The Washington Post today has the kind of article I hate to read. It explains that Senator Daniel Inouye (D-HI) may have used his political influence to reverse an FDIC ruling that a local bank should get bailout money. It gets worse: he helped to establish the bank and had most of his personal wealth there.
From the Post:
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.
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.
Ugly. Very, very ugly. The Senator, Treasury and FDIC all deny that his inquiry influenced the decision. And yet, without the inquiry, the FDIC was set to deny funds. Unfortunately, it's pretty hard to prove the inquiry alone changed that, but it seems pretty clear, from an ethical standpoint, that he should never have even inquired on the bank's behalf, given what he had to gain.
And here's the real problem, which the Post only mentions in passing:
Even if Inouye were directly involved, it would not violate the rules the Senate sets for itself, experts said.
It sounds to me like the Senate needs some better rules. What could be a more blatant abuse of political power than to obtain government bailout money for a cause that directly affects you financially? If that low of a standard doesn't violate the ethical rules Congress sets for itself, then those rules need to be addressed.
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