New America Media, News Report, Earl Ofari Hutchinson
WASHINGTON - Embattled California Congresswoman Maxine Waters took a bold and virtually unprecedented step. She challenged the House Ethics Committee to release the entire report on her alleged ethics violation. The charge is that Waters used her influence to get the Treasury to funnel $12 million to a bank that her husband once sat on the board of directors of and had stock in. This violated the House code of conduct rule that states: Members “may not permit compensation to accrue to the beneficial interest of such individual from any source, the receipt of which would occur by virtue of influence improperly exerted from the position of such individual in Congress.”
Waters’ challenge is unprecedented for two troubling reasons. The ethics committee wraps its investigations in a thick cloud of secrecy. It literally takes an act of Congress to get the committee to publicly reveal the details of the case it makes against one of its own. That’s the case with Waters. The committee completed its investigation, and published its private report in August 2009.
The second reason Waters made the demand for full disclosure is more troubling. There is no smoking-gun proof that she did anything wrong. This writer received a copy of the 80-page report. The report contains a summary of the allegation, a jurisdictional statement, procedural history, and a summary of investigative activity. There are 18 exhibits of memos, affidavits, testimony and interviews with Waters and the other principals involved.
The committee interviewed Waters in June 2009. She admitted that she called then-Treasury Secretary Henry Paulson and asked for a meeting with the National Bankers Association, the trade association for the nation’s 103 minority and women-owned banks. Waters requested that NBA President-Elect Robert Cooper supply her with “talking points” to explain the purpose of the meeting. The meeting focused solely on the government takeover of Fannie Mae and Freddie Mac and the severe financial impact the takeover had on minority banks. She did not say who should attend, or set the meeting agenda. No member of her staff attended.
The report makes clear that the only financial interest Waters had in One United Bank was investment income deposited five years ago. She disclosed that in her financial disclosure statement. When asked why she did not attend the meeting with the Treasury, she stated, “Why should I? I don’t think members normally do that. The NBA are their own best advocates. Let them tell their own story. That’s how I see it.”
Waters chairs the House Financial Services Subcommittee. The ethics committee acknowledged that in that capacity she talked with Paulson frequently on issues involving the bank bailout, minority investment banks, money managers, and toxic assets. â¨Treasury officials routinely testify before her subcommittee. The committee noted that Waters’ husband had resigned his position on the board of One United five months before the meeting between Paulson and the NBA in September 2008. The subsequent letters, memos and correspondence between Waters’ office and the NBA essentially confirm that a meeting was requested, the NBA officials did attend, and that her office was informed of the meeting.
The committee interviewed Paulson in April 2009. He detailed the circumstances that led to the takeover of Fannie Mae and Freddie Mac and the financial impact and confusion it caused. Paulson said that he received 70 to 80 calls a day from banks and financial industry groups about the takeover. Waters’ call was one of them. Paulson was adamant that Waters did not “mention a particular bank” when she requested the meeting. Paulson quickly added that, “even if she had mentioned that she had a personal financial interest in One United Bank,” he still would have granted the meeting. He considered the request reasonable and non-partisan.
The same month, the committee interviewed Congressman Barney Frank. Frank flatly said that he had frequent dealings with the NBA, and that One United Bank “was never a major presence.” When he thought of NBA, he “thought of southern banks and not One United.”
In December, One United got $12 million in TARP funds, but Frank, who chairs the House financial services committee, said it had nothing to do with Waters’ intervention. Frank wrote a provision in the federal bailout legislation that was specifically designed to aid One United. Frank has said he inserted it because One United was the only African-American-owned bank in his home state, Massachusetts. In an earlier interview, he made it clear that Waters’ interest "had zero impact on the outcome because I would have done it anyway."
The actual committee report reveals in full detail that Waters did not profit from or influence decisions the Treasury made to help One United Bank, or any other minority bank. But the damage has been done. Waters is now firmly imprinted in the media and public mind as the poster politician for congressional corruption. She’s black, high profile, a ranking Democrat, and outspoken. That instantly made her an inviting target to dump on the political hot seat. The release of the full report should, but won’t, change that.
In this exclusive interview with NAM's Earl Ofari Hutchinson, Waters’ discusses the ethics charges against her, the targeting of Congressional Black Caucus members for ethics violations, the effect on the Democratic Party, her constituents, and the relation to the fall elections.
Interview with Maxine Waters
EOH: The House’s Office of Congressional Ethics charges against you were initially made more than one year ago. Why are they just being made public now?
MW: We have asked the ethics committee the same question. Why has it taken so long to bring the charges? The OCE report was made public just as the House was going into a six week summer break. That hurt, because there’s no real opportunity to contest the charges and that’s not fair. So that’s why we have publicly demanded that the committee release the full report that contains the specific charges.
EOH Many wonder because of the long time gap before release, were there any new charges?
MW. There are none. There’s nothing new.
EOH: Do you feel that you and other members of the Congressional Black Caucus are being targeted?
MW: I have no idea whether that is the case. True, there’s much speculation about that. I can say that in my case, we challenge the committee that if you have a real case, lay it out, and let’s see what happens.
EOH: Has the House Democratic Leadership, Speaker Nancy Pelosi, and the OCE responded to your challenge to disclose?
MW: There’s been no response. We’ll be back in special session the second week of August to vote on a Senate passed aid bill for the states. We intend then to raise the question again about releasing the report.
MW: You’ve asked for a trial. What does that entail?
MW: It’s not really a trial. It’s more an adjudication hearing. The ethics committee members present the information they have. They call witnesses and hear testimony. Our side does the same. Then they weigh everything and make a determination to sustain or dismiss. But it’s the House members sitting in judgment.
EOH: In the report that was released, a representative from Treasury was very specific that at the time you asked for a meeting with the National Bankers Association, Treasury was getting 70 to 80 calls a day from all financial parties about the Fannie Mae and Freddie Mac bailout and your call was simply one among the many. Why then is considered now a major offense?
MW: I believe this started with a Treasury employee who was a mentee of Karl Rove (a top GOP operative). He remembered that I had disclosed that my husband sat on the board of directors of One United Bank at one time. He took this public information to the OCE to make it look as if there was a conflict of interest. The committee looked at it and said “aha” maybe there is a conflict here. And because their investigation is so limited, they came up with the idea that I received some benefit from the meeting that I requested.
EOH: There’s nothing in the 80 page report that shows that you or your husband received any financial benefit from this meeting.
MW: That’s because there was no benefit, and I know that there’s nothing in the report that shows it. One United Bank did not get any immediate help from the Treasury. The Bank then went to the private market and got $20 million in loans to help them stabilize their lending. The bank’s investors did not lose anything. The way I see it the committee took bits from conversation and information between staff members about the economic crisis and the Treasury’s role in it and then pieced them together to try to make something out of it. And it’s not fair.
EOH: House Financial Services Committee chair Barney Frank is quoted as telling you “to stay out of it”
MW: That’s not true. When I learned that One United Bank was seeking help, I said to Frank that One United is one of your constituents (the bank is headquartered in Frank’s state Massachusetts) so you should take a look at this. He said “you’re right, they are my constituents, stay out of it, I’ll take a look at what One United is requesting.” That was said before the TARP bailout even came into existence.
EOH: The media and the committee made Frank’s words to you appear that he was concerned about a potential conflict of interest on your part.
MW: That conversation took place after the September meeting and before TARP came into existence, and it was only in relation to that.
EOH: The charges against you come on the eve of the crucial fall elections. What effect could it have on them?
MW: The Democrats don’t benefit from this this close to the election. It puts them on the defensive. Even if you argue that it seems that the ethics investigation process is working, the Democrats having to defend the process at this time doesn’t help the party. It’s hurtful because it gives the Republicans a chance to say, “See the Democrats have all those problems over there.” I don’t know if they’ll do that because they’re a lot of Republicans that have been investigated. But there’s nothing positive in this for the Democrats.
EOH: President Obama weighed in on Harlem Congressman Charles Rangel who also faces ethics charges) and said he should retire with dignity. Has he communicated with you on your ethics charge?
MW: Not at all.
EOH: Has the widespread reporting of the charges hurt or tainted you with your constituents?
MW: We’ve received many calls of support. My constituents know that I’m a strong advocate for small and minority business, and for those who don’t have access. Bank of America, Chase, Citibank, and the Wall Street financial houses, all have access to the Treasury. They can pick up the telephone on a first name basis and walk into their offices as they please. The day the meeting with the NBA occurred Treasury officials met with the Big Boys from the banks. My responsibility is to make sure that minority businesses have that same access. My constituents know that I’m always going to be under fire whether from challenging the CIA on drugs, police brutality or minority businesses and they understand that.
EOH: Will you take a deal if offered?
MW: No deals! I’m not going to the backroom. Bring it out.
Earl Ofari Hutchinson is an author and political analyst. He hosts a nationally broadcast political affairs radio talk show on Pacifica and KTYM Radio Los Angeles.