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FDIC Denies Maintaining List of Banks with ‘Prominent Connections’ (PJM Exclusive)

Responding to PJM, the Federal Deposit Insurance Company denies the allegations raised in a recent Washington Post story. But they have not yet responded to the Post directly.

by
Patrick Richardson

Bio

September 27, 2010 - 8:46 am
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On Friday, PJM contacted the FDIC to ask those same questions. After repeated phone calls were not returned and this reporter was told people “had just left for a meeting,” PJM received an email from Andrew Gray, director of Public Affairs at the FDIC, at 4:57 p.m. EST:

We don’t have a system or list of prominent banks that have relationships with prominent people. The Washington Post article was wrong. If you look at the testimony that the reporter drew from, it is pretty clear.

Note Gray directed PJM to testimony which is not public, but which the Washington Post has obtained:

Regulators were worried about the bank’s expenditures on its officers and its $50 million worth of investments in the stocks of two federally chartered mortgage lending companies, Fannie Mae and Freddie Mac, according to a sworn interview by Sandra Thompson, the FDIC’s chief supervisory and consumer protection official, with House investigators. Her statements, obtained by the Post, have not been made public.

PJM then contacted R. Jeffrey Smith, the Washington Post journalist who wrote the original story, to ask him about the allegations raised by Gray.

Smith responded via email as well, late Friday evening:

We haven’t made a decision about making the testimony public in full. But I stand by the story in full. Moreover the agency has not contested to us our description of that testimony.

FDIC needs to explain themselves, and quickly.

That the law is fairly applied — and that all have an equal opportunity before it — is the cornerstone of American society. Bad enough that this bank so obviously was given consideration far above and beyond any other bank in the country because of its connection to Waters, but that a government agency should so blatantly keep track of organizations with the “proper contacts” is a level of corruption which defies description. It is possible, of course, that Smith and his collaborators did indeed get it wrong. But the fact that FDIC will deny this to PJM, but has not protested to the Post is telling.

That politicians will try to curry favors for constituents’ friends and relatives is a law of nature, as is that bureaucrats will often grant them. But this should not be institutionalized. If the Post is correct and this practice was institutionalized at FDIC, all Americans should be appalled, and a criminal investigation should follow Issa’s.

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Patrick Richardson has been a journalist for almost 15 years and an inveterate geek all his life. He blogs regularly at www.otherwheregazette.com, which aims to be like another SF magazine, just not so serious.
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