The House ethics committee announced three counts of alleged ethics violations against California Democrat Maxine Waters, including a charge that she requested federal help for a bank where her husband owned stock and had served on its board. The report accuses the 10-term congresswoman of violating three House rules: one that requires its member to “behave at all times in a manner that shall reflect creditably on the House”; a second that prohibits lawmakers from using their influence for personal benefit; and a third forbidding the dispensing of favors. By transmitting a “statement of alleged violation,” the ethics committee is ending the investigative phase of the Waters matter and moving to the adjudicatory phase. Taking this crucial step signals that the committee has “substantial reason to believe” that Waters broke the official rules of the House.
Waters case revolves around whether she helped OneUnited Bank obtain federal bailout funds in late 2008. Her husband, Sidney Williams, served as a member of OneUnited’s board of directors from January 2004 until April 2008, and was a stockholder in the bank. Waters’ husband, former NFL linebacker Sidney Williams, was on the board of directors of OneUnited Bank and had between $500,000 and $1 million in investments there, according to the congresswoman’s financial disclosure reports. The bank still features a photograph of the congresswoman on its website. OneUnited was heavily invested in preferred stock of both Fannie Mae and Freddie Mac, and its leadership feared it was on the brink of collapse in 2008.
Around the same time that Waters set up a September 2008 meeting between U.S. Treasury Department officials and representatives of minority-owned banks, her chief of staff, Mikael Moore, sent an e-mail to the staff of Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee. According to the report, the subject of the e-mail was: “One United is in trouble.’” Waters has publicly boosted OneUnited’s executives and criticized its government regulators during congressional hearings. Last fall, she helped secure the bank a meeting with Treasury officials.
Three months later, Boston-based OneUnited, with branches in Massachusetts, Florida and Los Angeles County, received $12 million in bailout funds. Waters has detailed her financial ties in a series of federal disclosure forms and has been vocal in public in support of the bank. Those ties, however, have received little public attention. Nor is it well known how the influential lawmaker has over the years acted to support the bank and its executives. Waters said in 2007 during a congressional hearing that for African-Americans, “the test of your commitment to economic expansion and development and support for business is whether or not you put your money where your mouth is.” OneUnited’s executives have donated $12,500 to Ms. Waters’s election campaigns.
In her 2007 remarks, Waters alluded to two banks, Independence Bank of Washington, D.C., and “another bank that was about to be acquired by a major white bank out of Illinois.” Waters didn’t mention that OneUnited had been an unsuccessful suitor of Independence, which had been taken over several years earlier. The second bank, which she didn’t name, appears to have been Family Savings Bank of Los Angeles. In 2002, that bank backed out of a merger agreement with FBOP Bank of Oak Brook, Ill., and shortly afterward was acquired by OneUnited. OneUnited’s minority-lending record is mixed. The bank received “outstanding” Community Reinvestment Act ratings for lending in Los Angeles. It has weak ratings in Massachusetts and failed to meet minimum standards in Florida. Waters acknowledged she made a call to the Treasury on OneUnited’s behalf. The bank’s capital, which was heavily invested in shares of Fannie Mae and Freddie Mac, was all but wiped out with the federal takeover of the two mortgage giants, and the bank was seeking help from regulators. OneUnited eventually secured bailout funds under the government’s $700 billion Troubled Asset Relief Program.
A provision designed to aid OneUnited was written into the federal bailout legislation by Mr. Frank, who is chairman of the financial-services panel. Mr. Frank has said he inserted the provision to help the only African-American owned bank in his home state. Regulators demanded that OneUnited raise fresh capital and name an independent board. The bank was ordered to stop paying for a Porsche used by one of its executives and its chairman’s $6.4 million beachfront home in Pacific Palisades, Calif., a luxury enclave between Malibu and Santa Monica. The report says Waters asked the Treasury Department to meet representatives from the National Bankers Association, a trade group representing minority-owned and women-owned banks. The discussion at that September 2008 meeting centered on OneUnited Bank.
Waters, who chairs the Financial Services subcommittee on housing and community opportunity, contends that the National Bankers Association requested the meeting, which was held on behalf of the association, not OneUnited. The report comes one year after the Office of Congressional Ethics, an independent watchdog, asked the House Ethics Committee to investigate Waters, citing a call the congresswoman made to then-Treasury Secretary Henry M. Paulson during the financial crisis to set up the meeting between Treasury officials and representatives of minority-owned banks.
Waters and her husband, Sidney Williams, were investors in two African-American owned California banks that merged with other lenders in 2002 to form OneUnited. Congressional financial-disclosure forms show Ms. Waters acquired OneUnited stock worth between $250,000 and $500,000 in March 2004, as did Mr. Williams. Mr. Williams joined the board of OneUnited that year. ach sold shares in September 2004 — including Ms. Waters’s entire stake — but Mr. Williams continued to hold varying amount of the company’s stock. In the lawmaker’s most recent financial-disclosure form, dated May 2008 and covering the prior year, Ms. Waters reported that her husband held between $250,000 and $500,000 worth of the bank’s stock. Waters issued a defiant statement in response to the committee’s decision, vowing to take the matter to a public trial. “I have not violated any House rules,” Waters said. “Therefore, I simply will not be forced to admit to something I did not do.”
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