Political Hay

A Grandmother on Trial

Maxine Waters' most vulnerable spot could be her undoing.

By 8.11.10

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Ultra-leftist Congresswoman Maxine Waters (D-CA) faces three ethics charges (see official Ethics Committee document here) related to her attempt to get federal bailout money directed to a bank, OneUnited, in which her husband, Sidney Williams, was an investor. The value of Williams' ownership had dropped from over $350,000 at the end of June, 2008, to $175,000 in September, 2008, after the government put Fannie Mae and Freddie Mac into "conservatorship" (because OneUnited had substantial investments in FNM and FRE-backed securities.) Williams had also been a member of the bank's Board of Directors.

In September, 2008, Rep. Waters contacted former Secretary of the Treasury Henry Paulson to arrange a meeting which she apparently believed could help smooth the path toward OneUnited receiving cash from the government to compensate for the FNM and FRE losses. At one point, bank executives asked for $50 million.

Waters also contacted Barney Frank, Chairman of the House Financial Services Commitee, who told her to stay out of it. Waters said she would stay out of it, but proceeded to have her Chief of Staff continue to try to influence the process, both by contacting Treasury and contacting Barney Frank's staff.

In fact, Waters' Chief of Staff -- and grandson -- Mikael Moore, drafted potential legislation designed to get bailout money directed to OneUnited and sent the draft to OneUnited management.

A OneUnited Vice President exchanged e-mail with Mr. Moore about a "back-up strategy in case Treasury does not grant the specific relief" the bank wanted.

It appears that legislative language from Waters made its way into TARP legislation in the form of guiding Treasury to give assistance to financial institutions which met a particular set of characteristics which appear to have been satisfied only by OneUnited. (This is, of course, in addition to other institutions which the Treasury would be aiding based on other standards.)

In December, 2008, OneUnited received over $12 million in TARP money.

According to the key finding of fact by the Ethics Committee's investigation, "If OneUnited had not received this funding, [Waters'] husband's financial interest in OneUnited would have been worthless. Thus, the preservation of the value of [Waters'] husband's investment in OneUnited personally benefitted [Waters]."

The charges against Waters include:

• Violating House Rule XXII, which says, "A Member…shall behave at all times in a manner that shall reflect creditably on the HOUSE."

• Violating House Rule XXIII, which says, "A Member…shall adhere to the spirit and the letter of the Rules of the House and to the rules of duly constituted committees thereof," and "A Member may not receive compensation and 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."

• Violating the Code of Ethics for Government Service, which says that "any person in Government service should… never discriminate unfairly by the dispensing of special favors or privileges to anyone, whether for remuneration or not; and never accept for himself or his family, favors or benefits under circumstances which might be construed by reasonable persons as influencing the performance of his governmental duties."

In effect, Waters' charges stem from her "failure to instruct her Chief of Staff to refrain from assisting OneUnited after (Waters) realized that she 'should not be involved.'"

Waters filed a motion to dismiss the charges against her which the Investigative Subcommittee of the Ethics Committee (officially the Committee on Standards of Official Conduct) dismissed in July.

In a statement on her website last week, Waters said she has not violated any House rules and "will not be forced to admit to something I did not do." She also said that "the record will clearly show that in advocating on behalf of minority banks neither my office nor I benefited in any way, engaged in improper action or influenced anyone."

While Waters focuses the rest of her defense on the fact that she did very little personally, the key to the charges against her rely on the fact that she as a member of Congress "is responsible for the conduct and actions of members of her staff, especially her Chief of Staff, when members of her staff are acting with the scope and course of their employment." In other words, Waters' problem is not primarily about the couple of telephone calls she made, but about the behavior of her Chief of Staff for which she is legally and ethically responsible when he is acting in his capacity representing her office.

Waters does not have plausible deniability regarding such extensive efforts put forth by someone who is not just her Chief of Staff, but also her grandson -- and was thus working for the financial benefit of a relative not just doing his boss' bidding. Mikael Moore's efforts are Waters' efforts; his ethics breaches are her ethics breaches.

Waters ended her statement with the interesting proclamation -- perhaps laying the foundation for an appeal of her ethics trial -- that she is "not convinced that the process for investigating and examining House ethics cases is fair." It's par for the course for the Congressional Black Caucus and its members to imply that the ethics process is racist, and to attempt to kneecap House ethics investigators and limit public disclosure.

Waters' ethics trial thus poses a no-win situation for the Democratic leadership, at least if the trial ends up finding her guilty. Either Waters accepts the verdict, damaging Pelosi's claim (which nobody believed anyway) that she's "draining the swamp," or Waters casts herself as the victim of a racist witch-hunt -- during a Congress in which Democrats have the overwhelming majority. In either case, black voters -- an absolutely critical voting block in close statewide elections -- are likely  to find another reason to put aside their 2008 Obama-fueled enthusiasm and just sit out the November election.

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About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Saturday mornings from 6 AM to 9 AM. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.