WASHINGTON -- Two prominent Democrats are facing trial in the House on serious ethics charges less than three months before the voters go to the polls to deliver their midterm verdict.
Both involve severe abuses of power, but one more so than the other as it is entangled in the subprime mortgage debacle that triggered a two-year recession and led to hundreds of billions of dollars in bank bailouts and countless home foreclosures.
New York Rep. Charles Rangel, the once-powerful chairman of the tax-writing House Ways and Means Committee, was forced to step down as a result of 13 ethics charges involving failure to pay taxes, disclose finances, improper political use of a rent-controlled office in New York, and use of his public office to seek millions of dollars in donations from lobbyists and corporations to establish the Charles B. Rangel Center for Public Service at the City College of New York.
In Rangel's case, the House Committee on Standards of Official Conduct, known as the ethics committee, has recommended that he be given a "reprimand," the mildest punishment possible. But Rep. Maxine Waters of California, the fiery member of the Congressional Black Caucus, could face a far more severe punishment for seeking a taxpayer bailout for a Boston-based bank, OneUnited, in which her husband, Sidney Williams, served on the board of directors and owned up to $750,000 in stock.
The ethics panel that has been investigating Waters released an 80-page report written last August by the quasi-independent Office of Congressional Ethics that concluded she broke the conflict of interest rule that forbids members from using their influence as a member of Congress for personal financial gain.
OneUnited was in trouble after having lost $50 million in high-risk investments in subprime-backed stocks at federal mortgage giants Fannie Mae and Freddie Mac. At one point, it was seeking nearly $100 million in bailouts from the U.S. Treasury to keep itself afloat.
Federal investigators said the bank had used poor documentation and lending standards, and gave top executives excessive pay and perks that included the use of a $6.4 million beachfront mansion in Santa Monica.
The ethics investigation found that Waters went to then-Treasury Secretary Henry M. Paulson Jr., asking him to meet with OneUnited executives.
Paulson told investigators later that he believed he was meeting with many minority bankers represented by the National Bankers Association, and was surprised to learn that only OneUnited executives attended. The investigation's preliminary report said "the discussion at the meeting centered on a single bank -- OneUnited."
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