Friday is the last workday for Congress before members return to their districts for the election homestretch. That's the day the House Ethics Committee picked to finally hold a hearing on charges against Congresswoman Maxine Waters — nearly two years after the committee's first attempt to take up the case.
The 11-term Democrat from South L.A. is accused of using her political influence to help a bank in which her husband owned stock. But the investigation has been delayed by allegations of impropriety and political gamesmanship that led to the departure of two staffers, committee members recusing themselves from the investigation, and the hiring of an outside investigator.
On Thursday, the House Ethics Committee announced the long-awaited hearing on the matter, a scant six weeks before the election.
Melanie Sloan, who heads CREW, Citizens for Responsibilty and Ethics in Washington, calls the timing "overtly political." Sloan, who's been critical of Waters in the past, says the timing doesn't give Waters "much of a chance" to respond to charges. Sloan thinks the committee should have waited until after the November election.
Some observers suggest the Ethics Committee might release its own report plus a second one by special investigator Billy Martin.
The allegations date back to the near-collapse of the banking system in 2008. Waters was contacted by officials from OneUnited Bank on behalf of minority bankers. In a 2010 interview with KPCC, Waters said she was told that "many minority banks had over-leveraged their capital in Fannie [Mae] and Freddie [Mac] 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" — stock the federal government encouraged them to buy.
OneUnited was particularly vulnerable because it stashed most of its available cash in Fannie and Freddie stock. When the government took over the failing mortgage agencies, that stock became worthless and OneUnited was in danger of going under.
Waters' husband owned more than $350,000 of OneUnited stock. The Congresswoman said she responded as she often does, by advocating on behalf of a minority-owned business. She called then-Treasury Secretary Henry Paulson on behalf of the National Bankers Association. A meeting was scheduled the next day. Most of the attendees were from OneUnited. They asked the Treasury to buy back $41 million of the worthless Fannie and Freddie stock. Treasury officials said they had no authority to do so.
Weeks later, Congress created what’s now known as TARP, the Troubled Asset Relief Program. OneUnited officials again contacted Waters’ office with a few suggestions for language that would benefit their bank.
At that point, Waters said she stepped back and consulted the then-head of the House Financial Services Committee, Democrat Barney Frank of Massachusetts.
"Because my husband had once served on the board of OneUnited Bank and still held investments there," she said, "I felt I should seek assistance from Chairman Frank, a representative from the state where the bank was headquartered, and someone with a record of commitment to the health of minority-owned banks."
Frank said he counseled Waters to “stay out of it.”
The Ethics Committee says Waters violated House Rules by failing to keep her office out of a matter that involved her husband.
The hearing is scheduled for 9 a.m. Friday. Representative Waters has had no comment.
In November's election, Waters faces fellow Democrat Bob Flores, who she defeated in the primary by 65-to-35 percent. Because of California's new election laws, they are facing off again in the general election.