House Panel Recommends New Rules on Ethics

By ERIC LIPTON

September 25, 2012

WASHINGTON — Saying that public trust was at stake, a special House ethics panel on Tuesday called for new rules to prevent lawmakers and their staffs from violating conflict of interest standards, and proposed other measures to keep partisan squabbles from undermining future investigations of possible wrongdoing.

The recommendations, coming only a few months before the House adopts a new set of rules for the next Congress, were released as the House ethics committee completed a three-year investigation of Representative Maxine Waters, Democrat of California — an inquiry that itself was caught up in such partisan disputes and ambiguous ethics rules.

The chairman and vice chairman of the special committee appointed to handle the investigation of Ms. Waters concluded, as they had hinted last week they would, that she had not violated House rules in late 2008 when she called Henry M. Paulson Jr., the Treasury secretary at the time, to set up a meeting that included executives from a financially troubled bank in which her husband then owned about $350,000 worth of stock.

But the special panel that investigated Ms. Waters recommended on Tuesday that House members should be required to notify their entire staffs if they have concluded that they should recuse themselves because of a conflict, as Ms. Waters apparently did not do in the case of the Boston-based bank OneUnited.

Executives at the company involved should also be notified of the decision, the committee recommended, and the lawmaker’s staff should then be informed of the details of the apparent conflict of interest.

Current House rules only ambiguously require that lawmakers refrain from taking action that might bring them direct personal financial benefit, particularly if such action assists an individual company instead of a broad class of companies.

“The recommendations we have shared will result in greater attention being paid to the issue of conflicts and, thereby, greater trust by all of our constituents,” the committee said in its statement.

The dismissal of the charges this week against Ms. Waters hinged on a key difference between this new investigation and a 2009 inquiry by the Office of Congressional Ethics, a quasi-independent agency that serves as sort of a grand jury for the House.

The office’s report gave little weight to a warning Ms. Waters had said she made in September 2008 to her chief of staff to stay out of the OneUnited matter, as she had realized after calling the Treasury Department to set up the special meeting that she had a conflict of interest.

But the new investigation accepted as fact that this warning had occurred, even though there is no written record of it, and Ms. Waters was absolved of any wrongdoing.

With Ms. Waters cleared, the special committee unanimously voted to reprimand Mikael Moore, Ms. Waters’s chief of staff and grandson, issuing a “letter of reproval” that concluded he had continued to assist OneUnited in a bailout request even after Ms. Waters had warned him to avoid the topic.

The special panel also suggested that the House revise its nepotism rules on employing relations to include grandchildren, a change that would have prevented Mr. Moore from being hired in the first place by Ms. Waters.

The investigation of this case took three years, in large part because of a dispute that rocked the ethics committee after the chief counsel in 2010 accused Republican-appointed staff members of improperly sharing confidential case materials with Republican lawmakers on the committee.

These and other allegations led the ethics panel to conclude that it had operated in far too partisan a fashion, as disputes among competing staff members threatened to compromise the investigation of Ms. Waters.

In her case, the disputes led to the rare appointment of a special outside counsel, a former federal prosecutor named Billy Martin, and the decision by the panel’s chairman and vice chairman and other committee members to recuse themselves from the inquiry and allow new specially appointed members to handle the matter.

To prevent such problems, the special committee recommended that future professional committee staff members, many of whom are lawyers, should not be hired if they have previously served on a lawmaker’s staff, as has often been the case.