Journal Lambasts Menendez for Trying to Save Bank, Buries Key Facts

Sen. Robert Menendez (D-N.J.), who chairs the Democratic Senatorial Campaign Committee, is under fire in The Wall Street Journal today for a poorly written letter drafted by a legislative assistant and likely signed by the office auto-pen.

In his letter to the Fed July 21, Mr. Menendez said there was a strong likelihood that First BankAmericano, of Elizabeth, N.J., would fail in three days, which would “send yet another negative message to consumers and investors and further impact our fragile economy.” The one-page letter, obtained by The Wall Street Journal under the Freedom of Information Act, urged Fed Chairman Ben Bernanke to approve a sale of the bank to JJR Bank Holding Co. of Brick, N.J.

The Journal would like you to know that the two of the First BankAmericano executives are “major” Menendez donors: former Chairman Joseph Ginarte and vice chairman Raymond Lesniak, who gave $30,000 to Menendez and his PAC since 1999 and “generously,” respectively. The Journal’s definition of “generously” is, at least when it comes to Democrats, $5,250 since 1990. By way of comparison, Menendez has raised almost $30 million for his campaigns since starting his federal political career in 1989 and $2.5 million for his PAC since starting it in 2000, making Ginarte’s donations less than .1 percent of Menendez’s total contributions in that period, and Lesniak’s even less.

Buried further in the piece than the fact that a New Jersey banker and a New Jersey Democratic politician were donors to one of the state’s Democratic senators is this tidbit, which the editorial staff of the Journal found less important than Menendez’s donors: If the Fed had acted upon Menendez’s request and allowed the sale of First BankAmericano — which it didn’t — both Ginarte and Lesniak would have taken huge financial hits.

Better yet, neither Ginarte nor Lesniak actually contacted Menendez or his office: The letter was written after a request for assistance was received from First BankAmericano’s consulting firm, FinPro Inc. None of the principals of FinPro have ever donated to Menendez, though, so that’s probably not as interesting if you’re trying to paint a senator as beholden to his donors.

Finally, at the very, very bottom of the story, there’s this tiny piece of information that would normally seem pretty important, unless the article is framed around making Menendez look … beholden to his donors.

In a twist, after the bank failed and the Federal Deposit Insurance Corp. auctioned it off, it was bought by a subsidiary of JJR—the same firm to which it would have been sold if the Fed had approved the acquisition. The failure cost the FDIC $15 million.

In other words, had the Fed bothered to act in a timely fashion on a bank sale already approved by the state of New Jersey — which was the reason that FinPro asked Menendez to weigh in — the government would have saved itself $15 million. But the deficit hawks at the Journal are, in this case, less concerned with the Treasury’s balance sheets than with those of Sen. Menendez’s campaign coffers.