ISSUE #3 - Moran Campaign Seeks Truth on McAuliffe’s Federal City National Bank Involvement

~ Bank Cited for Unsafe Practices and Forced to Merge~

ALEXANDRIA – Moran Campaign Manager Andrew Roos sent a letter to the federal Comptroller of the Currency this week requesting all available documents regarding the investigation and citation of the D.C.-based Federal City National Bank. Terry McAuliffe frequently cites chairmanship of this bank as a reason to support his candidacy and an example of his business success. However, during his tenure as Chairman of the bank, it was cited for “unsafe and unsound business practices” by federal regulators, according to the Washington Post. McAuliffe joined the company’s board in 1987 and took over as Chairman in January of 1988.

On October 16, 1991, several years into McAuliffe’s tenure, the Washington Post reported that Federal City signed a consent order, a severe action taken by the office of the Comptroller of the Currency short of seizure of the institution.

According to the Post, the bank was cited for unsafe, unsound banking practices on October 1, 1991. (Washington Post, “Comptroller Cites Two Banks in Area for Unsafe Practices,” October 16, 1991; Washington Business Journal, “Small Banks in District Pushed Against the Wall,” October 7, 1991)

According to the Washington Times, the “ailing Federal City” was taken over by Credit International Bank under pressure and after more than four years of McAuliffe’s leadership. (Washington Times, “Bank Start-Ups Get Bowled Over by Stubborn Real-Estate Recession,” July 23, 1992)

Terry McAuliffe often talks about the “success” of his leadership at Federal City National Bank as a central qualification to be Governor.

“At the age of 30 I’m the youngest bank chairman in our nation’s history. Had to take over a failing institution, get it back to solvency, which I did.” (AP Day Joint Candidates Forum, December 2, 2008, Video Recording)

“The reports from the Post and the Times seem to suggest this bank was cited for unsafe and unsound practices and merged to avoid failure,” Moran Campaign Manager Andrew Roos said. “If that turns out to be the case, I doubt Virginians will consider it a success story for Mr. McAuliffe. With all the concerns about failing banks and banker bailouts, we need to fully investigate what happened with Federal City National Bank since Mr. McAuliffe has made it a central qualification for his candidacy.”

Also of note, in 1987, Federal City provided an unsecured $125,000 loan to the presidential campaign of Richard Gephardt while McAuliffe was the campaign’s national finance chairman and on the Board of Federal City. The bank would also give business loans to House Whip Tony Coelho and Speaker Jim Wright. (The New York Times, “Gephardt Received 2 Unsecured Loans” February 13, 1988; The New York Times, “Friendship Counts; Clinton’s Top Fund-Raiser Made Lots for Himself, Too,” December 12, 1999)

Letter to John C. Dugan, Comptroller of the Currency: http://brianmoran.com/assets/2009/5/6/Letter_to_COC_Dugan.pdf

Brian Moran has a 20-year record of fighting for the people of Virginia. He was Chairman of the House Democratic Caucus and a Delegate from Alexandria City and Fairfax County. Prior to that, he served as a prosecutor in Arlington County.

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