House ethics panel clears Rep. Maxine Waters, ends inquiry

WASHINGTON — The House Ethics Committee on Tuesday formally ended its investigation of Rep. Maxine Waters, concluding in a unanimous decision that the veteran Los Angeles lawmaker did not break any rules in her efforts to assist minority-owned banks during the financial crisis.

The 10-member panel, evenly divided between Democrats and Republicans, said the lawmaker’s actions did “not establish, to the standard of clear and convincing evidence, that Rep. Waters violated House rules.”

Waters did not comment on the end of the investigation, which has gone on for more than three years. Its conclusion clears the way for her to become the top Democrat on the House Financial Services Committee in the next Congress.

The ethics panel, however, criticized the actions of Waters’ chief of staff and grandson, Mikael Moore. Its members urged the House to consider extending to grandchildren a rule that generally prohibits lawmakers from hiring relatives, including spouses and children.

“One of the issues that complicated the resolution of this matter was the nature of the relationship between Rep. Waters and her chief of staff, who is also her grandson,” the committee said. The panel noted that employer-employee relationships with grandchildren can be “just as fraught with risk as other familial relationships in the workplace.”

The committee’s findings, along with a 137-page report from Billy Martin, a Washington attorney hired by the panel, were submitted to the House on Tuesday.

The report concludes an investigation that featured partisan fights, an inquiry into the committee’s conduct, a review of 150,000 pages of documents and a potential $1-million legal bill for taxpayers.

The report also provides a rare glimpse into the secretive panel, which became embroiled in a tense “atmosphere of suspicion and mutual distrust” between its then-Democratic chairwoman and Republican committee members in the last Congress.

The case grew out of a meeting that Waters set up between Treasury officials and representatives of minority-owned banks during the 2008 financial crisis.

The Office of Congressional Ethics, an independent body that referred the case to the committee, said the discussion at the meeting “centered on a single bank, OneUnited.” Waters’ husband, Sidney Williams, owned stock in the bank and served on its board. OneUnited later received $12 million in federal bailout funds, which had yet to be paid back as of last week.

Waters “reasonably believed, at the time she requested the meeting, that the attendees would be speaking on behalf of minority banks generally,” the committee said. “While it appears that all of the minority bankers who attended the meeting were associated with OneUnited, and that OneUnited was alone in requesting substantial financial assistance from the Treasury Department at the meeting, the record indicates that Rep. Waters did not have reason to know of either of these facts when she arranged the meeting.”

The panel issued a letter of reproval to Moore for seeking to help OneUnited “when he knew, or should have known, of Rep. Waters’ personal financial interest, despite Rep. Waters’ instructions to avoid the conflict.”

The committee, which has previously criticized lawmakers for staff members’ actions, said Waters took steps to inform her chief of staff of her conflict of interest with OneUnited.

richard.simon@latimes.com