AP sources: 3 charges filed against Rep. Waters



AP – FILE - In this Oct. 28, 2009 file photo, Rep. Maxine Waters, D-Calif., is seen on Capitol Hill in Washington. …
By LARRY MARGASAK, Associated Press Writer – 2 hrs 32 mins ago
WASHINGTON – California Democrat Maxine Waters faces a House trial this fall on three charges of ethical wrongdoing, setting the stage for a second election-season public airing of ethics problems for a longtime Democratic lawmaker.
The charges focus on whether Waters broke the rules in requesting federal help for a bank where her husband owned stock and had served on the board of directors. She denied the charges Monday.
Persons familiar with the case said Waters is accused of violating:
_A rule that House members may not exert improper influence that results in a personal benefit.
_The government employees' ethics code, which prohibits granting or accepting special favors, for the employee or family members, that could be viewed as influencing official actions.
_A rule that members' conduct must reflect creditably on the House.
The persons were not authorized to be quoted by name on allegations not yet made public.
The House ethics committee's announcement comes just days after it outlined 13 charges against Rep. Charles Rangel, D-N.Y., including failing to disclose assets and income, delayed payment of federal taxes and improper use of a subsidized New York apartment for his campaign office.
Rangel, the former House Ways and Means Committee chairman who has served for 40 years, faces a trial in the fall.
Democrats face certain losses in the congressional elections, the first midterms for President Barack Obama, and the high-profile trials could further damage the party's political standing.
Republicans quickly jumped on the latest news. The GOP's House campaign committee released a statement with the headline: "The Dirty Details: Ethics Office Reveals Waters Charges. Panel Has 'Substantial Reason to Believe' Dems Have Another Ethics Problem on Their Hands."
Waters is a senior member of the House Financial Services Committee, which handled the recent rewrite of legislation that regulates financial institutions and has strong protections for consumers.
Rangel stepped aside in March as the chief House tax writer following a negative report on his conduct in a separate ethics case. In addition to taxes, his committee handles trade, portions of health care reform, Medicare and Social Security.
The charges against Waters were filed July 28 by a four-member investigative panel, but not announced until Monday. An eight-member subcommittee of four Democrats and four Republicans will now conduct the Waters trial. The specifics of the allegations won't be made public until the panel — four Democrats and four Republicans — hold its still-unscheduled organizational meeting.
Brendan Daly, spokesman for Speaker Nancy Pelosi commented, "As we have said in the past about the process, ethics proceedings are a result of a bipartisan, confidential and independent process in the House."
In a statement, Waters said, "I have not violated any House rules. Therefore, I simply will not be forced to admit to something I did not do and instead have chosen to respond to charges made by the House Committee on Standards of Official Conduct in a public hearing."
The ethics committee also released a year-old report by the Office of Congressional Ethics — a separate body of non-lawmakers that conducts a preliminary investigation.
That report said that in September 2008, Waters asked then-Treasury Secretary Henry Paulson to have Treasury officials meet representatives from the National Bankers Association, a trade group representing minority-owned and women-owned banks.
At a meeting and subsequent follow-up activity through Waters' office, the discussion centered on OneUnited Bank.
Waters' husband, Sidney Williams, had been a board member of OneUnited from 2004 through April 21, 2008, according to the ethics report. Her 2008 financial disclosure report said Williams had two investments in OneUnited valued between $500,000 and $1 million.
The report said Waters told Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, that she was in a predicament because her husband had been involved with the bank that needed help. Frank told the Office of Congressional Ethics, "She knew she should say no, but it bothered her." Frank testified it was clear to him that this was a conflict of interest problem.
His advice to Waters was to "stay out of it," the report said.
Waters said in her statement, "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."
She added that she fully disclosed her assets as required by House rules, "even going above and beyond the requirements by disclosing my assets at several Financial Services Committee hearings. In sum, the case against me has no merit."
She said the accusations stem from her advocacy work for minority communities and businesses.
She said it was the National Bankers Association that requested the meeting with Treasury Department officials. The meeting was held on behalf of the association, not OneUnited Bank, she said.
"I followed up on the association's request by asking then-Treasury Secretary Hank Paulson to schedule such a meeting, as did other members of Congress. Secretary Paulson recognized that the NBA's concerns about the future of minority banks were valid and arranged for a meeting.
"No benefit, no improper action, no failure to disclose, no one influenced: no case," said Waters, who chairs the Financial Services subcommittee on housing and community opportunity.

Here is Maxine in 1995 shooting of her mouth about ethics
http://www.c-spanarchives.org/program/ID/53643&start=2987&end=3062

Cibby Lautaro where are you .....This woman is a real friend of the DR

Waters charges taint Pelosi's House
Ethics investigators cite conflict of interest; GOP notes new 'scandal'
By Kara Rowland- The Washington Times 8:35 p.m., Monday, August 9, 2010ASSOCIATED PRESS SPOILING FOR A FIGHT: Rep. Maxine Waters asked the House ethics committee to make public the 10-page "statement of alleged violation" against her.


House investigators on Monday charged Rep. Maxine Waters with "improperly" exerting influence to help bail out a bank in which her husband held stock, handing more ammunition to Republicans eager to blast House Speaker Nancy Pelosi for overseeing a "House of scandal."

The House ethics panel said the office of the senior California Democrat violated conflict of interest rules by repeatedly lobbying the Treasury Department for bailout money on behalf of minority-owned OneUnited in which her husband held as much as $350,000 in stock. The bank received a $12 million slice of the taxpayer-funded Wall Street bailout.

Ms. Waters has fiercely proclaimed her innocence and asked the committee to make public the 10-page "statement of alleged violation" against her. Like Rep. Charles B. Rangel of New York, she has opted to let the matter play out in a public hearing before the bipartisan ethics committee, demanding that one be scheduled as soon as possible.

For Republicans, the looming ethics trials of two high-profile Democrats provides an ironic campaign issue heading into November's congressional elections. Republicans say the charges against Ms. Waters could further play into GOP charges that Mrs. Pelosi and other Capitol Hill Democrats have failed in their pledge to "drain the swamp" in Washington.

"Nancy Pelosi's 'most ethical Congress in history' has turned into a House of scandal. The inability or unwillingness of the Democrat leadership to crack down on corruption serves as a reminder to the voters that the November elections will be a referendum not only on President Obama and his failed policies, but on the failed leadership of the Democrat-led congress," said Ken Spain, a spokesman for the National Republican Congressional Committee.

Democratic leaders have been largely noncommittal when asked specifically about either of the proceedings, saying that the cases are being handled appropriately. Rep. Chris Van Hollen, head of the House Democrats' campaign arm, said the charges may serve to help the party in November by demonstrating that Democrats take the ethics process seriously.

"The reason people are hearing about the cases of Charlie Rangel and Maxine Waters is because we put in place accountability measures to make sure that we have high standards and that people are held accountable to those standards," the Maryland Democrat said in an appearance on MSNBC last week.

Even so, two ethics trials ahead of November's midterm elections - when the size of their majority and even the majority itself is on the table, according to some political observers - is a thorn in the side for Democrats who swept to power in 2006 in the wake of Republican ethics scandals, such as that involving former House Majority Leader Tom DeLay, Texas Republican.

The charges against Ms. Waters are not as extensive as those facing Mr. Rangel, who stands accused of 13 ethics violations ranging from failure to properly disclose financial assets to using his office to lobby for donations to a school established in his honor. All three charges in the case of Ms. Waters relate to OneUnited's quest for government assistance and the help she and her chief of staff, who is also her grandson, gave the firm, which bills itself as "the largest black-owned bank in the country" with offices in Boston, Los Angeles and Miami.

The bank was seeking bailout money to curb losses related to its investments in Fannie Mae and Freddie Mac, which were taken over by the government.

Ms. Waters' husband, Sidney Williams, served on OneUnited's board of directors from January 2004 until April 2008 and owned stock worth about $350,000 in the bank as of June 2008. The government's takeover of Fannie Mae and Freddie Mac cut the value of his holdings in half, to about $175,000 by the end of September, and ultimately threatened to make them "worthless," according to investigators.

Ms. Waters helped secure a September 2008 meeting between bank executives and top Treasury officials while her chief of staff, Mikael Moore, helped draft legislation that would authorize the administration to provide the firm a lifeline. Congress passed the so-called Wall Street bailout in October, and language in the bill ensured that OneUnited would be eligible for funding.

In the midst of the talks, investigators say, Ms. Waters, a member of the House Financial Services Committee, went to Chairman Barney Frank and informed him of her husband's past board position at the bank, at which point he said she should no longer be involved in assisting the firm. But her chief of staff continued to press the case, leading to a charge that she did not behave in a manner reflecting "creditably on the House."

The other charges include violating the spirit of House rules against receiving compensation that occurs as a result of improper influence and the "dispensing of special favors."

In a letter to ethics panel members last week, Ms. Waters did not address the charges specifically but said the failure to schedule a hearing "violates the fundamental principles of due process, denies my constituents the opportunity to evaluate this case, and harms my ability to defend my integrity."

Some have accused ethics investigators of having a racial bias, given that both Ms. Waters and Mr. Rangel are senior members of the Congressional Black Caucus. In an interview Monday on Fox News, Mr. Van Hollen said he didn't see any racial motivations.

THE DETAILS
Maxine Waters accused of three ethics violations
A House report gives more details of its allegations against the Los Angeles Democrat. Her chief of staff and grandson is accused of being 'actively involved' in helping a bank with ties to her husband.

Waters seeks release of ethics case details, speedy trial
Stage set for Maxine Waters' ethics trial

By Richard Simon, Los Angeles Times
August 10, 2010


Reporting from Washington —
As Rep. Maxine Waters was warned against interceding on behalf of a bank with ties to her husband, her chief of staff, who is also her grandson, was "actively involved" in working to help the institution, according to a House Ethics Committee report released Monday that accuses the longtime Los Angeles political figure of three ethics violations.

Waters was accused of violating three rules — one that requires its members to "behave at all times in a manner that shall reflect creditably on the House," a second that prohibits lawmakers from using their influence for personal benefit and a third forbidding the dispensing of favors.

» Don't miss a thing. Get breaking news alerts delivered to your inbox.

The Democratic congresswoman has vowed to fight the charges in a trial before fellow House members, contending that her efforts were in keeping with her longtime work to promote opportunity for minority-owned businesses and lending in underserved communities such as her South Los Angeles district.
The 10-page statement of alleged violations and other documents released Monday provide more details than the findings of the Office of Congressional Ethics made public last week.

The documents contend that Waters' chief of staff, Mikael Moore, worked to help OneUnited Bank, even as Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, urged Waters to "stay out of it" because of her husband's ties to the bank.

OneUnited received $12 million in federal bailout funds in December 2008. Waters' husband, Sidney Williams, served on the OneUnited board from January 2004 to April 2008, and owned stock in the bank when Waters set up a September 2008 meeting between Treasury Department officials and representatives of minority-owned banks.

The case against Waters, a fiery 71-year-old liberal who won election to the state Assembly in 1976 and to Congress in 1990, comes as Rep. Charles B. Rangel (D-N.Y.), another prominent Congressional Black Caucus member, faces an ethics trial in the weeks before what is shaping up as a tough midterm election for Democrats.

Unless Waters settles, an eight-member panel of her House colleagues, evenly divided between Democrats and Republicans, will hear the case against her.

The statement of alleged violations noted that Waters' husband's stock in OneUnited, worth about $350,000 in June 2008, dropped to half its value in September 2008. If OneUnited had not received the aid from the Troubled Asset Relief Program, her husband's financial interest in the bank would have been worthless, the statement said.

Once Waters realized that she should not be involved in assisting OneUnited, she should have instructed her chief of staff to refrain from assisting the bank, the statement said.

But Moore, 32, "provided continued assistance to OneUnited," including attending meetings and exchanging e-mails and phone calls with the bank's executives and "communicating with other congressional staffers regarding a legislative solution to the OneUnited's financial problems," according to the documents.

House rules generally prohibit lawmakers from putting spouses, children and a number of other family members on their congressional payrolls, but not grandchildren.

Waters came under scrutiny for calling then-Treasury Secretary Henry M. Paulson during the financial crisis to set up the meeting between his staff and representatives of minority-owned banks. The Office of Congressional Ethics report said the discussion at the meeting, however, "centered on a single bank — OneUnited."

Shortly after the meeting, according to the newly released documents, Moore sent an e-mail to Frank's staff, the subject of which said, "O[ne]U[nited] is in trouble." Other e-mails were sent between the chief of staff and OneUnited officials — including one from the bank's senior counsel to Moore reading, "Thank you for all your hard work," according to the committee.

Waters' attorneys assert in documents released Monday that the committee is treating the congresswoman differently than it has treated other lawmakers for similar conduct, citing the panel's dismissal of a case against a Missouri congressman who invited a business partner of his wife to testify at a hearing on alternative fuels.

Her attorneys argue that the charges against her run counter to a precedent that "actions taken by a member that may affect her interests as part of a larger class of shareholders do not violate House rules or ethical standards." Her attorneys also challenged the assertion that Waters' husband benefited from the bailout.

"If TARP funding neither saved OneUnited nor increased its stock value, this committee cannot establish that Rep. Waters received any financial benefit as a result of her alleged actions," her attorneys argued.

They also questioned whether e-mails sent to Frank's staff by Waters' chief of staff "alerting them about a constituent's [OneUnited's] concerns" constituted an ethics violation.

The bank official's thank-you e-mail to Moore was "a general thank you and not connected to any specific actions by Rep. Waters' office," they added.

But Reps. Kathy Castor (D-Fla.) and Michael K. Conaway (R-Texas), who investigated Waters, said in documents released Monday that regardless of whether OneUnited was helped by the congresswoman's chief of staff, "the appearance of acting for respondent's [Waters'] narrow financial interest was itself improper."

Fight, Maxine! Don’t let those racist Democrats get you!…

Rep. Maxine Waters blasts ethics panel and media, defends links to OneUnited
By Perry Bacon Jr.
Washington Post Staff Writer
Saturday, August 14, 2010; A03

A lawmaker was looking on proudly at her grandson, but this was anything but a warm occasion.

Three days after Rep. Charles B. Rangel (D-N.Y.) defended himself on the House floor against ethics charges, another veteran legislator accused of breaking House rules, Rep. Maxine Waters (D-Calif.), on Friday blasted the ethics committee and the press while denying she had "violated anything."

After Waters's speech, her chief of staff, Mikael Moore, painstakingly went through a series of e-mails and letters in a 50-page PowerPoint presentation to defend the congresswoman. Moore, 32, whose e-mails are at the center of the probe, is Waters's grandson.

While Rangel's speech was unorthodox, Waters's performance went further. Most members of Congress, including Rangel, rarely discuss the details of their ethics controversies, deferring to attorneys. But in an unusual news conference in the Capitol that lasted more than an hour, Waters answered a series of questions about her alleged role in securing millions of dollars for a bank in which her husband was a major investor.

"I won't go behind closed doors. I won't cut a deal. I will continue to talk about the fact that I have not violated anything," Waters said.

One of the slides read, "No benefit, no improper action, no failure to disclose, no one influenced, no case."

Her performance didn't win over her critics.

"The fact remains, Representative Waters abused her office for personal financial gain, and she must be held accountable for that," said Melanie Crew, executive director of Citizens for Responsibility and Ethics in Washington, a nonpartisan watchdog group. "No PowerPoint presentation by her grandson or anyone else can change that reality."

The House ethics committee report released Monday said Waters's office improperly worked in September 2008 to press for aid to prevent the failure of Boston-based OneUnited Bank, which eventually stayed afloat with the help of money from the Troubled Assets Relief Program.

Waters's husband, Sidney Williams, had served on the bank's board. He owned stock in OneUnited that had declined in value from $350,000 in June 2008 to $175,000 two months later and would have been "worthless" without the bailout funds, according to the ethics committee.

Eventually, the language in the TARP bill, which Congress passed in October 2008, included a provision that would aid small, minority-owned banks such as OneUnited, and the bank received $12 million two months later.

The report highlights e-mails Moore sent and received from OneUnited executives and suggests Waters should not have allowed him to send them when her family had a specific financial stake in the bank. The congresswoman has said she was aiding a group of minority banks that includes OneUnited.

The legal arguments Waters and Moore detailed Friday had already been hashed out in memos between her attorneys and the ethics committee. They will probably be resolved in a trial later this year, as Waters has refused to accept any admonishment from the ethics committee. The controversy is not expected to affect her ability to win reelection in her heavily Democratic district.

But the 71-year-old Waters, who was first elected in 1990, seems determined to not only convince her colleagues of her innocence but defend her reputation. For Waters, a combative figure on Capitol Hill, going public with her defense is perfectly in character.

She criticized the ethics committee, which consists of five Democrats and five Republicans, for taking too long to investigate her case, even though she said it "ignored or disregarded key pieces of exculpatory evidence."

She attacked the media for covering her ethics scandals but not her longtime work in pressing for minorities to get more government contracts and other federal aid, which she says was the reason she aided black-owned banks during the financial crisis.

"The system has not adequately recognized that it is not open and available to everybody," she said. "I, as an African American woman, must be aware of what I can do to open up the system to everybody."

Addressing the two dozen reporters and photographers in attendance, she added, "I would love for your newspapers and your television stations to be interested in this work, but normally it's not sexy enough, it's not interesting enough, so I don't get heard and others who do this kind of work don't get heard.

"But now we're in the middle of an investigation and the discussion is on."

Cohee at OneUnited, bank in Maxine Waters case, has checkered record
By R. Jeffrey Smith
Washington Post Staff Writer
Thursday, August 12, 2010; A01

As chairman and chief executive of OneUnited Bank, Kevin L. Cohee has sought to build a company that is about more than just money. He promoted the bank, now at the center of a House ethics case against Rep. Maxine Waters (D-Calif.), as a uniquely responsible investor in impoverished minority communities and urged prospective clients to live modestly.

Customers ought to focus on "real connections, real relationships," Cohee urges in a recording on the bank's Web site. Avoid "people who want to be with you based on the things that you have."

"Do you really need a Mercedes-Benz?" he asks. "Houses don't make you, cars don't make you."

Cohee, 52, took a somewhat different view in his own life. His bank bought or leased luxury real estate he used and, until federal regulators complained in 2008, paid for his Porsche. Cohee's East Coast spread was an $880,000 condominium on Miami Beach's Ocean Drive, and out west the bank leased a $26,500-a-month mansion for him on Palisades Beach Road in Santa Monica, Calif., owned by Bruce Springsteen's drummer, Max Weinberg.

A battle of lawsuits over the house -- Cohee complained that he had to ship in "a huge bar, a desk, a chandelier," and Weinberg accused him of installing secret surveillance cameras in the master bedroom -- led Cohee and his wife, through a corporation they formed, to buy the house for $6.4 million in late 2006. OneUnited then provided him a living allowance at the mansion, where, a year later, he was twice arrested, on sexual assault and drug charges.

It was the bank's assistance with his expenses that helped provoke a cease-and-desist order from the federal government, accusing the bank and its officers of misspending and lax lending, and putting its operating license at risk.

That order landed in the fall of 2008, in the same period that Cohee and his colleagues at the bank were in contact with Waters and House Financial Services Committee Chairman Barney Frank (D-Mass.) to secure tens of millions of dollars in taxpayer money to keep it afloat. About $51 million of the bank's stock in federally chartered lending agencies had become virtually worthless, leaving it with a shortage of capital.

OneUnited's loss was also a loss for Waters's husband, Sidney Williams, a former member of the bank's board whose stock in it had plummeted in value from about $350,000 to $170,000. In 2005, 2006 and 2007, the couple had earned a total of more than $35,000 in dividends from Williams's OneUnited stock. Cohee and other bank officers had also contributed at least $11,000 to her campaign and organized a fundraiser for her at one of his homes.

In December 2008, after Frank inserted language in legislation he said was meant to benefit OneUnited and similar banks, the bank received a $12 million grant from the Troubled Assets Relief Program (TARP), created to encourage lending by healthy, viable banks. A report released this week by a congressional ethics committee said that without that grant and some new private investment, Waters's husband's financial interest in OneUnited "would have been worthless" -- a contention that Waters's attorneys dispute.

Waters's decision to arrange a September meeting, requested by Cohee, with Treasury Department officials at which the bank appealed for federal money is at the heart of allegations that she violated House rules, a charge she vehemently denies. Waters acknowledges setting up the meeting with Cohee, who is African American, but says it was on behalf of minority-owned banks in general.

A review of public records and statements shows that it was not the first time the congresswoman had interceded with government officials in a way that helped Cohee and his fellow bank owners while her husband had financial ties to his bank.

In 2002, Waters wrote a letter with others to the governor of California in an attempt to block the sale of a black-owned bank in her district to a white-owned bank in Illinois, an action that helped pave the way for Cohee's bank -- then named the Boston Bank of Commerce -- to acquire it instead. "We want to keep the ownership. That way, we'll know that the bank won't be closed or merged into a bigger institution," Waters told the Los Angeles Times in February of that year.

At the time, Waters was the senior Democrat on the House Financial Services subcommittee on financial institutions, and her husband had a checking account valued at $250,000 to $500,000 in Cohee's bank, as well as a home mortgage and a line of credit. Her financial disclosure for 2001 does not list income from the account -- because of a clerical error, an aide said -- and her 2002 statement lists unspecified interest income. Such a large account would be partly at risk only if Cohee's bank failed.

When Cohee and his co-investors bought the bank in August 2002, Waters told the American Banker newspaper that it was "a giant step forward for minority banks everywhere."

'Professional and social' friend
Waters has described herself as a "professional and social" friend of Cohee's, though at the time he sought her assistance in 2008 she apparently had no idea that his personal life was troubled or that he had a record of adverse court cases related to his finances.

In 1991, for example, a judge in New Jersey approved a $1.8 million payment to his co-investors in a credit card company Cohee controlled, settling a breach-of-contract lawsuit they had filed. In 1992, seven years after he graduated from Harvard, a court in New York entered a $23,493 judgment against him, according to public records that list Cohee as a debtor and the university as a creditor. Harvard's public relations office said it could not find records explaining its litigation.

Weeks before his meeting with Treasury officials in 2008, Cohee was also dealing with the consequences of the arrests at the Santa Monica mansion, according to police and court records obtained by The Washington Post. The first arrest, on April 22, 2007, occurred after a woman who was not his wife fled the mansion and drove to a police station to lodge a complaint of violent sexual assault.

The second arrest, on May 15, 2007, involved 17 police officers and resulted from drugs found during the execution of a search warrant "in regards to a sodomy investigation," according to a police report. When they reached the second floor of the house and asked Cohee to come out of the bedroom with his hands up, the door was instead pushed shut. Police kicked it open and found a woman, as well as cocaine and a black tar-like substance in a desk drawer, the report states. It was later determined to be concentrated cannabis, according to court records.

(Read the police report)

Prosecutors did not pursue the assault charge, but Superior Court Judge James R. Dabney declined to grant a motion by Cohee to dismiss the drug charges. He agreed instead to drop them after Cohee completed 12 meetings of Narcotics Anonymous, a typical outcome in California for a first-time charge of drug possession, Dabney said in a telephone interview. He said he was unaware at the time that Cohee was a bank chief executive and a lawyer. "I would have remembered that," he said.

Cohee never mentioned the arrest or treatment program to Waters, according to her chief of staff, Mikael Moore, who is also her grandson.

In a brief interview on his cellphone Tuesday, Cohee denied that he had been arrested in California. "You clearly have me confused with someone," he said before ending the call.

But the Social Security number and birthday in public data connected to his home address in Boston match the Social Security number in California police records of Kevin Lafate Cohee's arrests. The arrest occurred at a residence leased by the bank and then purchased by a limited liability corporation controlled by Cohee and his wife. And one of the police reports lists Cohee's home town of Kansas City, Mo., and the same cellphone number Cohee answered on Tuesday.

Robert Patrick Cooper, the bank's counsel, released a statement in the bank's name stating that "it is essential to reiterate and make clear that Mr. Cohee has no criminal record; the spurious claims from 2007 were reviewed fully by a court which found the allegations to be baseless and without merit." He also said the "leased housing where Mr. Cohee resided was fully furnished and contained . . . personal possessions of others [including] when it was subsequently purchased." He added that Cohee "has fulfilled all of his financial obligations."

Court records show that after Dabney disposed of the case in July 2008, Cohee's arrest record was forwarded to the Justice Department. But that had no impact on his ability to remain an officer for OneUnited.

Although federal regulators can bar banks from employing officers who commit certain misdemeanors or felonies or who engage in a "breach of trust" demonstrating personal dishonesty, they do not restrict the employment of those charged with narcotics possession or who enter pretrial treatment programs, said David Barr, a spokesman for the Federal Deposit Insurance Corp.


Research editor Alice Crites contributed to this report.

Post a Comment

Page ...2

The FDIC's action against OneUnited in fall 2008 was instead based on an audit. Besides ordering the bank to stop paying expenses at the Santa Monica house, take away Cohee's car and enforce a written policy barring "reimbursement of personal expenses of the Bank's directors, officers, and employees," it faulted the bank for "operating without effective underwriting standards and practices . . . engaging in speculative investment practices . . . [and] committing violations of law and regulations."

Using a chit
Days after hearing Cohee's appeal for help at her House office in late August 2008, Waters dialed Treasury Secretary Henry M. Paulson Jr. She told him that "some people" she considered important needed to meet with his top aides, who were overwhelmed by the distractions of a crumbling national economy. "You don't use your chits for nothing, you call when there is an important issue," Waters explained later.

More than a dozen top Treasury officials attended the nearly hour-long meeting on Sept. 10. Waters has said she was only trying to help the National Bankers Association, a trade group of banks owned by minorities and women. But five members of the board of the Office of Congressional Ethics -- a group of mostly former congressmen -- said in their 107-page report this month that this contention is implausible, partly because no other member of the association was invited.

Treasury's response was that it had no legal authority to give OneUnited the $50 million that House investigators said Cooper and Cohee requested at the meeting. Nevertheless, Moore later sent an e-mail to Frank's staff warning that OneUnited was in trouble. Moore also exchanged e-mails with Cohee containing draft Treasury language for legislation granting the department authority to help all banks, he said.

The TARP bill that President George W. Bush signed on Oct. 3, 2008, included the provision Frank inserted into the bill to help OneUnited and other minority-owned banks harmed by the stock devaluation at Fannie Mae and Freddie Mac. "We were very clear we wanted them to be eligible," Frank said in an interview, speaking about OneUnited. But he said that it was up to regulators to decide whether to give the money.

A subsidiary issue at Waters's forthcoming House trial may be whether Treasury improperly allowed its decision-making to become tainted by political pressure, from Frank as well as Waters. Frank told House investigators that Waters openly worried about assisting the bank because of her husband's past service on its board, and that he told her to steer clear because he planned to take up its cause.

"I had independently heard from people in Massachusetts about it; it was not like a handoff," Frank said in an interview. He did not know about Cohee's arrests, an aide said.

The Treasury Department has said that its grant, the first given to a minority-owned bank under the Troubled Assets Relief Program, was based on sound, normal criteria. But at the time, OneUnited had a uniquely poor ratio of loans to debts, according to data compiled by American University researchers who combed through records of all 987 banks that received TARP money between October 2008 and October 2009. A senior Treasury official said in an interview that it was up to the FDIC to vet the conduct or trustworthiness of officers at banks that apply for money and that Treasury has "no particular rules or regulations" about such matters even though it makes the final decisions on TARP awards.

Treasury Department e-mails about OneUnited make clear that officials there were convinced in any case that Waters and Frank were "interested" in assisting the bank, as one wrote to a colleague. After the bank was told that the money was coming, Waters and Frank told Paulson in a letter that "we applaud the recent decision" to help minority-owned banks "on advantaged terms."