Another House Bank Scandal in the making?

The House Bank wasn’t exactly a professional outfit. It didn’t send members of Congress monthly statements. It didn’t even use computers. The data entry was done by hand with a pen into a paper ledger. A vestige of the past, the House Bank was a perk befitting the power of the Congress. From the members’ standpoint, the House Bank was great, because it floated them interest free loans, no questions asked. Some members had these interest-free loans for up to eight months, it was later revealed by House investigators.

Twenty-two of these members ended up being cited by the ethics committee for unethical behavior, and three were convicted of crimes.

Newt Gingrich — who, ironically, had his own bounced-check problems — made the decision to push for a full investigation, figuring that more Democrats than Republicans had bounced checks. He inspired seven freshman members of the House, the so-called Gang of Seven (which included now-Minority Leader John Boehner) to make the House Bank scandal a political issue, and they did just that. Former Rep. Jim Nussle famously put a paper bag over his head to protest the shameful conduct of his colleagues.

The political firestorm was deadly. The voters were outraged at yet another example of members of Congress getting special breaks, just as the people were getting screwed.

All told, 77 incumbents lost their elections two years later, weakened partially by the House Bank scandal. Members of Congress on both sides of the aisle who were caught up in the vortex of the scandal were, for the most part, confused and dazed by the revelations. They thought that the House Bank was just the usual way of doing business in Congress. They thought it was terribly unfair that they were being tainted as being corrupt or unethical. They were mystified at the anger that came their way from their constituents.

And amid the confusion, Republicans stormed to their first majority in 40 years.

I was reminded of the House Bank Scandal when I read the front page of The Washington Post this morning. The headline blared: “Dozens in Congress under ethics inquiry.” The story’s lead: “House ethics investigators have been scrutinizing the activities of more than 30 lawmakers and several aides in inquiries about issues including defense lobbying and corporate influence peddling, according to a confidential House ethics committee report prepared in July. The report appears to have been inadvertently placed on a publicly accessible computer network, and it was provided to The Washington Post by a source not connected to the congressional investigations. The committee said Thursday night that the document was released by a low-level staffer. … Shortly after 6 p.m. Thursday, the committee chairman, Zoe Lofgren (D-Calif.), interrupted a series of House votes to alert lawmakers about the breach. She cautioned that some of the panel's activities are preliminary and not a conclusive sign of inappropriate behavior.”

I am fairly certain that none of the members who were cited in the ethics committee report think that they have done anything wrong. Sure, they collected campaign contributions. Nothing illegal in that, goes their thinking. In fact, if you don’t raise money for yourself or your colleagues, you can’t get reelected to Congress, and you probably won’t ascend up the leadership ladder without giving campaign money to the leadership.

And the fact of the matter is that for many members, taking care of campaign contributors is all part of the game. Otherwise, why would they give to you?

Because we now live in an era of greater disclosure and greater transparency, that game may be changing. Rewarding campaign contributors with spending earmarks simply doesn’t fly anymore. The American people are tired of seeing their money wasted, the news media is having a field day covering these ethics transgressions, and Republican leaders like John Boehner, who remember well how a well-timed scandal can cause a political earthquake, are well-situated to take advantage of the fallout.

The old ways don’t work anymore. And sometimes the last ones to figure that out are the members of Congress who have been there the longest.

Will this latest revelation of the internal workings of the ethics committee have the same impact as the House Banking Scandal of 1992? I don’t know, but it could. And that must make Speaker Nancy Pelosi very nervous right about now.


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