OneUnited Bank received special treatment beyond what was disclosed

From the moment Boston-based OneUnited Bank began seeking a federal bailout in the summer of 2008, it received special treatment that went beyond what the Treasury Department or the bank and its political supporters have previously disclosed.

Congress adjusted the law and regulators broke with customary practices, despite an explicit internal warning that the bank was in financial trouble. Among other exceptions, the bank was allowed to count as part of its capital $12 million in federal bailout money - before the aid arrived.

OneUnited was the only bank to receive all of these considerations among the 707 recipients of money from the Troubled Assets Relief Program, according to documents and interviews.

A close look at how OneUnited - which is now at the center of an ethics investigation involving Rep. Maxine Waters (D-Calif.) - won bailout money shows how the Treasury Department, federal regulators and another influential lawmaker helped it despite its record of bad investments and extravagant spending.

A few internal warnings sounded by regulatory analysts now seem prescient, because OneUnited is one of only a handful of banks that have failed to make six promised TARP dividend payments to the government, in this case totaling $904,000. Its chairman, Kevin L. Cohee, said in an interview that this decision was "consistent with safe and sound banking practices" and that its TARP contract permitted withholding all dividends.

A Washington Post review of documents and interviews with many involved in the decisions show that regulators flagged the bank early on for its "highly visible" connection - in OneUnited's case, a former board member who is married to Waters, the chairman of an important banking subcommittee. The alert was part of a previously undisclosed practice at the Federal Deposit Insurance Corp. of trying to identify banks that might cause "unnecessary press or public relations" problems, according to testimony a top FDIC official gave to House ethics investigators. (Continues here at WaPo)

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The aides were holding lawn signs that defended Waters from the ethics charges she is facing in the House.