WASHINGTON, Nov. 19, 2010 -- The House Ethics Committee Friday cancelled the upcoming public trial set for Nov. 29, for California Democratic Rep. Maxine Waters, saying the discovery of "new materials" in the case means further investigation is required.
Waters, a senior member of the House Financial Services Committee, stands accused of improperly using her influence in 2008 to help secure $12 million in TARP funds for a struggling bank with financial ties to her husband. She has denied any wrongdoing.
It's unclear what new information the committee will consider and how it could affect the charges or the need for a public trial. However, it's likely that resolution of the Waters case will not occur before the next Congress is seated in January.
Waters said in a statement she is disappointed the trial has been postponed. "For over a year, I have cooperated with the investigation and I have consistently asked for a public hearing on this matter," she said. "I remain eager to present my case and demonstrate to my constituents and all Americans that I have not violated any House rules."
"Since the fundamental purpose of a hearing is to evaluate evidence, I am puzzled at the Committee's insistence on moving backwards instead of forwards," she said of the referral back to the ethics panel investigating the matter.
The committee's announcement comes one day after the panel of five Democrats and five Republicans concluded its public trial for veteran New York Rep. Charles Rangel. The members recommended Rangel be censured by the full House after what chairwoman Rep. Zoe Lofgren called "wrenching" deliberations.
The Waters trial would have been the second public ethics hearing in as many weeks. The two cases have been embarrassing footnotes to the Democrats' tenure of the House.
House Speaker Nancy Pelosi pledged in 2006, when Democrats assumed the majority, that her party would lead "the most honest, most open and most ethical Congress in history."
The charges against Waters stem from a meeting that Waters' congressional office requested with then-Treasury Secretary Hank Paulson at the 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 sat as 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.
Waters Has Sought Public Trial to Clear Name
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 Ethics Committee 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."
Waters has vehemently defended her record and welcomed a public trial to clear her name. Unlike Rep. Rangel, Waters has set up a legal defense fund and hired a high-profile attorney.
"The decisions about who to fund [with TARP] were made by the FDIC and by the Treasury Department," she said on "Good Morning America." "Nobody did anything that interfered with their decision making. OneUnited was vetted properly. They met the criteria."
"We did not receive -- My husband did not receive any benefit from any of this," she said.