http://money.cnn.com/2009/01/08/news/companies/oneunited_tarp.fortune/index.htm?postversion=2009010809

NEW YORK (Fortune) -- Which banks get saved and which are left to die? Few know the answer, and the Treasury Department continues to send mixed signals on how it is implementing the Troubled Asset Recovery Plan (TARP).

Under the plan, Treasury has pledged $162 billion to 208 financial institutions. Not all of them are either billion-dollar giants or institutions that obviously measure up to Treasury's own standard of "healthy banks."

Consider the case of OneUnited, a small Boston bank that was recently the subject of a federal enforcement action that questioned the bank's safety and soundness -- and was also the recipient of a $12 million TARP bailout.

In October, OneUnited agreed to a so-called cease-and-desist order issued by its regulators, the commonwealth of Massachusetts and the Federal Deposit Insurance Corp.

The allegations against the bank included "operating without effective underwriting standards and practices," "operating without an effective loan docuмentation program" and "engaging in speculative investment practices."

The action also alleged excessive executive compensation. The FDIC ordered OneUnited to "sell all bank-owned automobiles," and to require that executives reimburse the company for any vehicles that had been purchased. The Boston Business Journal reported in November that the bank owns a 2008 Porsche sport-utility vehicle that is registered at the address of OneUnited CEO Kevin Cohee.

The FDIC also ordered the bank to stop paying for a beachfront house in Santa Monica that, according to the Boston Business Journal, was purchased for more than $6 million in early 2007 by a group that included Cohee and his wife Teri Williams, the bank's president.

OneUnited settled the case without admitting or denying the findings, and agreed to undertake a program to fix its shortcomings.

The bank, which bills itself as the first black-owned Internet bank and carries the Community Development Financial Institution designation that Treasury awards to institutions serving low-income residents, said it is cutting costs and making other changes in response to the FDIC order.

OneUnited, in response to questions from Fortune and CNNMoney.com, said it was hit hard by a loss this fall on its holdings of preferred stock in Fannie Mae and Freddie Mac, and that the Treasury infusion would help it to restore its capital.

"We were a casualty, not unlike many banks, of the tsunami that devastated the entire industry," said OneUnited senior counsel Robert Patrick Cooper, who says the Treasury knew of the enforcement action when it approved the bank's TARP application. "With the TARP money, we look to continue our mission and increase our lending and investments."

The Treasury Department didn't comment for this story.