Frank urged Waters to steer clear of trouble

Rep. Barney Frank, chairman of the House Financial Services Committee, told congressional investigators he warned embattled Rep. Maxine Waters to steer clear of a conflict involving a failing bank whose board once included her husband.

Waters (D-Calif.) sought advice from Frank (D-Mass.) as she was pressing the Treasury Department to aid minority-owned banks while it prepared to bail out the collapsing financial services industry in September and October of 2008. Waters had set up a meeting with Treasury officials and officials from the National Bankers Association, but the only bank represented there was OneUnited Bank, for which her husband Sydney had worked.

The meeting is at the center of allegations against Waters disclosed Sunday in a report released by the House Ethics Committee.

According to the report, Frank told investigators that Waters had approached him for advice on the potential conflict of interest involving her husband. Frank said he urged her to “stay out of it” and arranged to have his staff take over the OneUnited Bank issue from Waters.

The report does not detail whether Waters spoke with Frank before or after she set up the meeting with the Treasury Department, but an aide to the congresswoman told The Hill on Monday that the conversations with Frank occurred after Waters contacted Treasury Secretary Henry Paulson about the broader difficulties minority-owned banks were facing because of the collapse of the mortgage giants Fannie Mae and Freddie Mac. When she realized that OneUnited Bank was facing particular peril, she sought out Frank, the aide said.

Waters contends that she set up the Treasury meeting for the benefit of the National Bankers Association and minority-owned banks in general, and not OneUnited Bank in particular. “I have not violated any House rules,” she said in a statement Monday.