WHO: Sen. Robert Menendez
WHAT: The New Jersey Democrat — a member of the Senate Banking Committee and coordinator for this year’s Senate Democrat re-election efforts — wrote a letter urging the Federal Reserve to quickly approve the purchase of near-failing BankAmericano. He didn’t mention that the chairman and vice chairman were big contributors to his political campaigns and the pending acquisition would have saved them from losing the rest of their investment.
WHY IT WAS A BAD IDEA: A former federal bank regulator called the senator’s letter “grotesquely inappropriate” due to his ties to the two bankers. The letter crossed an accepted line by asking regulators to approve an application instead of simply asking that it be given consideration.
WHAT’S BEING DONE: Menendez’s letter was just obtained by The Wall Street Journal under the Freedom of Information Act, so it’s too soon for any official censure. The Fed didn’t act on the senator’s request, and BankAmericano failed July 31. Also, the FDIC lost $15 million by auctioning it off to the same company that would have bought it earlier.