Ethics probe of Rep. Waters derailed by infighting, sources say

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:
By R. Jeffrey Smith and Carol D. Leonnig
Washington Post Staff Writers
Thursday, December 16, 2010; 11:01 PM

A lengthy House investigationof Rep. Maxine Waters (D-Calif.) has been derailed by infighting within the politically charged ethics committee over errors in building a case against her, according to congressional sources with direct knowledge of the probe.

The probe, opened in 2009, dissolved this fall and most likely will fall to a newly composed committee and possibly a new investigative staff, the sources said.

The case - one of the most prominent ethics investigations undertaken by the committee - came apart as committee and staff members argued over whether documents should be subpoenaed and when the trial should be scheduled and for how long. They all expected Waters to agree to a negotiated settlement, which she ultimately declined.

At one point, the committee's ranking Republican, Rep. Jo Bonner (Ala.), accused the chairman, Rep. Zoe Lofgren (D-Calif.), of violating House rules. Other complaints and counter-complaints have been flung for months between Lofgren and the professional staff leading the investigation.

On Thursday, the committee's staff director and chief counsel, R. Blake Chisam, notified the House that he is resigning. Because of his closeness to Lofgren, his departure is seen as an indicator that Lofgren might not return as the committee's top Democrat after Republicans take control of the House next year.

At least one committee member, Rep. G.K. Butterfield (D-N.C.), has urged that the entire panel be replaced in the next Congress and that a new investigative team take a fresh look at the allegations.

The breakdown of the Waters inquiry highlights the difficulties that the ethics committee faces in policing House colleagues. The panel sought to restore public confidence in its work during the current Congress, scrutinizing nearly two dozen members for possible transgressions and preparing for several trials. But its staff of 14 was quickly overwhelmed.

The Waters probe focused on whether the California Democrat, who chairs a House banking subcommittee, had improperly arranged federal help for OneUnited, a minority-owned bank in which her husband had a significant investment. But the investigation followed a twisting path, according to congressional sources, and sometimes missed what many agree in hindsight were important steps.

Last month, Lofgren tried to fire two investigators, and she told others that they had misled her about the probe. But the firings were blocked by Bonner, and the employees remain on paid leave.

The events at issue involved players at the Treasury Department, the Federal Deposit Insurance Corp. and the House Financial Services Committee. The committee is headed by Rep. Barney Frank (D-Mass.), who has acknowledged helping to write legislation that enabled OneUnited to qualify for a $12 million federal bailout.

Lofgren had been pushing for the Waters trial to start in mid-September but staff investigators said that was "impossible," internale-mails show. Then, in September, after asking the staff for an update on its preparations, Lofgren became concerned that it was not ready and urged putting off the trial. Lofgren and Chisam learned that investigators were missing important e-mails from Waters's chief of staff and hoped to request or subpoena them.

At a Sept. 16 meeting, however, investigators told her that they were fully prepared to "begin a hearing immediately," according to sources and a staff e-mail. Staff members complained that Lofgren and Chisam had obstructed their probe.

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