All Blog Posts from Political Hotsheet

A struggling Hawaii bank received a $135 million federal bailout last fall two weeks after staff from the office of Sen. Daniel K. Inouye, a big investor in the bank, called federal regulators about the aid application, according to a report in ProPublica Tuesday.

Bank regulators had designated Central Pacific Financial as a marginal candidate to receive federal assistance, according to documents cited in the report. But soon after the phone call from Inouye's office, the Treasury directed millions of dollars to bolster the bank's capital reserves.

Inouye, D-Hawaii, owns shares in the bank that totaled between $350,000 and $700,000 at the end of 2007, according to the report. That amounts to roughly two-thirds of the senator's personal wealth.

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Before departing for California this afternoon, President Obama called for the creation of a “resolution authority” similar to the FDIC that would oversee institutions like AIG and help insure that massive government bailouts of such entities are not needed in the future.

The president said that while the situation with the AIG bonus payouts is troubling, “what I think is also important and just as outrageous is the fact that we find ourselves in a situation where we're having to clean up after AIG's mess.”

He said he had just spoken to Financial Services Committee Chair Barney Frank about “giving ourselves tools to prevent ourselves from getting in a situation where an AIG can pose such enormous vulnerabilities to the system as a whole.”

“And what we are working on is a resolution authority that would be similar, not identical but similar, to the powers that the FDIC currently has over banks,” said the president. “What they're able to do is to, at the same time protect creditors, depositors, and consumers, while also exercising greater power proactively over institutions like AIG which is not a bank which is an insurance company with a hedge fund on top of it.”

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