Insider's Game

There’s one thing missing from the ethics charges issued against Maxine Waters: Facts. Neither the Office of Congressional Ethics nor the House Committee on Standard of Official Conduct has ever alleged facts that show that show Waters or anyone on her staff ever violated any rules or statutes. The fatal flaws are obvious to anyone who knows something about the law, or knows how to read.

 

The “new evidence,” which prompted the House Ethics Committee to delay Waters’ trial indefinitely, seems incredible for two reasons: First, it’s hard to believe that the evidence is really new. Second, the evidence raised an issue that should have been resolved in a matter of minutes. Waters asserts that the Committee has had the information for over a month. The simultaneous suspension of the Committee lawyers working on the case adds to the intrigue. But before we get to the bogus media narrative concerning the “new evidence,” let’s recap the fatal flaws in the existing allegations against Waters.

 

The entire case against Waters, set forth in the Statement of Alleged Violations adopted by the Ethics Committee five months ago, rests on the assistance that her chief of staff, Mikael Moore, who is also her grandson, gave to officers of the National Bankers Association, a group of small minority-owned banks, whose largest member is OneUnited. Waters’ husband held $178,00 worth of stock in OneUnited,a bank headquartered in Boston with branches in southern California, not far from Waters’ district. You would never know it from a recent 3,900-word article in Slate, but nothing in the law or the rules prohibits Waters or her staff from providing such assistance, notwithstanding her husband’s financial stake.

 

The NBA was lobbying for legislative relief to offset losses incurred from holding preferred stock in Fannie Mae and Freddie Mac, and such relief was set forth in Section 103(6) of “Emergency Economic Stabilization Act of 2008,” which gave Hank Paulson unfettered latitude to spend billions to bail out the financial system. In the context of the hundreds of billions of dollars that Paulson spent with no paper trail, the relief for OneUnited and the other NBA banks, in the tens of millions, was literally a drop in the ocean.

 

Moore provided the NBA some help in contacting members of Congress and their staffers. Most of Moore’s actions were the sorts of courtesies performed by an administrative assistant or intern, such as printing out .pdf files and forwarding emails to staffers on the House Finance Committee. Waters did recuse herself from sponsoring or drafting legislation, in accordance with a House rule that limits such official actions in case of a financial conflict. But the rules say nothing to prohibit her office from extending informal favors to constituents, irrespective of any financial interest. Waters also kept tabs on the progress of the legislation, which is the job of any House member. An ethics violation does not involve the appearance of impropriety; it involves breaking the rules.

 

We’ll go through the obvious problems in each of the counts:

 

1. Providing assistance is not the same thing as “improper influence.”

According to the report, Waters violated House Rule 23, Clause 3 , which states:

 

A Member…may not receive compensation and may not permit compensation to accrue to his beneficial interest from any source, the receipt of which would occur by virtue of influence improperly exerted from his position in Congress.

It’s certainly true that Waters’ husband benefitted financially, but no facts have been alleged that come close to meeting the definition of “improper influence.” The term is defined in various statutes and cases, as: “Any influence that induces or tends to induce a Government employee or officer to give consideration or to act regarding a Government action on any basis other than the merits of the matter.” As you’ll see, Moore provided some limited assistance to some OneUnited officers who were representing the National Bankers Association, but:
(a) Neither he nor anyone else in Waters’ office ever induced any government official to do anything; and
(b) There is no record of anyone requesting consideration of the legislative proposal for any reason other than to preserve the health of small banks serving minority communities.

 

Contrary to what the Committee’s insinuations, the Rule does not prohibit a House member from providing assistance when she has some unspoken agenda. And Waters’ financial interest in OneUnited was always fully disclosed.

 

2. Most “special favors” are not illegal, including those extended by Waters’ office.

The committee alleges that Waters violated the Code of Ethics for U.S. Government Service, which states that a government official must:

 

Never discriminate unfairly by the dispensing of special favors or privileges to anyone, whether for remuneration or not; and never accept for himself or his family, favors or benefits under circumstances which might be construed by reasonable persons as influencing the performance of his governmental duties.

The law does not prohibit a government employee from dispensing special favors or privileges, it only prohibits a government official from discriminating unfairly in the dispensing of special favors or privileges. And there was no evidence that Waters office discriminated unfairly in providing assistance to anyone else. The law says that a government official may not accept a favor or benefit that influenced her performance, but in order to accept a favor, someone must first make an offer, i.e. there must be some kind of quid pro quo.

 

These statutes were drafted very carefully, and the words to not reference any “benefit that may accrue,” (a phrase used in House Rule 23, Clause 3) to influence a politician’s performance. The fact that the value of the OneUnited stock was enhanced by the legislation was not an offer of a favor, it was an ancillary result. And House Code explicitly authorizes members to vote on matters that benefit them financially, so long as the legislation affects a class and not a single entity. House Rule 3, clause 1, goes on to state, “even where one corporation or entity is primarily affected by legislation, a Member’s interest in such corporation or entity might not be found to be a disqualifying interest in the subject matter.”

 

The Code does limit certain other actions taken as part of a representative’s official legislative duties, and Waters was careful to recuse herself in that respect:

 

“The provisions of House Rule 3, Clause 1, as discussed in this section, apply only to Member voting on the House floor. They do not apply to other actions that Members may normally take on particular matters in connection with their official duties, such as sponsoring legislation, advocating or participating in an action by a House committee, or contacting an executive branch agency. Such actions entail a degree of advocacy above and beyond that involved in voting, and thus a Member’s decision on whether to take any such action on a matter that may affect his or her personal financial interests requires added circumspection.”

3. To allege that Waters did not “behave at all times in a manner that shall reflect creditably on the House,” the Committee fabricated evidence.

The catchall-charge against Waters is that she violated House Rule 23, Clause 1:

 

A Member…shall at all times behave at all times in a manner that shall reflect creditably on the House.

In order to concoct the violation, the Committee fabricated a direct quote. Specifically,

 

Once Respondent [Waters] learned that she “should not be involved” in assisting OneUnited, respondent should have instructed her Chief of Staff, Mikael Moore, to refrain from assisting OneUnited. Respondent failed to do so.

After the National Bankers Association contacted Waters seeking legislative help, she consulted with Barney Frank about her conflict, and then recused herself from the legislative process. Frank described what happened in a half-hour interview with two lawyers from the Office of Congressional Ethics. Thereport sloppily paraphrases what was actually said. “[Frank’s] advice to Congresswoman waters was to ‘stay out of it’–OneUnited was a Boston bank and he had a commitment to minority banks. He would address the problem. [Frank] then asked his staff to take over the issue from Representative Waters.”

 

Again, it’s all about the rules as they are drafted, not as some people would like them to be. The rule does not explicitly prohibit taking official legislative action in case of a financial conflict; it simply demands that a member show, “added circumspection.” And the rule says nothing about providing a constituent group with informal assistance, even when that member has a financial stake in the legislative outcome. And the record does not show that Frank or anyone else admonished her so she “should not be involved” in assisting OneUnited, only that Frank advised her to stay out of the legislative process. Or rather, they don’t even know what Frank meant. They could have easily gone back and asked him to be more specific; but instead they put words in his mouth and, through a sleight of hand, concocted a violation.

 

Why The New Evidence Seems Suspicious

The evidence, which was withheld from the public but leaked to the Associated Press, was an email written by Mikael Moore and sent to staffers at the Financial Services Committee some time on Sunday September 28, 2008. The critical piece of information was the exact time, because the final version of “Emergency Economic Stabilization Act of 2008,” was posted on line in the early afternoon. Moore wrote that has boss had an explicit “impression” about a section in the bill affecting the NBA, and “If there is any material or technical changes to the language as last agreed upon, please alert me as soon as possible so that Rep. Waters has an opportunity to weigh in.”

 

If there were no last-minute changes, then the email is irrelevant. That was the day when Washington was scrambling to put any finishing touches on a bill to give Hank Paulson the power he wanted in order to stabilize the global financial system. Everyone had much bigger things to worry about than tweaking the final text of of the bill, which was consistent with the legislative solution first initiated by staffers of Barney Frank and others from Massachusetts. By Sunday morning it sure looked as if after the legislative train had already left the station, and there were no more “opportunities to weigh in.” The email responses to Moore would have settled the matter, one way or the other.

 

The Office of Congressional Ethics and the Committee had already reviewed Moore’s emails, which were quoted in its initial report of August 2009. The Statement of Alleged Violations, issued last June, also quotes from Moore’s emails as of September 28, 2008. It seems odd that the “new evidence,” could have been “uncovered” so belatedly, and that the matter would cause an indefinite delay in proceedings. That is, it seems odd if you assume that the Committee were interested in exposing the matter to public scrutiny. If you’re interested in stretching out a media narrative, there are plenty of cable pundits who want to insinuate that all black politicians are ethically challenged.