Sen. Robert Menendez wrote to Federal Reserve Chairman Ben Bernanke last summer seeking help for a home state bank operated by campaign contributors, specifically asking for approval of an acquisition that would have rescued the institution.
Requests on behalf of constituents — even political donors — are not unusual. But such inquiries typically urge government agencies to expedite an action, not to act in a certain way. What made Menendez' letter stand out was that it pressed the Fed to take measures to avoid putting the bank — First BankAmericano — in receivership.
"I write to ask the Federal Reserve to grant the attached application," the letter says. Two paragraphs later, it adds: "I urge you to support the proposed acquisition..."
The existence of the letter was first reported Tuesday by the Wall Street Journal.
Menendez spokesman Afshin Mohamadi says the language in the letter was an unintentional error and that making a specific request for action was a mistake.
The Fed ultimately didn't act on the acquisition request, forcing New Jersey banking regulators to close the bank. The Federal Deposit Insurance Corp. then stepped in as receiver.
Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington, said Menendez crossed a line.
"It looks like Mr. Menendez's conduct was inappropriate," she said. "While it's fair for a member of Congress to ask federal agencies and quasi agencies to take some action, it can't ask them to take a specific action."
Menendez, a New Jersey Democrat who is also chairman of the Senate Democrats' campaign arm, defended his effort to help a struggling financial institution in his home state. "The denial of this sale was a gut punch to communities where New Jerseyans are starving for financial services," Menendez said in a statement Tuesday. Both banks are minority-owned and serve New Jersey's Hispanic community.
At issue was an application by another bank, JJR Bank Holding Co., to acquire First BankAmericano — a move that would have allowed bank shareholders, including board members, to retain some of their investment. The bank's failure, however, wiped those investments out.
Before it failed, the chairman of First BankAmericano was Joseph Ginarte and its vice chairman was Raymond Lesniak, a New Jersey state senator. Both men have been Menendez political donors. Lesniak has contributed more than $29,000 to Menendez campaigns and to his political action committee since 1999, according to Federal Election Commission records. Neither Lesniak nor Ginarte returned phoned calls seeking comment.
A Menendez aide said the senator's request was made at the behest of FinPro Inc., a consulting firm that was assisting First BankAmericano, not at the request of Ginarte or Lesniak.
Menendez' July 21 letter came two weeks after the New Jersey director of Banking and Insurance had approved JJR's acquisition of First BankAmericano, leaving it to the Fed, which oversees bank holding companies, to make the final decision. The Fed had until July 24 to approve it. In a letter to Menendez the following month, Bernanke said JJR withdrew its application on July 23.
After the FDIC took over the bank, a JJR subsidiary purchased First BankAmericano's deposits.
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