Rep. Maxine Waters Faces Heat of Ethics Charges

When the House of Representatives interrupts its six-week vacation today for one day of legislative business, Rep. Maxine Waters will be returning not only to Washington's scorching summer, but also to the political heat on Capitol Hill.

The House Ethics Committee released new details Monday from its investigation of the 10-term Democrat from California. Among the charges Waters faces is that she allegedly broke House conduct rules for her role helping a minority-owned bank obtain federal bailout money during the financial collapse in September 2008.

The charges stem from a meeting that Waters' congressional office requested with then-Treasury Secretary Hank Paulson at start of the financial crisis in September 2008. Waters and Paulson did not attend the meeting, but senior Treasury officials and members of the National Bankers Association (NBA), a trade organization representing over 100 minority-owned firms, did.

An ethics report found that at that meeting and in follow-up conversations "the discussion centered on a single bank -- OneUnited," where Waters' husband was a board member from 2004 to 2008.

On financial disclosure forms, the couple reported owning $352,089.64 worth of stock at OneUnited in June 2008. By the end of September, the value of the stock had plummeted to $175,000, but what remained was salvaged thanks to a portion of the $700 billion Wall Street bailout.

OneUnited -- a Boston-based bank that requested $50 million in federal aid and ultimately obtained more than $12 million in TARP funds -- would have likely failed without intervention from Waters' office, the report said.

Because Waters' stock would have been rendered worthless if OneUnited had failed, the violations "constitute compensation accruing to the beneficial interest of [Waters]," according to the committee.

According to House rules, "A member ... may not receive compensation and may not permit compensation to accrue to the beneficial interest of such individual from any source, the receipt of which would occur by virtue of influence improperly exerted from the position of such individual of Congress."

The Citizens for Responsibility and Ethics in Washington (CREW), a non-profit legal watchdog, called for Waters to step down immediately from her post as chairwoman of the House Subcommittee on Housing and Community Opportunity.

"The facts released today make it increasingly clear that Congresswoman Waters abused her office and she must be held accountable for her actions," CREW executive director Melanie Sloan said. "[Waters] intervened on behalf of OneUnited Bank despite the fact that she knew her intervention constituted a conflict of interest."

According to documents released Monday, Waters' chief of staff Mikael Moore -- who is also her grandson -- created the appearance that Waters "was actively involved in assisting OneUnited representatives with their request for capital from Treasury and crafting legislation to authorize Treasury to grant the request."

To date, the bank still has not paid back the bailout money.

Waters was also accused of violating the rule that members' behavior should reflect creditably on the House.

When asked by the ethics investigative panel how often she called cabinet-level officials such as Paulson, Waters replied, "You don't use your chits for nothing. You call when there is an important issue."

Among the details released in documents today, after the meeting with Treasury officials and at the onset of the financial crisis, Waters allegedly approached House Financial Services Committee chairman Rep. Barney Frank, D-Mass., to confess her husband's association with OneUnited. Frank reportedly did not know that Waters held stock there and told her "not to get involved."

Frank, however, assured Waters that he would handle the business with OneUnited.

But, the committee said, Waters failed to instruct her chief of staff to stay out of the negotiations and Moore continued corresponding with Frank's staffers.

"Once [Waters] realized that she 'should not be involved' in assisting OneUnited, [Waters] should have instructed her Chief of Staff ... to refrain from assisting OneUnited," the statement said.

The committee announced Aug. 2 that an investigative subcommittee found reason to believe Waters had broken House rules and she would face an ethics trial. Waters appealed to have the charges dismissed, but her motion was denied.

"I have not violated any House rules," Waters said in a statement. "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."

Waters said she was merely "advocating on behalf of minority banks," never concealed her interests in OneUnited and did not benefit or act improperly in any way.

"In sum, the case against me has no merit," Waters said. "No benefit, no improper action, no failure to disclose, no one influenced: no case."

The charges come at a bad time for House Democrats as they hope to hold on to their majority in the midterm elections this November. Waters was the second House Democrat to face ethics violations charges during July.

Last month, the ethics committee charged former House Ways and Means committee chairman Charles Rangel with 13 ethics violations. Unless Rangel's lawyers can cut a deal, the New York Democrat is expected to go on trial in September when the House convenes after Labor Day.

No date has been announced for Waters' trial, but it is also expected to occur before the voters head to the polls this fall.

Read the full report on Waters' ethics charges here.

ABC's Matthew Jaffe and Dean Norland contributed to this report