California Democrat Maxine Waters goes before the U.S. House Ethics Committee today to hear the conclusions of its two-year probe of allegations that she helped a troubled bank in which her husband held stock get a government bailout in 2008.
In 2010, the panel began an investigation into allegations that Waters brought discredit on the House by helping OneUnited Bank of Boston get $12 million from the Troubled Asset Relief Program that Congress enacted during the 2008 financial-market crisis.
Under committee rules, the panel won’t bring formal ethics charges against Waters because it didn’t reconvene a new investigative subcommittee when a newly elected Congress took office in 2011. A rule of the full House empowers the ethics panel to “report to the House its findings of fact and any recommendations” for disposing of an investigation only after it conducts a public hearing.
“The committee is developing a report” and scheduled today’s hearing because Waters has “an opportunity to be heard on it before the committee finalizes the report,” Kentucky Representative John Yarmuth, the panel’s top Democrat, said yesterday in an interview.
The panel’s investigation of Waters was delayed by allegations that two staff lawyers had leaked information about the inquiry to Republican lawmakers.
Billy Martin, a Washington lawyer, was hired by the panel to investigate the alleged misconduct by the staffers, who have since left the panel. Martin also was asked to complete the review of the allegations against Waters and her chief of staff, Mikael Moore.
Martin found no evidence that Ethics Committee members were biased by the leaks. Still, House Speaker John Boehner appointed six lawmakers to serve as acting members of the panel to oversee the Waters inquiry.
A statement of charges released in 2010 said that Waters failed to stop Moore, who is also her grandson, from helping the Boston bank after Barney Frank, then the chairman of the House Financial Services Committee, had warned her not to assist the troubled institution.
OneUnited sought government assistance to avert its financial collapse in Sept. 2008 because it owned “substantial investments” in Fannie Mae and Freddie Mac.
Without a government financial bailout, OneUnited stock owned by Waters’s husband, Sidney Williams, would have been worthless, the committee alleged.
The shares were worth almost $352,000 in June 2008 and their value dropped to $175,000 four months later after federal regulators had placed Fannie Mae and Freddie Mac in a conservatorship, the committee said. OneUnited received $12 million from the Troubled Asset Relief Program enacted by Congress that year plus $17 million in private investment.
Moore’s continued assistance to OneUnited “created an appearance” that Waters “was taking official action” for “her personal benefit, which did not reflect creditably on the House,” the panel said.
Waters also was accused of calling then-Treasury Secretary Henry Paulson to request a meeting between members of the National Bankers Association, of which OneUnited was a member, to discuss how the collapse of Freddie Mac and Fannie Mae affected minority-owned banks.
Waters had been asked by the bank’s chairman and chief executive officer, Kevin Cohee, to set up the meeting. The executives met with Treasury officials on Sept. 9, though Paulson didn’t attend.
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