Cooke was also involved in one of the scandals that plagued the Grant administration known as the Seneca Stone Ring Scandal. The owners of the Seneca Quarry, the Seneca Sandstone Company, had sold shares to senior Republican leaders in 1867 at half price, including Ulysses Grant a year before his election to the presidency, in the hopes of buying influence in the post-war building boom in Washington, D.C. This move undercapitalized the company, such that it took out several unsecured loans to fund its operations, notably from the Freedman's Savings Bank, which served freed African-American slaves and their descendants. Henry Cooke sat on the boards of both the Seneca Sandstone Company and the Freedman's Bank and facilitated the loans, though this was a clear conflict of interest. With the Panic of 1873, the indebted Seneca quarry could not pay its debts back, which in turn helped undermine the Freedman's Bank. Both institutions went bankrupt in 1876. Congress investigated and recommended that Henry Cooke and others be indicted, but no one ever was.