BLOG VIEW: In August 2010, the House Ethics Committee released an 80-page investigative report that found ‘substantial reason’ to believe Rep. Maxine Waters, D-Calif., violated House ethics rules in her intervention with the Department of the Treasury during the September 2008 financial crisis on behalf of Boston-based OneUnited Bank.
According to the investigative report, Waters' intervention resulted in the bank's receiving $12 million from the Troubled Asset Relief Program (TARP). The reason for the infusion was because Waters argued the bank's capital was ‘all but wiped out’ due to its heavy investing in Fannie Mae and Freddie Mac. Waters, however, never bothered to inform the Treasury that her husband was a former director of OneUnited Bank and held $350,000 in its stock – a hefty sum that was saved with TARP dollars.
Waters denied that she violated House ethics rules, and the Ethics Committee was set to bring the matter to trial on Nov. 29, 2010. But 10 days before the trial was to start, it was indefinitely postponed, because new documents relating to the case had surfaced. The subcommittee announced it would need to investigate the matter further.
To date, there hasn't been a peep out of the Ethics Committee regarding the Waters case. In the past month, however, Waters has been anything but silent. In a stream of press releases flowing out of her Capitol Hill office, Waters is depicting herself as a one-woman dynamo who is using her authority to fight for the disenfranchised and the downtrodden in regard to housing and mortgage banking issues.
In reading her press material, it is easy to imagine Waters flying around in an invisible airplane and swinging a golden lasso of truth. Unfortunately for Waters, her recent press-release pronouncements suggest she has relatively little acquaintance with reality.
First, there is her Feb. 18 announcement of legislation to ‘preserve public housing and protect residents.’ In reading the proposed legislation, it appears that Waters believes throwing money at a problem is the best way to solve it. In this case, inadequacies in the public housing system are blamed on an ‘overreliance’ on housing choice vouchers and a ‘lack of hard affordable rental units.’
What is not being said, however, is that public housing developments have a long and sad history of incompetent mismanagement by the municipal housing authorities responsible for their creation and maintenance. Perhaps the most extreme case is the Philadelphia Housing Authority (PHA), the nation's fourth largest, which is responsible for housing more than 81,000 people. The PHA is such a disaster that the Federal Bureau of Investigation is examining its questionable spending and personnel practices, and the U.S. Department of Housing and Urban Development is demanding that its five-member board resign.
Clearly, before any more money is spent on public housing, it is crucial to ensure that the people receiving the federal funds are capable of doing their jobs. The miserable state of today's public housing sector is a reflection of clueless and corrupt municipal leadership – and that issue needs to be addressed immediately.
On Feb. 24, Waters announced her rejection of the ‘Republican plan to defund foreclosure assistance programs.’ The plan in question focuses on four programs – the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program, the Emergency Mortgage Relief Program and a mortgage financing program run by the Federal Housing Administration – that have track records of falling short of their goals. At a time when the federal budget needs to go on a crash diet, the easiest programs to sacrifice are those with a proven track record of accomplishing next to nothing.
Waters acknowledged in her press release that HAMP failed, but she insisted on replacing it with ‘stronger solutions like mandatory loss mitigation and principal reductions’ while adding that she ‘demanded that our regulators hold servicers accountable.’ Yeah, right!
On Feb. 25, Waters issued a press release saying she was ‘troubled’ by the reported deal regarding foreclosure fraud, she insisted that the proposed $20 billion was ‘too small.’ She also claimed, ‘I believe that there is substantial evidence indicating that improper fees, wrongful application of borrower payments, the use of unscrupulous foreclosure mills and other practices evidence the fact that improper foreclosures are widespread.’ However, she did not produce any evidence to support such a loaded charge.
In a way, I hope that the House Ethics Committee never gets around to rescheduling its trial of Waters. Her recent press-release buffoonery provides an entertaining sideshow that also provides a serious reminder of the failed policies and misguided politics that helped turn the federal housing finance market into its current incarnation. There is a lesson to be experienced, even if it requires gritting your teeth and holding your nose.
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
