The ranking Democrat on the House Financial Services Committee in the upcoming Congress is married to a then-director of and investor in a bank that got significant taxpayer funds through the 2008 financial bailouts. Her role in the bank’s bailout triggered a congressional investigation.
While Rep. Maxine Waters (D-CA) was eventually cleared of official wrongdoing by the House Ethics Committee, the broader allegation — that she used her position in a manner that enriched family members — was never in dispute, even if it is not an official violation of House ethics rules.
Despite that fact, and a host of other instances of the congresswoman’s family apparently profiting financially from her position, Waters is now slated to be the top Democrat on the Financial Services Committee.
As the Treasury Department began doling out bailout money from the Troubled Asset Relief Program in 2008, Waters called then-Treasury Secretary Hank Paulson to arrange a meeting between regulators and the executives of OneUnited Bank. Her husband served on the bank’s board and owned stock in the company at the time.
OneUnited would eventually receive $12.1 million in TARP money, despite being the weakest of any bank to receive support from the bailout, according to NBC News:
When then-Treasury Secretary Henry Paulson announced creation of the so-called “Capital Purchase Program” in October 2008, he said it was directed at “healthy institutions.”…
Records show that as of Sept. 30, 2008, the latest quarter before the investment, OneUnited had “Tier 1 capital” of just 1.8 percent of assets. Of the 363 banks that got TARP money in the fourth quarter of 2008, at the height of the financial crisis, that was the lowest Tier 1 ratio.
In fact, none of the 987 banks that got TARP money between October 2008 and December 2009 reported a lower ratio in the quarter before they received federal cash.
The Ethics Committee’s eventual exoneration of Waters does not imply that she did not misuse her official position. Indeed, the laxness of congressional ethics rules have been faulted by good-government advocates, who note that the rules don’t preclude members of Congress from using their influence to financially benefit themselves or their families.
“As long as legislation affects the financial interests of others, a senator may help pass legislation which also affects his or her own personal financial interest,” according to Washington University law professor Kathleen Clark. “The House rules contain even fewer restrictions.”
In other words, a legislator can use his or her influence to profit financially without violating ethics rules as long as at least one other person profits as well. “Were a corporate executive to do this with corporate funds,” Hoover Institution fellow Peter Schweizer noted in his 2011 book Throw Them All Out, “she would more than likely be in trouble.”
Sure enough, Waters’ attorneys argued before the Ethics Committee that she thought she was helping all minority-owned banks, not just OneUnited, through her dealings with Treasury. That she used her access to the treasury secretary to her husband’s financial benefit was never in dispute. The fact that her actions did not violate ethics rules says more about those rules than about Waters’ conduct.
Nor was the OneUnited deal the first time Waters’ family members benefited from her work on Capitol Hill. “U.S. Rep. Maxine Waters’ family members have made more than $1 million in the last eight years by doing business with companies, candidates and causes that the influential congresswoman has helped,” the Los Angeles Times reported in 2004.
The left-wing ethics group Citizens for Responsibility and Ethics in Washington has included Waters in three of its annual lists of Congress’ “most corrupt” members.
Lachlan Markay is an investigative reporter for The Heritage Foundation. Follow him on Twitter.