Employer of Cantor’s Wife Benefited from Bailout

WASHINGTON-A bank that employs the wife of Rep. Eric I. Cantor, R-Va., benefited from the $700 billion Wall Street bailout that Cantor helped steer through Congress last fall.

Diana F. Cantor runs a Virginia-based subsidiary of New York Private Bank and Trust. The New York bank received $267.2 million from the U.S. Treasury’s Troubled Asset Relief Program Jan. 9.

A spokesman for New York Private Bank and Trust told ProPublica, an investigative journalism Web site that first reported the relationship, Diana Cantor was “never aware that the parent bank was seeking or received [bailout] funding.“

Diana Cantor, the managing director of the subsidiary, Virginia Private Bank and Trust, did not return a phone call seeking comment Monday. She also serves on Media General’s board of directors.

Through a spokesman, Eric Cantor declined to comment. Rob Collins, the congressman’s deputy chief of staff, called the government investment in the parent company of his wife’s bank “a freak coincidence” and said the congressman did nothing to facilitate it.

He first learned the bank received the money when his wife emailed him a Jan. 16 article in American Banker, Collins said.

“It’s not like she’s lobbying for the industry,“ Collins said. “She has no clue what’s going on up in New York.“

Hundreds of banks, financial institutions and auto companies have received funding from the Treasury program.

The $267.2 million given to New York Private Bank and Trust is almost nine times the median amount received by companies participating in the program, a Media General News Service analysis of Treasury records found.

In the American Banker article, New York Private Bank and Trust chairman and CEO Howard P. Milstein said he changed the bank’s tax structure to make it eligible for the bailout.

The bank was not short on cash, but Milstein told American Banker, “We are in a season when you can’t have too much capital.“

Though Cantor and other Republican leaders voted for the bailout, he has fiercely criticized the Bush administration’s implementation of the program.

In letters to Treasury, he criticized the administration for scrapping its plan to use the bailout funds to buy toxic mortgage-backed securities from financial institutions and instead inject cash directly into banks.

As a sign of his protest, Cantor voted last week to bar Treasury from spending the second half of the $700 billion bailout.

The legislation passed the House, but will not prevent President Barack Obama from distributing the remaining funds because the Senate killed identical legislation.

The fact that the government did not disclose the Cantors’ relationship when providing funding to Diana Cantor’s employer underscores an overall lack of transparency with the bailout, critics of the program said.

Treasury officials have disclosed little about how banks have used the government funds.
Instead of increasing lending to consumers and businesses - the original intent of the program - some banks have simply held onto the money or used it to buy other banks.

Obama has promised several changes to the program to make it more transparent and put more restrictions on how banks can use the money.

Rep. Cantor should have disclosed how his wife’s company could benefit from the bailout and recused himself from related votes, said Jeffrey S. Harrison, a professor of management at the University of Richmond’s Robins School of Business.

“Transparency is absolutely vital and that information should have been disclosed much earlier,“ said Harrison, who has written about business ethics.

But Harrison said that it was unlikely that Diana Cantor was aware of the company’s request for government funds. Even the board of directors of the parent company would probably “not (be) involved in that level of detail at all,“ he said. As director of the subsidiary, Harrison said, Diana Cantor would have been “further removed.“

(Contact Neil H. Simon at .)