The House Ethics Committee has concluded that the rights of Rep. Maxine Waters have not been violated in an ongoing investigation.
The committee will now be able to continue its investigation. Waters, who serves on the House Financial Services Committee, is accused of pulling strings to set up a meeting between minority-owned banks and Treasury Department officials. Waters has been adamant about her innocence.
She alleged that her rights were violated, in part by delays in the case and also by communications between committee staff and Republican committee members. The allegations led to the extraordinary decision in February by the committee’s five Republicans and the top Democrat to withdraw from the Waters case.
A statement from the acting chairman and acting top Democrat says Waters has been treated fairly, and that some of the information Waters objected to came out of a press conference held by Walters herself.
In the hour-long news conference two summers ago, the L.A. Democrat explained she wanted to be sure minority-owned banks were included in the government bailout, particularly those that followed government suggestions to invest in housing giants Fannie Mae and Freddie Mac.
"It was represented to me," she told reporters, "that many minority banks had over-leveraged their capital in Fannie and Freddie and the association wished to know whether or not their members’ capital was lost or if the government was responsible for protecting the capital that they had invested in preferred stock."
Waters’ husband owned more than a quarter million dollars in stock in OneUnited, a minority-owned bank. Executives from the bank were at the meeting that Waters set up with Treasury officials. The OneUnited group wanted the Treasury Department to buy back more than $40 million of worthless Fannie and Freddie stock.
The Treasury officials couldn’t do that. But later, OneUnited — like other banks— got government bailout money.
In 2009, the House Ethics Committee began investigating whether Waters did anything wrong when she set up the Treasury meeting that included OneUnited.
A formal hearing was set for the fall of 2010. Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington, says the timing was no coincidence.
"Republicans on the committee realized that they could make political hay out of these investigations into high-ranking Democrats as we were coming into a midterm election, when there was a chance of the House turning over," she says.
Sloan has accused Republicans of wanting to use these investigations "to hit the Democrats over the head with."
Days before the initial 2010 hearing, the committee placed two staffers on administrative leave — and uncovered new e-mail evidence. Then, someone leaked stories about the case to the press and the hearing never happened.
Eventually, six committee members stepped away from case and the committee hired an attorney to investigate the investigation.
Now, nine months and half a million dollars later, that outside investigation is done. It found one violation of Ethics Committee rules, when a former staffer refused to answer questions about leaked documents. But that didn’t affect the committee’s work on the Waters investigation — so the committee was cleared.
UPDATE: Waters is expected to respond to the Ethics Committee's findings later this week. The letter to Waters explaining the decision is below.