Fighting three ethics charges, Congresswoman Maxine Waters now performs her most important public service, illustrating modern national governance in a way that is clear and easy to understand.
The ethics counts stem from Waterss official actions, and those of her congressional office, in helping OneUnited Bank snatch up $12 million in TARP funds. Back in September 2008, with her husbands investment in OneUnited nose-diving from about $350,000 to $175,000 — and with a very real possibility that the bank would go belly up, making the remaining investment worthless — Congresswoman Waters called then Treasury Secretary Hank Paulson to set up a meeting between Treasury officials and representatives of OneUnited.
Though, please understand, this is where the various accounts of the story diverge. Waters claims she sought to set up a meeting between Treasury and the National Bankers Association, a trade group for banks owned by women and minorities. But the House Ethics committee didnt buy that rationale considering that only representatives of OneUnited Bank showed up for the meeting. Moreover, the meeting seems to have been squarely centered around a request for the Treasury Department to bailout OneUnited to the tune of $50 million.
At least some of OneUniteds difficulty was caused by the banks investment in Fannie Mae and Freddie Mac, which just days before Rep. Waterss call had been announced as going into receivership. Waters has been a strong Fannie and Freddie booster and years ago pooh-poohed arguments that the two Congress-created financial institutions were in trouble.
The meeting with Treasury did not result in any bailout for OneUnited, as there was no legislative authority for such a bailout. Yet. But TARP was coming and Waterss Chief of Staff Mikael Moore (also her grandson) continued to communicate back and forth with OneUniteds CEO and House Financial Services Committee Chair Barney Frank. At one point, Moore shared draft language for TARP legislation prepared by the Treasury with OneUnited officials.
Chairman Frank admits that in drafting the rules, We were very clear we wanted [OneUnited] to be eligible. After the legislation passed and Treasury handed the bank $12 million smackeroos, Waters and Frank sent the Treasury secretary a letter saying, we applaud the recent decision.
Now it turns out that OneUnited had the weakest balance sheet of any bank that was bailed out. The bank is also one of the few bailed-out banks under a federal supervisory enforcement order, as FDIC and the Massachusetts Division of Banks wrote in October of 2008 that they had reason to believe that the Bank had engaged in unsafe or unsound banking practices and violations of law.
But for heavens sake, lets not even go into the arrest record of OneUniteds CEO Kevin L. Cohee. Thats beside the point.
The point is: Did Waters do anything wrong? Her setting up a meeting could be spun, as she has been spinning it, as just another in her many efforts throughout her political career to help minority interests.
At her defensive news conference last Friday, she was asked by a reporter, Is it not odd that the weakest bank that received a bailout in the fourth quarter has a direct, a direct relation to your husband? Is that not odd?
I wish I could make this clear to you, Waters responded. I have nothing to do with the regulatory agency and how it operates and making those kinds of decisions. We depend on our regulatory agencies to make decisions about whether or not these banks are acting properly. If theyre not, they ought to shut them down.
Oh, it is true that Waters is big on the federal government throwing its weight around, shutting things down or taking over whole industries. But it doesnt seem to fit as a rationale for setting up this meeting with Treasury.
Of her fateful call to Paulsen, Waters once commented, You dont use your chits for nothing, you call when there is an important issue. Wasnt the important issue helping the bank in whose stock was as much as 15 percent of her husbands net worth? Even she has never suggested it was to ask Treasury to shut down the bank for bad behavior.
After so many years in Washington making policy without reading it, Waters extemporaneous explanations come off contrived. I just feel that things have unfolded in the way that they have because this is how government is, she offered. Things work on a fast pace, we were at a point in time where the economic crisis was right before us, the meltdown was going on, conversations go on, people take actions of sorts, things just go on.
Yes, things do just go on and on and on in Washington. And, whether laws are broken or not, the outcome is the same: Those in public office and those connected to those in public office are again and again bailed out at the expense of the average honest hard-working taxpayer.
Thats how government is. And its criminal.