC, which Cohee and Williams set up to buy a 3,200-square-foot home, according to Los Angeles County real estate records. OneUnited declined to disclose the amount of the allowance.
A recent depletion of OneUnited’s capital prompted regulators to conduct a top-to-bottom review of the bank’s expenses and operations, Cooper said. The FDIC described compensation to senior executives as “excessive.”
The FDIC action orders the bank to bolster capital, provide adequate supervision over bank officers and diversify its stock portfolio.