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StarBulletin.com

Given his stake, Inouye should've known better


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POSTED: Friday, July 03, 2009

Services provided by members of Congress routinely include contacting federal agencies on constituents' behalf, but Sen. Daniel Inouye has been taken to task by the Washington Post for doing so for a Hawaii bank where he keeps at least two-thirds of his assets. The contact did not violate Senate rules, the Post points out, but Inouye should have appreciated the impropriety and referred the bank to another member of Hawaii's delegation to place such a call.

Central Pacific Financial Corp. was among 1,600 banks that applied last year to the Federal Deposit Insurance Corp. and its application was among 408 that were transferred to the Treasury Department. The bank's government-affairs officer called Inouye in late November to check on the status, and a day later an Inouye staffer made the query to the FDIC's office in San Francisco, which confirmed receipt of the application.

“;That single phone call was the entire extent of my staff's contact with regard to Central Pacific Bank,”; Inouye said in a statement to the Post. He said the contact amounted to a voice-mail message. The bank announced in December that its application for $135 million in funds from the Troubled Asset Relief Program, or TARP, had been approved.

That seems innocent enough — except for the fact that federal agencies are highly sensitive to queries by members of Congress, especially senators who are as powerful as chairman of the Appropriations Committee. The appearance of conflict arises from Inouye's report of owning Central Pacific shares worth $350,000 to $700,000 at the end of 2007. The Post reported that the bank, which Inouye and other World War II veterans founded in 1954, has lost 29 percent of its value since then.

Inouye was the only senator among 33 owning shares of stock in banks that got federal aid who intervened on behalf of the bank, the Post reported. Inouye maintained he was not trying to influence the decision.

Many members of Congress have pressed regulators and the Treasury Department to act on constituent bank applications. The Ohio delegation complained loudly when the National City Bank in Cleveland was denied TARP money. Rep. Maxine Waters, D-Calif., organized a meeting last year of regulators and executives of minority-owned banks, including a bank in which Waters' husband has invested.

The failure of Congress to clarify standards regarding members providing constituent services that may create conflicts of interest puts the onus on members to set their own rules. In Inouye's case, they should be rewritten.