Rep. Maxine Waters who may be facing a formal
House of Representatives ethics trial over her activities on
behalf of a bank, is just the most recent member of the
Congressional Black Caucus to face such an investigation.
Currently New York Rep. Charles Rangel is facing
an ethics trial, following in the footsteps of ethically
challenged Louisiana Rep. William Jefferson.
Waters, the long-time Southern California representative, is,
according to House sources, facing charges that she provided
special access to OneUnited Bank, a Massachusetts based bank that
is similar in its history to the notorious ShoreBank in Chicago.
House officials say the Waters investigation is focused on
Waters’ activities in 2008, when House sources say she had
communications with Treasury officials involved in determining
whether OneUnited would receive $50 million in funds from the
Troubled Asset Relief Program (TARP). Waters also serves on the
House Financial Services Committee. Those communications are
mostly phone calls, say sources, she had with her husband,
Sidney Williams, a former board member of
OneUnited and a current holder of at least $250,000 in bank
stock, as well as with current OneUnited officials and with
Treasury officials overseeing bailout program. OneUnited had lost
millions in 2008 from holdings it had in Fannie Mae and Freddie
Mac financial instruments; in the end, OneUnited received $12
million in TARP funds.
Waters has strenuously denied any wrongdoing in the case,
and said her contacts — including setting up a meeting with
Treasury officials on behalf of the National Bankers Association,
a group of African-American banks and a longtime supporter of
Waters and the Congressional Black Caucus — were in keeping with
her longstanding assistance to community-based financial
institutions. In that meeting with TARP officials, according to
House sources, a OneUnited official with ties to the bankers’
association asked for TARP funds for OneUnited.
Waters’ troubles are also expected to lead to a greater
focus on the group at the center of the Rangel-Waters scandals:
the Congressional Black Caucus (CBC), made up of 42 members of
Congress, but a caucus unlike just about any other on Capitol
Hill.
“You want to know why caucus members like Jefferson and
Rangel and Waters are in trouble?” asks a former Democrat staffer
on the Ways and Means Committee. “It’s because they are so used
to hitting up corporations and business associations for dollars
for the CBC that they really don’t see a difference for what they
do on their own. Rangel almost certainly saw no difference
between hitting up companies for his own job-training program in
New York and what he would do to steer money to the CBC.”
The staffer pointed out that the National Bankers
Association, which Waters claimed asked for the meeting that is
now at the center of her potential troubles, has been an active
supporter of the CBC in the past.
Unlike many other caucuses on the Hill, which are in many
cases informal associations of House members focused on specific
issues, the Congressional Black Caucus is a financial powerhouse,
with a 501(c)(3) foundation under its control, and a $4 million
townhouse headquarters in downtown Washington, far from the
prying eyes of Capitol Hill reporters. That townhouse’s mortgage
was paid for in 2008 by a fundraising program that tapped dozens
of U.S. corporations — including AT&T, General Motors, and
Coca-Cola — for tens of thousands of dollars. Coca-Cola in the
past has also underwritten the organization’s annual prayer
breakfast.
Because the Congressional Black Caucus steers all those
corporate dollars through its nonprofit, charitable educational
foundation, it is not beholden to federal campaign finance rules.
And that foundation has pulled in millions — more than $50
million, in fact, between 2004 and 2008.
In the past, the CBC has liked to portray itself as the
“conscience of the Congress,” but in recent years, that
conscience has been flexible depending on the issue and how much
a corporation or trade association was willing to pay. “You may
not be able to buy the whole caucus, but for a given issue or
bill, all you really need are few of those members to support
you,” says a current House Republican leadership aide. “Some of
the negative talk is just jealousy that others caucuses can’t
pull off this kind of fundraising, but much of it comes out of
knowing that there is a quid pro quo going on there, and there
isn’t much any of us can do about it.”
Even the CBC appears aware that its activities may be
skirting around ethics rules. In May, the CBC sought to curtail
the ethics procedures its own Democrat leadership put in place.
Twenty members of the CBC signed onto a resolution that would
roll back the powers of the independent Office of Congressional
Ethics, which is overseen by a panel of private citizens. The OCE
is empowered to initiate and investigate possible ethics
violations, but cannot prosecute ethics cases. The OCE hands its
findings and recommendations over to the House Committee on
Standards of Official Conduct, which is comprised of
congressional members and can conduct investigations, has
subpoena power, and recommends penalties for lawmakers found in
violation of House ethics rules. The OCE can also pass along its
findings to other federal agencies should it deem it
appropriate.
To date, the OCE has launched investigations of more than a
dozen members of the Congressional Black Caucus, including
Rangel. The CBC was also investigated for its annual members-trip
to the Caribbean, which is paid for by the CBC Foundation. The
CBC’s resolution sought to change the operations of the OCE,
barring it from initiating its own investigations and requiring a
sworn complaint by a citizen claiming first-hand knowledge of the
alleged violation, barring referrals to the House Ethics office
within 60 days of an election, and the sealing of all findings by
the OCE from public view.
“If people want to know what Democrats are really nervous
about if they lose the House, they just have to look at the OCE
and what it’s doing,” says the House GOP leadership aide. “We’re
going to take our hits, too, but there is a lot more dirt over on
the other side of the aisle to be dug up in the coming years. I
think Democrats believe the OCE is going to be far more empowered
under our control than theirs.”
