By Jordan Fabian and Russell Berman - 08/03/10 12:32 AM EDT
Rep. Maxine Waters (D-Calif.) strongly denied allegations that she broke House ethics rules and rejected a deal that would avoid what could be a bruising doubleheader of public trials for veteran Democrats in a tough election year.
“I have not violated any House rules,” Waters said in a statement released Monday, minutes after the ethics committee posted a report finding “substantial reason to believe” a violation occurred.
The committee released a 23-page report detailing allegations against her and announced it has formed an adjudicatory subcommittee to hold a trial regarding the charges. The report was written by the independent Office of Congressional Ethics (OCE) last year but was made public Monday.
The document contained no specific charges but said there is “substantial reason to believe” Waters, 71, committed a violation by improperly using her position to help others benefit financially.
Waters, a member of the Financial Services Committee, is accused of using her influence to arrange a meeting between Treasury Department officials and the National Bankers Association (NBA) regarding OneUnited Bank. Waters’s husband, Sydney Williams, was a significant shareholder in the bank at the time and formerly served on its board of directors.
The report disclosed that Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, told investigators that Waters had approached him for advice on the potential conflict of interest involving her husband.
“She was in a predicament, because Sydney had been involved in the bank,” the report said, characterizing Frank’s interview with investigators. “But OneUnited people were coming to her for help. She knew she should say no, but it bothered her.”
Frank said he urged her to “stay out of it” and arranged to have his staff take over the OneUnited 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. An aide to the congresswoman told The Hill on Monday the conversations with Frank occurred after Waters contacted then-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 was facing particular peril, she sought out Frank, the aide said.
Frank is named only as “Representative A” in the report, but a later addendum identifies “Representative A” as the chairman of the House Financial Services Committee.
The California lawmaker has been under investigation since last year, and the case centers on the purpose of the meeting Waters arranged.
Waters contends it was to help the bankers association and the 100 minority-owned firms it represents, while the OCE suggested Waters was looking to benefit OneUnited Bank in particular. The report pits the claims of Waters against the recollection of Paulson, a former Republican Treasury secretary, who told investigators he voiced concerns about the meeting to Waters after it took place.
Waters accused the OCE of drawing negative inferences and of twisting the facts “to fit its faulty conclusions.”
She insisted the report showed no case.
“No benefit, no improper action, no failure to disclose, no one influenced: no case,” Waters said in the statement.
The committee said the body would first hold an “organizational meeting” but did not announce a date. The House adjourned Friday for a six-week recess.
Waters will be the second member of the Congressional Black Caucus (CBC) to face an ethics trial; Rep. Charles Rangel (D-N.Y.) faces his own trial over 13 alleged violations of House rules and federal statutes. The scenario threatens to cast an ethical cloud on veteran House Democrats in the middle of the party’s fight to retain control of Congress this fall.
Waters said this point was underlined by a letter from the NBA to Treasury that was included in the OCE report.
“I followed up on the association’s request by asking then-Treasury Secretary Hank Paulson to schedule such a meeting, as did other members of Congress. Secretary Paulson recognized that the NBA’s concerns about the future of minority banks were valid and arranged for a meeting,” she said in the statement.
Both Waters and Paulson acknowledged the importance of her involvement in setting up the meeting. Paulson told investigators that he was so busy managing the deepening financial crisis that a meeting would not have occurred without Waters’s call. Asked by investigators how often she directly contacted Cabinet-level officials, Waters said: “You don’t use your chits for nothing, you call when there is an important issue.”
The OCE report said that after the meeting, Paulson called Waters to express concern that few NBA members were in attendance.
Three out of the four attendees invited by NBA had ties to OneUnited Bank.
E-mails provided to the OCE by Waters’s office show the bank’s CEO invited individuals to the meeting, contradicting Waters’s claim that the NBA decided who would attend the forum. The report also questioned whether an NBA representative at the meeting, its chairman-elect, Robert Cooper, was acting in his role for the industry-wide trade association or in his capacity as an executive for OneUnited.