The conflict-of-interest charges against California Rep. Maxine Waters could mean congressional Democrats will have to face an already tough election under the cloud of two ethics trials.
Waters became the second member of Congress to be slapped with an ethics complaint in less than a week, following allegations against New York Rep. Charles Rangel last week.
The case against Waters reaches back to the middle of the financial meltdown of 2008, when she rang up Treasury Secretary Henry M. Paulson Jr. to insist his top staff meet with the officers of Boston-based OneUnited Bank, which was on the brink of collapse and in urgent need of a federal bailout.
Waters, whose husband was heavily invested in the bank and once sat on its board, insisted the September 2008 meeting was set up to talk generally about how the government conservatorship of Fannie Mae and Freddie Mac could hurt minority-owned banks. But OneUnited was the only bank represented at the meeting, at which bank officials suggested a “transfer of federal funds.” They eventually received $12 million from the Treasury’s bank bailout fund, thanks to Waters.
Waters plans to challenge the findings. “I simply will not be forced to admit to something I did not do,” she said Monday.
She faces a public ethics hearing, much like a trial, unless she negotiates a settlement before the House returns from summer recess.
The charges against Waters offer the specter of back-to-back ethics trials involving Democrats at a time when the politically vulnerable party already stands to lose dozens of House seats and more than a handful of Senate seats in November’s midterm elections.
The details of the case against Waters are laid out in an 80-page document assembled last year by an independent ethics office that works outside of Congress to bring potential violations to the attention of the House ethics committee.
The report outlines Waters’ attempts to help OneUnited, even though she seemed to understand that would present a conflict of interest because her husband, Sydney Williams, was once a board member and had invested between $500,000 and $1 million in the bank.
Waters, a subcommittee chairman on the House Financial Services Committee, relayed her concerns to Financial Services Chairman Barney Frank, D-Mass., who is described as “Representative A” in the report.
Waters, the report found, “told Representative A there was a problem with OneUnited, but that she didn’t know what to do about it because ‘Sydney’s been on the board.’ ”
Frank told Waters to “stay out of it,” and he would handle the bank. Frank said the conversation took place in September, but did not recall the date.
The meeting between OneUnited took place on Sept. 9, 2008. A day later, according to the charges, OneUnited senior counsel Robert Cooper, who was also chairman-elect of the National Bankers Association, followed up with Treasury officials, who were puzzled as to why more minority-owned banks had not attended the meeting.
“We emphasized that Treasury should provide … protection on an urgent basis to avert possible failure of one if not several of our institutions. …” Cooper stated in the letter to Treasury.
