Dear President Barack Obama and Speaker Nancy Pelosi:
The Black Economic Council and our nation’s 40 million Blacks have, for too long, stayed on the sidelines regarding ethics bashing by both parties. The party in power, particularly near election time, is often unfairly attacked for minor so-called ethical violations that are routine among corporate America and among the opposition party.
On August 1, the Wall Street Journal announced that Federal Reserve Chair Ben Bernanke and other members of the Federal Reserve had made an estimated $8 million from the stock market in 2009 as a result of policies heavily promoted by the Federal Reserve and Treasury.
Similarly, Congresswoman Maxine Waters had a much higher interest than the small ($500 million asset) Boston based Black-owned bank (OneUnited) in which her husband was a long-time investor. As the Federal Reserve can demonstrate, and as Chairman Ben Bernanke himself can recite, Black banks are an endangered species. Their total assets are approximately $5 billion.
Citigroup, which received $45 billion in Troubled Asset Relief Program subsidies to stay alive, despite the predatory lending practices that got the institution in trouble, has assets almost 500 times greater than OneUnited Bank. Furthermore, unlike the $12 million in TARP funds given to OneUnited, Citi received in excess of than three thousand times more assistance. Yet, Citigroup, unlike OneUnited, helped create the financial crisis.
Further, Goldman Sachs, which the Securities and Exchange Commission let escape effective scrutiny, deprived millions of working Americans of their homes and yet received directly or indirectly, including through AIG subsidies, more than $40 billion to stay alive.
Equally disturbing regarding the selective nature of the so-called ethics violation is that former Secretary of the Treasury, Henry Paulson, consistently collaborated with his former colleagues at Goldman Sachs to ensure the Goldman Sachs’ “too-big-to-fail” safety net. Similarly, former Secretary Robert Rubin was an effective lobbyist for Citigroup in creating its safety net.
Since Congresswoman Waters divulged her interest in this tiny Boston-based Black-owned bank, it appears that this is more of a political witch-hunt that singles out advocacy for the poor as a special interest and allows advocacy for the powerful–such as Goldman Sachs–to remain unpunished and generally unexamined. This Black-owned bank has never received the kind of protections and favors it should rightly receive given its unique service to unbanked and underbanked Black Americans.
World War Two analogy
During the heat of battle, soldiers who should receive a Congressional Medal of Honor are sometimes incorrectly charged with conduct leading to dishonorable discharges (no Blacks received Congressional Medals of Honor for their World War Two heroism, but thousands were forced out of the service for their unwillingness to accept a segregated military that offered better treatment for Nazi war prisoners than Black soldiers). This analogy is appropriate for Congresswoman Maxine Waters. She has done nothing wrong and should, in fact, except for the partisan environment, be a hero to Congress, Main Street and the present administration.
Congresswoman Waters has raised what the president and the speaker have not dared to raise–that racism still exists, even in the heart of federal government. (See Dodd-Frank Bank Reform bill and Waters legislation on minority and women diversity offices and the partisan Republican attack on these offices). She has sought to ensure that minorities are at the table for the distribution of almost $2 trillion in direct federal aid (from the economic stimulus and bank bailout), as well as many trillions of dollars more for indirect subsidies such as zero borrowing costs for banks.
It is said in many parts of America that there is one standard for Republicans, a somewhat higher standard for Democrats and a much higher standard for Black Democrats. This appears to be the case for Waters.
With this in mind, before condemning Congresswoman Waters, we request that the Federal Reserve provide a comprehensive report on the state of Black financial institutions over the last five years relative to the fate of the five largest financial institutions receiving federal bailouts, including Chase, Bank of America, Wells Fargo, Citigroup and Goldman Sachs.
We think you will discover that her husband’s mistake was not an ethical one but a financial misjudgment that harmed no one but himself. That is, the profit margins for Black banks are far lower than for mainstream banks. Therefore any investor primarily interested in profit would never invest in a Black bank. Their failure rates have rapidly increased and any wise investor would know better (if financial remuneration was her objective) than to invest in a Black bank as opposed to Goldman Sachs.
Public trial in D.C.
We commend Maxine Waters for refusing to plead guilty to a bogus partisan charge and to be willing to face a trial before the House. We urge the ethics panel, however, to ensure that this public trial be held in the largest indoor public forum available in D.C. in order that not just the Black community but all communities have an opportunity to demonstrate their support for a long-time advocate for the most underserved and unbanked on Main Street. It is also our expectation that the House ethics committee will call Henry Paulson, former Secretary of the Treasury to discuss in detail his virtually daily contacts with Goldman Sachs and former Secretary Rubin for his efforts on behalf of Citigroup. Both should be asked about their efforts to assist Goldman Sachs and Citigroup and other banks “too-big-to-fail.”
President Obama and Speaker Pelosi, do your duty. Stand tall behind a congresswoman who fights for justice and battles unflinchingly against unfairness and inequality, no matter how powerful her foes may be.
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