Democrat Dirty Laundry: BARNEY WARNED MAXINE: DON’T DO IT!

August 3, 2010

Report: Frank Warned Waters to Avoid Troubled Bank Because Her Husband Owned Stock in it, “But the Democratic Congresswoman Didn’t Heed his Warnings”

SPIN CYCLE: Pelosi Once Promised to ‘Drain the Swamp’ and Sweep Corruption out of Washington

“‘Drain the swamp’ means to turn this Congress into the most honest and open Congress in history. That’s my pledge — that is what I intend to do,’ Pelosi stated in an interview with NBC’s Brian Williams.” (Brian Williams, “Rep. Pelosi poised to make history”, NBC Nightly News with Brian Williams, 11/08/2006)

RINSE CYCLE: Democrats’ Ethics Problems Grow Deeper As More Information Comes to Light

US Representative Barney Frank of Massachusetts urged Representative Maxine Waters of California to avoid any dealings with Boston-based OneUnited Bank because her husband owned stock in it. But the Democratic congresswoman didn’t heed his warnings, according to a House ethics report released yesterday, and now faces a possible trial before her colleagues over a conflict of interest with the bank.

The 79-page report by the Office of Congressional Ethics said Waters confided to Frank that bank officials came to her for help in 2008. But she felt conflicted because her husband, Sidney Williams, had served on the board of OneUnited from 2004-2008 and was a stockholder. It is against House rules to use one’s power as a member for personal financial gain.

The bank lost $50 million on investments in Fannie Mae and Freddie Mac when the government took over the mortgage agencies that September and was sanctioned soon after by bank regulators, who charged that it had employed poor standards on loans and documentation. Regulators also chided the bank’s top executives for taking excessive pay and perks, including a $6.4 million beachfront mansion in Santa Monica the bank says it used to conduct business.

Waters and Frank took steps to help the bank. Waters placed a call to then-Treasury Secretary Henry Paulson at the request of Cohee and OneUnited’s senior counsel, Robert Cooper. At the time, Cooper had identified himself as chairman-elect of the National Bankers Association and as a OneUnited executive. But at the meeting with Treasury officials, he and Cohee focused on funds for their own bank, not for the association, according to the report.

For example, a Sept. 19, 2008, e-mail from Cooper to a member of Waters’s staff suggests that her office was aware that Cooper and Cohee had sought the meeting to advocate for OneUnited, not for a broader group of banks. Cooper offered a “back-up strategy in case Treasury does not grant the specific relief we are requesting within the next couple of days.’’

Waters, 71, denies any wrongdoing, saying she was merely trying to help struggling minority-owned banks damaged by the financial crisis. “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,’’ Waters said in a statement, referring to the formal moniker for the ethics committee.

An ethics trial could further damage the embattled majority Democrats, who expect to lose seats in the November mid-terms. The House is already gearing up for a likely fall trial of Representative Charles Rangel, a New York Democrat accused of using congressional stationery to solicit funds for an academic center bearing his name and for improperly using a rent-controlled New York property as a campaign office. (Susan Milligan and Beth Healy, “Frank warned colleague not to aid troubled bank,” Boston Globe, 08/03/2010)

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