Washington Post: In defense of Maxine Waters, Part 1

by Jonathan Capehart

For 30 minutes yesterday, Rep. Charles B. Rangel (D-N.Y.) slammed his critics, hectored his fellow Democrats, warned them about the ethics process and called out President Obama for his expressed desire to see the Harlem congressman end his career with "dignity."

But if you ask me, the wrong member of Congress was standing on the House floor defending his or her honor and demanding a hearing from the Ethics Committee. After reading through the documents issued first by the Office of Congressional Ethics (OCE) and the Statement of Alleged Violation from the House Committee on Standards of Official Conduct, Rep. Maxine Waters (D-Calif.) has a stronger case to make in her defense than the pity-party pol from Harlem.

Let me state up front that Waters is not my favorite. She's not a complete racial grassy knoller. That would put her in league with the likes of Nation of Islam minister Louis Farrakhan. But she has been known to set up camp there, as she did in the 1990s when a series of stories in the San Jose Mercury News hinted at a connection between the CIA, the crack cocaine epidemic in black communities and the Nicaragua Sandinistas. Yet I must come to her defense on the ethics allegations against her.

Boiled down to its essential elements, the knock against Waters is that she used her position to help a bank in which her husband held stock to secure funding from the Treasury in order to maintain the value of that stock. But the facts as I read them don't neatly support that assertion. Frankly, I'm hard pressed to see what she did that put her outside the norm of constituent services. The details are not in the Statement of Alleged Violations. They are in the documents from the OCE.

The bank in question is the Boston-based OneUnited. Until April 2008, Waters's husband served on the board. He kept his shares after leaving. Robert Cooper, the senior counsel of the bank, was also the incoming chairman of the National Bankers Association (NBA), a trade association for minority-owned banks. Those banks held significant shares of preferred stock in Fannie Mae and Freddie Mac. When it looked like those government sponsored enterprises were going under in August 2008, Cooper went to Waters for help in getting the NBA's concerns about the impact on its member institutions to Treasury. Among these banks, OneUnited was the largest holder of Fannie-Freddie paper.

A letter was sent on Sept. 6 to Henry Paulson, President George W. Bush's secretary of the treasury, requesting a meeting. Fannie and Freddie were put into conservatorship on Sept. 7. According to the OCE's memorandum of interview, Paulson said that Treasury was aware that the impact of the actions taken left an "open question" as to the affect on "entities holding preferred stock."

As a result of these actions, the Secretary of the Treasury Department was receiving dozens and dozens of phone calls in the early part of the week of 8 September -- totaling 70-80 calls a day. However, he had a clear recollection of receiving a call from Representative Waters because the Member addressed in her phone call the very matter currently under debate within the Treasury Department -- the effect that the decision to not protect preferred stock holders would have on small banks.

It was in that phone call that Waters asked Paulson to meet with the NBA. Waters didn't mention her husband's connection to OneUnited. At that point, would it have been good if she had? Sure, out of an abundance of caution. But I don't fault her for not doing so because the meeting was being requested by the NBA to discuss an industry-wide concern. The memo of the Paulson interview notes, "Had Representative Waters informed the Secretary of the Treasury Department of her financial interest, [he] would still have granted the meeting. It was [his] policy to grant all reasonable requests made by a member of Congress regardless of political party."

The meeting took place Sept. 9. Neither Paulson nor Waters attended. But various congressional and Treasury staffers did, including an acting undersecretary and Mikael Moore, Waters's chief of staff. While they discussed minority-owned banks in general, conversation focused on OneUnited in particular. If anything, the official from OneUnited should be smacked around for using the time to plead his institution's particular case. And I'd still like to know if Cooper made any attempt to invite other NBA member banks.

It is worth remembering what happened just three days after that Treasury meeting: the American financial system began to implode. By Sept. 15, 2008, the economic system as we knew it took on a new and frightening hue. Assistance to OneUnited finally arrived in December 2008 through the Troubled Asset Relief Program (TARP). The bank secured $12 million, but only after getting approval from both the Treasury and the FDIC -- not from any special action or intervention by Waters.

So, what about the value of the OneUnited stock held by Waters's husband? And what about that meeting between Waters and Frank where he told her to stay out of the OneUnited issue? Answers to come in part two.