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House ethics probe to investigate whether Finance committee withheld records

The House ethics committee announced that Rep. Maxine Waters (D-Calif.) will face trial for her role in steering federal funds to a bank to which she is personally connected. She denies any wrongdoing. Her career in photos:

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By Carol D. Leonnig and R. Jeffrey Smith
Washington Post Staff Writers
Thursday, December 2, 2010; 7:56 PM

House ethics investigators have begun a probe into why the powerful House Financial Services Committee did not fully comply with its promise to turn over all documents pertinent to an investigation of subcommittee chairwoman Maxine Waters (D-Calif.), according to congressional staff and other sources close to the inquiry.

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After wrapping up their ethics investigation of Waters this summer and preparing for trial in October, the investigators learned about an e-mail that they considered important to their examination of Waters's efforts to help a troubled bank tied to her husband.

Four officials, congressional staff members, and others familiar with the probe confirmed on Thursday that her trial was postponed two weeks ago in part to explore the delay in not turning over that e-mail and to examine whether other evidence was withheld.

The action is part of an overall broadening of the Waters inquiry by the committee to look more deeply at her office's interactions with senior aides to the committee's chairman, Rep. Barney Frank (D-Mass.), on legislation meant to help the bank, according to the sources.

Some committee members are concerned that the Waters investigative team did not have access to all the records, in part because they did not press for them diligently enough. Others on the staff have expressed concern that evidence may have been inappropriately withheld.

The e-mail in question, sent by Waters chief of staff Mikael Moore, asked four aides to Frank for more information on the progress of legislation meant to rescue large banks in the 2008 financial meltdown. The top aide, who is Waters's grandson, proposed legislative wording changes that ultimately ensured the minority-owned bank in which Waters's husband had a financial investment, OneUnited, received federal assistance.

In August, the committee released a report stating that there was reason to believe Waters had acted improperly to help OneUnited, and that her actions gave the public reason to doubt her intregrity and objectivity. The committee's investigation continued, however. Waters has said she did nothing wrong and was only trying to assist all minority-owned banks.

The e-mail surfaced because investigators started interviewing a former Frank aide, John Hughes, in September. They asked him at the time if he had any relevant documents, and he reported that he did not. But then they asked him in October to be a witness at Waters's trial, and when he checked again for documents, he found the e-mail and turned it over, according to a source close to Hughes.

Hughes, who now works for House Majority Leader Steny Hoyer (D-Md.), "has complied fully with the Ethics Committee's request for information related to his previous service," said Hoyer's spokesman Katie Grant.

Frank previously has said he inserted the legislative provision discussed in the e-mail partly to help OneUnited, which was then in grave financial trouble due to the abrupt devaluation of its stock in federally chartered mortgage lenders. He fended off a potential ethics committee subpoena of his committee and its staff, the sources said, by promising voluntary cooperation. The committee later certified that it had turned over all relevant documents.

Frank said on Tuesday that the concern about late-arriving documents is news to him.

"When I received the Ethics Committee's 2009 request, I instructed my staff to turn over every document in personal office and committee files. I have every reason to believe they did that," Frank said yesterday.


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