Things went from bad to worse for Democrats in Congress on Monday when the House ethics committee officially announced that Rep. Maxine Waters, a senior California Democrat, is headed to a public trial on charges that she violated House ethics rules. Waters is accused of intervening with federal regulators on behalf of a bank in which she and her husband had substantial investments, and where her husband once served on the board of directors.
Waters is the second senior Democrat in as many weeks to be slated for a rare public hearing before the committee. On Thursday, Rep. Charlie Rangel was formally charged with 13 violations of House rules.
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 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."
In addition to the committee's announcement, Reps. Zoe Lofgren (D-Calif.) and Jo Bonner (R-Ala.), the chairwoman and ranking member of the ethics committee, also released a lengthy report summarizing the conflict-of-interest charges against Waters.
The committee report details a 2008 phone call, in which Waters phoned then-Treasury Secretary Henry Paulson to arrange a meeting between Treasury officials and the National Bankers Association to discuss the effects on minority-owned banks from the federal takeover of Fannie Mae and Freddie Mac.
The chairman-elect of the National Bankers Association, Robert Cooper, asked Waters to place the call and attended the meeting. In addition to his role with the Bankers Association, Cooper was also the vice president and senior counsel for OneUnited Bank, where Waters had personal connections. When the meeting occurred, witnesses who attended reported that the only bank discussed was OneUnited.
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.
In the committee report, a member of Congress, who is not identified, tells investigators that 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.
The same member of Congress also said that Waters had confided that she was unsure of how to deal with the OneUnited situation "because Sidney's been on the board." The member of Congress advised Waters, "Stay out of it."
As senior member of the House Financial Services Committee, Waters would have had significant clout with the Treasury officials at the meeting, as well as with officials who were doling out money from the Troubled Asset Relief Program, which OneUnited also applied for. OneUnited later received $12 million in bailout money.
Waters has represented her South Central Los Angeles district in Congress for 20 years. Her official House website describes the congresswoman as "considered by many to be one of the most powerful women in American politics today."
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