The State Provides Full Disclosure on Sen Lesniak’s First Americano Bank

Imagine my surprise when I saw State Senator Raymond Lesniak’s head peeking out of the PolitickerNJ talking heads column. I can’t recall seeing that before. Let me tell you, though. As a former Governor, I’ll take Lesniak over Undisputed Negotiation Tactician Carla Katz any day of the week.

In his column Sen. Lesniak defended the attempts to deliver a bailout to First BankAmericano, a failing Hudson County bank chaired by Lesniak and Newark attorney Joseph Ginarte, a major New Jersey Democrat donor.

First Americano Bank hit the news wires when it was revealed that New Jersey’s junior U.S. Senator Robert “Bob” Menendez lobbied the Fed last July to bailout the bank. Read the original WSJ article courtesy of U.S. Senator Tom Coburn’s website.

Federal Regulator William Black called Mendenez’s entreaties “grotesquely inappropriate” given Menendez’s ties to the bank’s two directors. Moreover, in 2007, First Americano Bank was put under federal orders to stop what authorities described as “unsound banking and loan practices.” First Americano Bank was providing low interest loans to its directors and shareholders, among other problems.
2009 A new Order to Cease and Desist
2008 Order Terminating Order to Cease and Desist
2007 Original Order to Cease and Desist

First Americano Bank is also the repository for the Union County Democrat Organization (No guarantee that ELEC will serve the link properly).

Lesniak argues that since numerous big banks were deemed “too big to fail” and were bailed out, it was proper and necessary to save the struggling First AmericanoBank, especially since the bank primarily served the “underserved Hispanic community.”

Lesniak is right, and furthermore we laud his keen interest in the Hispanic community. Clearly Lesniak has the people’s needs at heart.

Or maybe he wants to keep the gravy train running on time. Frankly, I, as a former Governor, could care less what ol’ Ray wants. I just want to finish this article and head to Gunnison.

First Americano Bank itself has not been a big campaign donor. But let us point out that the bank perhaps would not have been in such bad shape if First Americano Bank chief Joe Ginarte (who received a loan from the bank) and related interests had not given:

• $47,150 to New Jersey Democratic leadership PACs
• $35,550 to Menendez-controlled New Millenium PAC
• $14,300 to Lesniak, Union Dems and Suglia
• $7,500 to Albio Sires
• $5,500 to McGreevey
• $5,100 to Brian Stack

All told, we have $138,850 in donations to prominent democrats and democrat organizations from bank employees, Joe Ginarte and Ginarte’s law firm (which incidentally, is in collections according to a September 19th Experian Credit Report). View all the donations here.

Moreover, perhaps First Americano Bank would not need a bailout if it had been operating the bank under sound business practices, not any one of the ten charges lodged against the bank by the FDIC.

Lesniak on First BankAmericano
BYLINE: Joe Cryan on PolitickerNJ
The First BankAmericano was started in Elizabeth with a mission to serve the traditionally underserved Hispanic population by bringing them into the financial system through savings and checking accounts and loans. They are services that the big banks have not seen as profitable.

Over the years, the bank’s directors learned that servicing the many small accounts from the community produced a narrow profit margin, and the small capitalization of investment limited opportunities for more sophisticated services that would have produced a larger profitability. There’s a good reason why larger banks don’t seek out such markets — not a good social-benefit reason, but certainly a good reason if your only concern is return on investment.

The board members even brought their loan needs to the bank, despite having long-standing relationships with other, bigger banks, so First BankAmericano could make the profits from the loans, a policy approved by banking regulators and a good business practice as well.

When Holly Bakke, former New Jersey banking commissioner, and Angel Denis, the most senior Latino bank officer in the state, joined with the directors in 2008, their hard work and determination headed the bank in the right direction. They all knew the directors would never receive a return on investment much more than a standard savings account, but they remained committed to the other mission, serving an underserved Hispanic community.

Then the recession hit, and First BankAmericano did not have a cushion to absorb the loan losses. Neither did the more profitable big banks, but they were deemed too big to fail. A small Hispanic community bank was deemed to be expendable.

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