- The Washington Times - Monday, August 9, 2010

House investigators on Monday charged Rep. Maxine Waters with “improperly” exerting influence to help bail out a bank in which her husband held stock, handing more ammunition to Republicans eager to blast House Speaker Nancy Pelosi for overseeing a “House of scandal.”

The House ethics panel said the office of the senior California Democrat violated conflict of interest rules by repeatedly lobbying the Treasury Department for bailout money on behalf of minority-owned OneUnited in which her husband held as much as $350,000 in stock. The bank received a $12 million slice of the taxpayer-funded Wall Street bailout.

Ms. Waters has fiercely proclaimed her innocence and asked the committee to make public the 10-page “statement of alleged violation” against her. Like Rep. Charles B. Rangel of New York, she has opted to let the matter play out in a public hearing before the bipartisan ethics committee, demanding that one be scheduled as soon as possible.

For Republicans, the looming ethics trials of two high-profile Democrats provides an ironic campaign issue heading into November’s congressional elections. Republicans say the charges against Ms. Waters could further play into GOP charges that Mrs. Pelosi and other Capitol Hill Democrats have failed in their pledge to “drain the swamp” in Washington.

Nancy Pelosi’s ‘most ethical Congress in history’ has turned into a House of scandal. The inability or unwillingness of the Democrat leadership to crack down on corruption serves as a reminder to the voters that the November elections will be a referendum not only on President Obama and his failed policies, but on the failed leadership of the Democrat-led congress,” said Ken Spain, a spokesman for the National Republican Congressional Committee.

Democratic leaders have been largely noncommittal when asked specifically about either of the proceedings, saying that the cases are being handled appropriately. Rep. Chris Van Hollen, head of the House Democrats’ campaign arm, said the charges may serve to help the party in November by demonstrating that Democrats take the ethics process seriously.

“The reason people are hearing about the cases of Charlie Rangel and Maxine Waters is because we put in place accountability measures to make sure that we have high standards and that people are held accountable to those standards,” the Maryland Democrat said in an appearance on MSNBC last week.

Even so, two ethics trials ahead of November’s midterm elections - when the size of their majority and even the majority itself is on the table, according to some political observers - is a thorn in the side for Democrats who swept to power in 2006 in the wake of Republican ethics scandals, such as that involving former House Majority Leader Tom DeLay, Texas Republican.

The charges against Ms. Waters are not as extensive as those facing Mr. Rangel, who stands accused of 13 ethics violations ranging from failure to properly disclose financial assets to using his office to lobby for donations to a school established in his honor. All three charges in the case of Ms. Waters relate to OneUnited’s quest for government assistance and the help she and her chief of staff, who is also her grandson, gave the firm, which bills itself as “the largest black-owned bank in the country” with offices in Boston, Los Angeles and Miami.

The bank was seeking bailout money to curb losses related to its investments in Fannie Mae and Freddie Mac, which were taken over by the government.

Ms. Waters‘ husband, Sidney Williams, served on OneUnited’s board of directors from January 2004 until April 2008 and owned stock worth about $350,000 in the bank as of June 2008. The government’s takeover of Fannie Mae and Freddie Mac cut the value of his holdings in half, to about $175,000 by the end of September, and ultimately threatened to make them “worthless,” according to investigators.

Ms. Waters helped secure a September 2008 meeting between bank executives and top Treasury officials while her chief of staff, Mikael Moore, helped draft legislation that would authorize the administration to provide the firm a lifeline. Congress passed the so-called Wall Street bailout in October, and language in the bill ensured that OneUnited would be eligible for funding.

In the midst of the talks, investigators say, Ms. Waters, a member of the House Financial Services Committee, went to Chairman Barney Frank and informed him of her husband’s past board position at the bank, at which point he said she should no longer be involved in assisting the firm. But her chief of staff continued to press the case, leading to a charge that she did not behave in a manner reflecting “creditably on the House.”

The other charges include violating the spirit of House rules against receiving compensation that occurs as a result of improper influence and the “dispensing of special favors.”

In a letter to ethics panel members last week, Ms. Waters did not address the charges specifically but said the failure to schedule a hearing “violates the fundamental principles of due process, denies my constituents the opportunity to evaluate this case, and harms my ability to defend my integrity.”

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