Inside the Maxine Waters Ethics Committee Debacle

A few weeks ago, Rep. Laura Richardson (D-CA) received nothing but a slap on the wrist for, among other transgressions, forcing her taxpayer-funded congressional staff to work on her campaign. Well now the House Ethics Committee has allowed yet another California Democrat member of Congress to skate -- Rep. Maxine Waters. (Incidentally, both Richardson and Waters were listed on JW’s list of “Washington’s Most Wanted Corrupt Politicians” for 2011.)

On September 12, the House Ethics Committee released a report detailing its Waters investigation, which was characterized by Politico as a “chronicle of mistakes, partisan and intraparty squabbles, allegations of racism, bitter personal rivalries and failed attempts to bring the investigation to a close months and even years before it ended.”

Here’s more from Politico:

The Ethics Committee’s probe of the California congresswoman’s dealings with a minority-owned bank in which her husband held stock dragged on 38 months and consumed probably millions in legal fees — far more than the roughly $350,000 investment that Waters’s husband, Sidney Williams, was in danger of losing if OneUnited Bank collapsed during the 2008 U.S. financial crisis.

In the end, Waters emerged unscathed. The only person found to have committed any wrongdoing was her top aide.

On Tuesday, the House Ethics Committee issued its final report in the case. Waters will not be charged with any violations of House ethics rules. That decision is a big win for the California Democrat and clears the way for her to seek the ranking member post on the Financial Services Committee next year.

By the way, the “punishment” meted out to Waters’ top aide (did I mention he is also Waters’ grandson?) was a “letter of reproval” which is reportedly the lightest sanction the committee could have possibly issued.

Now, let’s take a brief look at the evidence so you can see why this is such an outrage.

In August 2010, an investigative subcommittee of the House Ethics Committee charged Rep. Waters with three counts of violating House rules and ethics regulations in connection with her use of power and influence on behalf of OneUnited Bank. She was expected to face an ethics trial in late 2010, but the committee delayed the trial indefinitely on November 29, 2010, citing newly discovered documentary evidence that may impact proceedings. (Ultimately outside counsel was hired in July 2011 after internal squabbling kept the investigation stuck in the mud.)

According to The Associated Press, the charges currently under the House Ethics Committee microscope “focus on whether Waters broke the rules in requesting federal help [bailout money] for a bank where her husband owned stock and had served on the board of directors.” At the time she requested the help, Waters neglected to tell Treasury officials about her financial ties to OneUnited Bank.

Seems pretty open and shut, right? This is a clear case of a conflict of interest if there ever was one. Waters’ husband stood to financially benefit from an official action taken by Rep. Waters. And no one is buying the idea that Waters simply “forgot” about her husband’s stake in the bank while she worked to get a bailout. (By the way, outgoing Rep. Barney Frank has his hands all over the OneUnited scandal as well…and the House Ethics Committee didn’t even bother to seriously investigate his involvement.)

I don’t think there’s any question that were this a fair and square analysis, without any favoritism, OneUnited would not have received a Troubled Asset Relief Program (TARP) funding. The Treasury Department stated that it would only provide bailout funds to healthy banks to jump-start lending. However, Judicial Watch uncovered documents detailing the deplorable financial condition of OneUnited at the time of the cash infusion. In fact, just prior to the bailout, OneUnited received a “less than satisfactory rating.”

Regarding the ethics investigation, it was a mess pretty much from the outset, thanks largely to efforts by California Rep. Zoe Lofgren’s attempts to throw monkey wrench after monkey wrench into the proceedings.

Not only did Lofgren, also a Democrat, fail to issue subpoenas for records related to the scandal, but she also delayed the ethics committee hearing after doing everything in her power to undermine the professional committee staff leading the investigation. And, as if that were not enough, Lofgren then improperly fired two attorneys working on the investigation.

Ultimately outside counsel had to be hired to pull the investigation out of chaos. The final result was a report that ultimately allowed everyone involved off the hook, save for a minor infraction leveled against a Waters aide that will not so much as leave a scratch on his record.

I am certainly not surprised by the ultimate result here. I don’t think there’s any doubt Waters acted inappropriately. The report details how she knew that her personal investment would make it unethical for her to push for an OneUnited bailout.  So Barney Frank told her to personally stay out of it and that he would handle it.  How’s that for “ethics.”  Waters is conflicted, so she asks someone else, namely the chairman of the relevant committee, to do her dirty work for her.  Only in the ethics la-la land of Congress would this be deemed appropriate.


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