Should we be shocked at reports that Rep. Maxine Waters, a staunch defender of fair lending on Capitol Hill, is at the center of a controversy over bailout ethics? The Times reported last week that in September, Waters requested a meeting with federal regulators that led to a bailout for a major Black-owned bank with ties to Waters’s husband. According to the Times, Waters:
requested the September meeting on behalf of executives at OneUnited, one of the nation’s largest black-owned banks. Ms. Waters’s husband, Sidney Williams, had served on the bank’s board until early last year and has owned at least $250,000 of its stock…. Treasury officials said the session with nearly a dozen senior banking regulators was intended to allow minority-owned banks and their trade association to discuss the losses they had incurred from the federal takeover of Fannie Mae and Freddie Mac. But Kevin Cohee, OneUnited’s chief executive, instead seized the opportunity to plead for special assistance for his bank, federal officials said.
So, let’s see… Waters–outspoken critic of Wall Street recklessness and advocate for the financial advancement of communities of color–quietly wielded her influence to steer the Bush administration’s decisions on TARP funds? But bear in mind that such entanglements between politicians and corporate America are pretty old news. Both sides of the aisle are packed with examples of current or past top officials with ties to banks and other institutions that do business with Washington. Not that the prevalence of potential conflicts of interest makes them less disturbing. But it’s intriguing that a critical lawmaker like Waters faces charges of improper, even hypocritical conduct at a time when conservatives are struggling to tie the country’s financial woes to allegedly over-generous policies toward marginalized communities. The Community Reinvestment Act in particular has been singled out for supposedly providing poor people of color loans they did not deserve. The rhetoric refuses to die, even though numerous experts have debunked it and pointed instead to a deeper lack of regulation. Waters has spoken up in defense of her role in the meeting—denying any specific intent to funnel money toward OneUnited. She wrote, “The federal government has a legal obligation to support minority banks,” and “I maintain that my advocacy on behalf of small, women, minority and community banks is appropriate.” Cronyism in Washington is virtually an open secret—often embraced as the grease that makes the political machine tick. And there’s obviously a lot of backdoor dealing going on to which the public is not privy. But when race and gender issues overlap with traditional networks of influence, scrutiny of lawmakers should be tempered with critical perspective on how scandal gets spun in the media.