The House Ethics Committee’s outside counsel recommended no further investigation of allegations that California Democrat Maxine Waters helped a struggling bank in which her husband held stock obtain a government bailout in 2008.
“The evidence in the record does not support a knowing violation of the ethics rules or any other standard of conduct” by Waters, Billy Martin, a Washington lawyer hired by the panel, told the committee at a public hearing.
Martin presented conclusions of his investigation to the panel, which met as Congress prepared to leave Washington until after the Nov. 6 election.
Martin’s “review is now complete” and the panel is “prepared to accept” his recommendation pending the outcome of the hearing, Virginia Republican Bob Goodlatte, the committee’s acting chairman, said in an opening statement. The panel made no announcement of any decision after a closed-door session.
Exoneration by the ethics panel would boost Waters’s chances to succeed Massachusetts Representative Barney Frank as the ranking Democrat on the Financial Services Committee after he retires this year. She is also in line, by seniority, to be chairwoman of the panel if Democrats win a House majority in the election.
In 2010, the committee began its investigation into allegations that Waters, 74, had brought discredit to the House by helping OneUnited Bank of Boston obtain $12 million from the Troubled Asset Relief Program.
The charges against Waters weren’t revived after the newly elected Congress took office in 2011. Martin was initially hired to review alleged misconduct by ethics panel staff lawyers, who have since moved to other jobs. He then examined evidence against Waters and her chief of staff, Mikael Moore, to determine whether to reopen the investigation.
At today’s hearing, Martin told the panel there was insufficient evidence regarding Waters or Moore. Martin said there wasn’t “clear and convincing” evidence that Moore, who is Waters’s grandson, knowingly violated House rules by helping OneUnited get the government bailout.
Still, Martin said investigators are “troubled” by inconsistencies in Moore’s testimony that raise “substantial issues of credibility.” He recommended that the panel consider whether “it was appropriate” to make a move against Mr. Moore short of formal action. That could take the form of a letter of reproval from the panel’s chairman and top Democrat.
Martin said he couldn’t “conclusively determine” whether Moore sent e-mails to help OneUnited get government assistance before or after Waters told him not to assist the bank.
Goodlatte said the panel had drafted a letter of reproval against Moore.
Waters should be exonerated of wrongdoing because evidence shows that she “took the important step” of instructing Moore “not to specifically assist OneUnited,” Martin said. The investigation found that there is no “clear and convincing” evidence that she “failed to supervise her staff,” he said.
Martin also reviewed evidence that Waters had called then- Treasury Secretary Henry Paulson to request a meeting on behalf of minority banks that were hurt by the government takeover of Fannie Mae (FNMA) and Freddie Mac.
The evidence showed that when Waters called Paulson, “she believed she was acting on behalf of all minority banks” in the National Bankers Association, a Washington-based trade group, and not only OneUnited, Martin said.
Paulson didn’t attend the Sept. 9, 2008, meeting between Treasury officials and two OneUnited executives, according to committee documents.
OneUnited had sought government assistance in September 2008 because it held “substantial investments” in Fannie Mae and Freddie Mac, according to the committee’s 2010 statement of alleged violations by Waters. 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 TARP, plus $17 million in private investment.
The two-year investigation was delayed by allegations that two former staff lawyers had improperly leaked information about the Waters’ case to Republican lawmakers. Martin concluded that none of the panel’s members was biased by the leaks. Still, House Speaker John Boehner, an Ohio Republican, appointed six acting members to oversee the Waters inquiry.
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