Stage set for Maxine Waters’ ethics trial

Reporting from Washington — 

A congressional panel set the stage Monday for an ethics trial for Rep. Maxine Waters, one of Los Angeles’ most enduring liberal politicians, over her actions involving a bank with ties to her husband that received federal bailout funds.

Without detailing the accusations, the House Ethics Committee released an investigative report that found “substantial reason” to believe that Waters may have violated ethics rules. The case centers on a meeting Waters set up in September 2008, during the financial crisis, between Treasury Department officials and representatives of minority-owned banks.

But discussion at the meeting “centered on a single bank — OneUnited,” according to the report by the Office of Congressional Ethics. Waters’ husband, Sidney Williams, served on the OneUnited board from 2004 to 2008, and at the time of the September meeting was a stockholder in the bank, the report said.

Three months after Waters, a senior member of the House committee that oversees banking, called then-Treasury Secretary Henry M. Paulson to set up the meeting, OneUnited received $12 million in bailout funds.

A defiant Waters — a South Los Angeles political fixture who won election to the state Assembly in 1976 and to Congress in 1990 — vowed Monday to fight the charges.

“I have not violated any House rules. Therefore, I simply will not be forced to admit to something I did not do,” she said. “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.”

Unless a settlement is reached, Waters, 71, will face a trial, probably this fall, before an eight-member panel of fellow House members evenly divided between Democrats and Republicans. Punishment for ethics violations can range from reprimand to censure and even expulsion from the House.

The case comes as Rep. Charles B. Rangel (D-N.Y.), another prominent member of the Congressional Black Caucus, faces trial on 13 ethics violations, adding to Democrats’ woes as they fight to hold onto their House majority in the November midterm election. The House GOP campaign committee pounced on the ethics cases, attacking Democrats for being “mired in the swamp they once promised to drain.”

“It’s yet another headache that congressional Democrats don’t need right now,” said John J. Pitney Jr., a political scientist at Claremont McKenna College.

Waters is accused of three ethics violations, according to a congressional source familiar with the case who spoke on condition of anonymity, citing the sensitivity of the proceedings.

The committee won’t make public the charges against Waters until it releases the findings of its own investigation when Congress returns from its summer recess in September. A committee statement issued Monday said the eight-member panel would “determine whether any counts in the statement of alleged violation have been proved by clear and convincing evidence.”

The 80-page report from the Office of Congressional Ethics, an independent body created by Congress after a spate of scandals, was completed about a year ago but made public Monday.

In a section titled “Rep. Waters’ Apparent Recognition of Conflict of Interest,” the report noted that Waters told a House colleague — believed to be Rep. Barney Frank (D-Mass.) — about her concerns for OneUnited but that she was “in a predicament” because her husband had been involved in the bank.

Even though investigators did not identify Frank by name, they did identify “Representative A” in their report as “chairman of the House Financial Services Committee,” a position Frank holds.

According to a memo summarizing an interview with Frank, investigators wrote that Waters told him she was “in a predicament because Sidney had been involved in the bank, but OneUnited people were coming to her for help. She knew she should say no, but it bothered her.”

Frank told The Times in a 2009 interview that Waters was concerned about the plight of minority-owned banks, as was he.

“She acknowledged that ‘Sidney had been on the board. I could have a conflict here,’ ” Frank said in the interview. “I said, ‘Fine, just stay out of it, I’ll deal with it.’ ”

Since the bank was based in Frank’s home state, he offered to have his staff look into the institution’s problems.

Waters’ spokesman said the conversations with Frank took place weeks after the meeting with Treasury Department officials.

Waters, however, said the Office of Congressional Ethics had “drawn negative inferences where there are none and twisted facts to fit its faulty conclusions.”

She said that the meeting was requested on behalf of the National Bankers Assn., a trade organization representing minority-owned banks, “not on behalf of OneUnited Bank as has been suggested.”

She said the meeting resulted in “no action.”

The Office of Congressional Ethics “failed to show that I received any benefit or engaged in any ‘improper exercise of official influence,’ ” Waters said.

Waters has defended her efforts as consistent with her longtime work to promote opportunity for minority-owned businesses and lending in underserved communities.

But the report expressed concern about OneUnited’s “singular role” in the Sept. 9, 2008, meeting.

When the meeting was held, a lawyer for the National Bankers Assn. was present, but OneUnited was the only bank represented, the report said.

The Office of Congressional Ethics said that was “cause for concern,” given that the National Bankers Assn. represents 103 banks, including two in the Washington area. Waters did not attend the meeting.

“Further evidence of what appears to be OneUnited’s singular role in the Sept. 9 meeting is the fact that e-mails provided by Rep. Waters’ office show Mr. [Kevin] Cohee, the bank’s CEO, inviting individuals to the meeting,” the report said. “This contradicts Rep. Waters’ and the chief of staff to Rep. Waters’ comments that the [National Bankers Assn.] decided who would attend the meeting.”

Waters’ husband was on the bank board until April 21, 2008, the report said. According to Waters’ 2008 financial disclosure report, Williams held investments in OneUnited valued between $500,000 and $1 million.

Paulson, interviewed by investigators, said Waters did not mention her husband’s ties to the bank.

Waters has previously come under scrutiny for activities that benefited her family financially. The Times reported in 2004 that family members had made more than $1 million by doing business with companies, candidates and causes that the congresswoman helped. Her husband, a former professional football linebacker turned Mercedes-Benz salesman, was named ambassador to the Bahamas by President Clinton in 1993.

Asked how her husband became a board member of the bank, Waters told investigators she could not recall.

“He takes care of his business and I take care of mine,” she was quoted as saying.

richard.simon@latimes.com