Waters charged with ethics violations related to OneUnited

By Beth Healy, Globe staff

A House Ethics Committee report released today charged US Representative Maxine Waters with three ethics violations for helping Boston-based OneUnited Bank secure a meeting with US Treasury officials and $12 million in bailout funds in late 2008.

The report alleges that Waters, a 10-term Democrat representing Los Angeles, helped an institution in which her husband held stock once worth $351,000, and that was at risk of failing without a cash infusion from the federal bank bailout program. The value of those shares had plummeted by half, to $175,000, as the financial crisis mounted and the bank lost millions of dollars invested in mortgage agencies Fannie Mae and Freddie Mac.

The Ethics Committee charged that Waters violated House rules by helping the bank because she had a large financial stake in its survival: "If OneUnited had not received this funding, Respondent's husband's financial interest in OneUnited would have been worthless,'' the report said.

Waters's husband, Sidney Williams, had served on the board of OneUnited, the nation's largest minority-owned bank, until just months before the bank's executives sought help from the congresswoman. His shares in the bank accounted for between 5 percent and 15 percent of the couple's net worth, according to the report, issued by the Ethics Committee's Investigative Subcommittee.

The report also alleged that Waters should have instructed her chief of staff and grandson, Mikael Moore, not to assist OneUnited. As previously reported, Waters told US Representative Barney Frank, the Newton Democrat who chairs the House Financial Services Committee, that she had a potential conflict in the OneUnited matter. Frank warned her to avoid the conflict, but she allowed her chief of staff to continue to assist the bank, according to the committee report.

Waters, in her legal responses to the allegations, called the statement of violations "ambiguous and convoluted." She challenged the notion that OneUnited would have failed without the infusion from the Troubled Asset Relief Program, citing rules that only healthy institutions could receive funds. OneUnited raised private capital before getting the bailout funds.

Waters's attorneys questioned the relevance of citing the OneUnited holdings as a portion of her net worth, and said there was no financial benefit to her when the bank received the TARP funds. They also argued that she was being treated differently from other lawmakers facing past ethics violations.

Waters was traveling to Washington and could not be reached for comment. Last week, she called for a hearing on the charges.

In a statement, OneUnited said that the bank and its executives could not comment on Waters "due to the ongoing nature of the proceedings." The bank said that it "went through the same TARP application process as any other banking institution" and that Treasury "was not influenced by any of the events at issue in determining to award the bank TARP funds."