Second senior Democrat may face ethics trial

Chairman of the Federal Reserve Ben Bernanke (R) talks with U.S. Rep. Maxine Waters (L) before he speaks at the Congressional Black Caucus Foundation's 39th Annual Legislative Conference at the Washington Convention Center in Washington, September 25, 2009.

WASHINGTON (Reuters) - A second senior Democratic lawmaker may face a public ethics trial this fall, adding a new threat to their party's efforts to keep control of the House of Representatives in the November elections.

The House ethics panel is expected to say as early as on Monday that its investigative subcommittee has found evidence that Representative Maxine Waters violated the chamber's ethics rules, a source familiar with the matter told Reuters.

The House panel unveiled ethics charges against Representative Charles Rangel on Thursday. Both lawmakers face potential public trials just weeks before voters go to the polls for the November mid-term elections as a sour economy and anti-incumbent mood already are indicating Democratic losses.

Both are leading members of the Congressional Black Caucus, making the cases highly sensitive as Democrats are working to get a big voter turnout by African-Americans, one of their traditional constituencies.

"There is a growing sense among Democratic leadership that these issues pose a real threat to our ability to make our closing argument in the fall," a House Democratic aide said.

Democrats have urged Rangel to cut a deal to avoid a trial they fear could become a political circus.

Neither trial is expected to begin before September and it is still possible deals could be reached to close the cases before a public airing, though that possibility becomes less likely as the elections draw near.

"Rangel and Waters need to seriously think about whether a public spectacle is worth the pain that will be inflicted on the party, especially when we have done so much to clean up the ethical and corruption messes left by Republicans," the aide said.

The committee had been investigating Waters, a 10-term lawmaker from Los Angeles, after a bank in which her husband had stock received $12 million in federal bailout funds.

Waters, who heads the House Financial Services Housing and Community Opportunity subcommittee, helped arrange a meeting of officials from that bank and other minority-owned financial institutions and Treasury Department officials, who later said they did not know of her husband's ties to the bank.

Waters has said the meeting was in keeping with her long record of promoting minority-owned businesses and lending in underserved communities.

She intends to fight the allegations, a source said.

'WITH DIGNITY'

The revelations about Waters come after President Barack Obama on Friday called ethics charges against Rangel "very troubling" and said he hoped the former head of the House tax writing panel could end his career "with dignity."

Rangel faces 13 counts of violating House ethics rules, including failure to report rental income from a villa in the Dominican Republic and use of a rent-stabilized apartment for his campaign committee.

A senior Democratic aide described Rangel as "more blustery than ever" and said a "showdown (is) looming on the case."

So far just a handful of Democrats have publicly urged him to resign.

Democrats won control of the House in 2006, promising to rid the chamber of corruption after a series of Republican ethical problems, including an influence-peddling scandal that resulted in prison time for a top Capitol Hill lobbyist.

"Like Chairman Rangel, this is another example of Speaker (Nancy) Pelosi's most glaring broken promise: to 'drain the swamp' in Washington," said Michael Steel, spokesman for House Republican leader John Boehner.

A House Democratic aide said, "This Democratic-led committee is showing that it's willing to aggressively go after its own (over possible ethical abuses), something Republicans never did when they were in charge."

(Editing by Vicki Allen)