The House banking scandal broke in early 1992, when it was revealed that the United States House of Representatives

United States House of Representatives

The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

 allowed members to overdraw their House checking accounts without risk of being penalized by the House bank (actually a clearinghouse

Clearing house (finance)

A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions...

).

This is also sometimes known as Rubbergate (from the expressions "rubber check

Non-sufficient funds

Non-sufficient funds is a term used in the banking industry to indicate that a demand for payment cannot be honored because insufficient funds are available in the account on which the instrument was drawn. In simplified terms, a cheque has been presented for clearance, but the amount written on...

" [bounced check] and "Watergate

Watergate scandal

The Watergate scandal was a political scandal during the 1970s in the United States resulting from the break-in of the Democratic National Committee headquarters at the Watergate office complex in Washington, D.C., and the Nixon administration's attempted cover-up of its involvement...

)". The term is misleading because House checks did not bounce; they were honored because the House Bank provided overdraft protection to its account holders. It was also sometimes known as the "congressional check-kiting scandal".

The scandal

The House banking scandal ultimately involved more than 450 representatives, most of whom did not break any laws. Twenty-two congressmen and -women were singled out by the House Ethics Committee for leaving their checking accounts overdrawn for at least eight months out of a sample of 39 months.

The following 22 House members were singled out by the House Ethics Committee:

Name	State	Party	# of checks	Months overdue
Tommy F. Robinson Tommy F. Robinson Tommy Franklin Robinson is a politician from the state of Arkansas.-Early life:Robinson was born in Little Rock and graduated from the University of Arkansas at Little Rock. He served in the United States Navy from 1959 to 1963....	Arkansas Arkansas Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...	Democratic/Republican	996	16
Robert J. Mrazek Robert J. Mrazek Robert Jan Mrazek was a Democratic member of the United States House of Representatives, representing New York's 3rd congressional district on Long Island for most of the 1980s...	New York New York New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...	Democratic	920	23
Robert W. Davis Robert William Davis Robert William "Bob" Davis was an American politician from the state of Michigan. He represented the state's 11th congressional district, which at that time included the Upper Peninsula and a large portion of Northern Michigan, in the United States House of Representatives from 1979 until...	Michigan Michigan Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....	Republican	878	13
Doug Walgren Doug Walgren Douglas Walgren was a Democratic member of the U.S. House of Representatives from Pennsylvania.Doug Walgren was born in Rochester, New York, and grew up in Mount Lebanon, Pennsylvania. He graduated from Dartmouth College in 1963, and received his LL.B. from Stanford University in 1966...	Pennsylvania Pennsylvania The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...	Democratic	858	16
Charles F. Hatcher Charles Floyd Hatcher Charles Floyd Hatcher is an American politician and lawyer. He served in Congress as a Democrat.-Biography:Hatcher was born in Doerun, Georgia and served in the United States Air Force from 1958 until 1962. After his military service, he attended Georgia Southern College in Statesboro in 1965 and...	Georgia Georgia (U.S. state) Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...	Democratic	819	35
Stephen J. Solarz Stephen J. Solarz Stephen Joshua Solarz was a United States Congressional Representative from New York. Solarz was both an outspoken critic of President Ronald Reagan's deployment of Marines to Lebanon in 1982 and a cosponsor of the 1991 Gulf War Authorization Act during the Presidency of George H. W...	New York New York New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...	Democratic	743	30
Charles Hayes	Illinois Illinois Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...	Democratic	716	15
Ronald D. Coleman Ronald D. Coleman Ronald D'Emory Coleman is an American politician and a former member of the United States House of Representatives from Texas. He was elected as a Democrat to the 98th United States Congress and to the six succeeding Congresses. He served from January 3, 1983 until January 3, 1997...	Texas Texas Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...	Democratic	673	23
Carl C. Perkins Carl C. Perkins Carl Christopher "Chris" Perkins , son of Carl D. Perkins, is a U.S. lawyer and politician who was United States Representative from the 7th district of Kentucky from 1984 to 1993. Perkins served as a Democrat.-Biography:...	Kentucky Kentucky The Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...	Democratic	514	14
Bill Alexander	Arkansas Arkansas Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...	Democratic	487	18
William F. Goodling William F. Goodling William Franklin "Bill" Goodling was a Republican member of the U.S. House of Representatives from Pennsylvania.Goodling, the son of former Congressman George Atlee Goodling, was born in Loganville, Pennsylvania and grew up in York, Pennsylvania. He received a B.S...	Pennsylvania Pennsylvania The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...	Republican	430	9
Ed Towns Ed Towns Edolphus "Ed" Towns is the U.S. Representative for , serving since 1983, and the former Chairman of the House Oversight and Government Reform Committee. He is a member of the Democratic Party...	New York New York New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...	Democratic	408	18
Ed Feighan Ed Feighan Edward Farrell "Ed" Feighan is a former American politician. He served as a member of the Ohio House of Representatives, and as a Democratic Party U.S. Representative from 1983 to 1993, serving Ohio's 19th congressional district.-Early life and education:Feighan graduated in 1965 from St...	Ohio Ohio Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...	Democratic	397	8
Harold Ford, Sr. Harold Ford, Sr. Harold Eugene Ford, Sr. was a Democratic member of the United States House of Representatives representing the Memphis, Tennessee area for ten terms—from 1975 until his retirement in 1997. He was the first African-American to represent Tennessee in the U.S...	Tennessee Tennessee Tennessee is a U.S. state located in the Southeastern United States. It has a population of 6,346,105, making it the nation's 17th-largest state by population, and covers , making it the 36th-largest by total land area...	Democratic	743	30
Mickey Edwards Mickey Edwards Marvin Henry "Mickey" Edwards is a former Republican congressman who served Oklahoma's 5th congressional district from 1977 to 1993.-Education and early career:...	Oklahoma Oklahoma Oklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...	Republican	386	13
Bill Clay Bill Clay William Lacy "Bill" Clay, Sr. is a politician from the state of Missouri. As Congressman from Missouri's First District, he represented portions of St. Louis in the U.S. House of Representatives for 32 years....	Missouri Missouri Missouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...	Democratic	328	9
Tony Coelho Tony Coelho Anthony "Tony" Coelho is a former United States congressman from California, and primary sponsor of the Americans with Disabilities Act...	California California California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...	Democratic	316	12
John Conyers John Conyers John Conyers, Jr. is the U.S. Representative for , serving since 1965 . He is a member of the Democratic Party...	Michigan Michigan Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....	Democratic	273	9
Mary Rose Oakar Mary Rose Oakar Mary Rose Oakar is an American Democratic politician and former member of the United States House of Representatives from Ohio, the first Democratic woman elected to the United States Congress from that state....	Ohio Ohio Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...	Democratic	213	18
Joseph D. Early Joseph D. Early Joseph Daniel Early is an American politician. He represented the third district of Massachusetts in the U.S. House of Representatives from 1975 to 1993....	Massachusetts Massachusetts The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...	Democratic	124	13
Douglas H. Bosco Douglas H. Bosco Douglas Harry Bosco is a former U.S. Representative from California.Born in Brooklyn, New York, Bosco attended Homestead High School, Sunnyvale, California. He graduated from the Capitol Page School in Washington, D.C., 1963. He received a B.A. from Willamette University in 1968 and a J.D. from...	California California California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...	Democratic	124	13
Jim Bates	California California California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...	Democratic	89	9

The scandal contributed to a perception of corruption and malfeasance and was a contributing factor to major changes in the House, in which 77 Representatives resigned or were ousted in the 1994 election. Four ex-Congressmen, a Delegate, and the former House sergeant-at-arms were convicted of wrongdoing as a result of the investigation that followed. Among these, Former Rep. Buz Lukens

Buz Lukens

Donald Edgar "Buz" Lukens was a Republican member of the United States House of Representatives from Ohio. His political career ended in scandal.-Early years:...

 (R-OH) was convicted on bribery and conspiracy charges. Former Rep. Carl C. Perkins

Carl C. Perkins

Carl Christopher "Chris" Perkins , son of Carl D. Perkins, is a U.S. lawyer and politician who was United States Representative from the 7th district of Kentucky from 1984 to 1993. Perkins served as a Democrat.-Biography:...

 (D-KY) pled guilty to various charges including a check kiting scheme involving several financial institutions including the House Bank. Former Rep. Carroll Hubbard

Carroll Hubbard

Carroll Hubbard, Jr. , a Democrat, represented Kentucky in the United States House of Representatives from 1975 to 1993.Hubbard grew up in Murray, Kentucky, graduated from Georgetown College in 1959 and from the University of Louisville law school in 1962...

 (D-KY) pled guilty to three felonies. Former Rep. Mary Rose Oakar

Mary Rose Oakar

Mary Rose Oakar is an American Democratic politician and former member of the United States House of Representatives from Ohio, the first Democratic woman elected to the United States Congress from that state....

 (D-OH) was charged with seven felonies, but she ended up pleading guilty only to a misdemeanor campaign finance charge not related to the House Bank. The House Bank investigation also led to Delegate Walter E. Fauntroy

Walter E. Fauntroy

Walter Edward Fauntroy is the former pastor of the New Bethel Baptist Church in Washington, D.C., and a civil rights activist. He is also a former member of the United States Congress and was a candidate for the 1972 Democratic presidential nomination, as well as a human rights activist...

 (D-DC) pleading guilty to an unrelated charge of a making a false statement relating to a charitable contribution to his church. The former Sergeant At Arms, Jack Russ, pled guilty to three felonies.

The House Bank functioned according to rules different from the laws governing deposit institutions. The facility was operated under very loose rules at the time, using a pencil and ledger system rather than a computerized accounting system, and the bank manager did not provide regular account statements to House members, nor were notifications sent to House members in the event they had overdrawn their accounts. Further contributing to the problem was the fact that the House Bank didn't post deposits in a timely manner, often as much as seven weeks after the fact. Thus, while some knowingly took advantage of the system (and were ultimately convicted of wrongdoing) many members of the House who wrote overdrafts were not actually at fault, as it was the House Bank's responsibility to post deposits in a timely manner.

Another practice which contributed to the scandal was that House members were allowed to overdraw their accounts, provided that the overdraft did not exceed the member's next paycheck. Many House members used this practice to take unauthorized advances on their paychecks which they would repay in the future. In a corporate context the practice of drawing money out of the corporation's accounts for personal use is a violation of fiduciary duty to the corporation's shareholders. Many U.S. banks, like the House Bank, offered overdraft protection to checking account holders.

Public exposure

In the early days of the scandal, when the media began reporting on the loose practices, Republican Minority Whip Newt Gingrich

Newt Gingrich

Newton Leroy "Newt" Gingrich is a U.S. Republican Party politician who served as the House Minority Whip from 1989 to 1995 and as the 58th Speaker of the U.S. House of Representatives from 1995 to 1999....

, along with 7 freshman Republicans referred to as the Gang of Seven

Gang of Seven

The Gang of Seven refers to a group of freshmen Republican U.S. Representatives, elected to serve in the 101st Congress in 1990. The group loudly condemned the House banking scandal and the Congressional Post Office scandal, forcing the congressional leadership to address the issues by ensuring...

 or "The Young Turks," made the strategic decision to publicize the scandal in an attempt to sweep congressmen with overdrawn accounts, most of them Democrats, out of power. Gingrich realized that far more Democrats could be implicated in this scandal than Republicans, so he made the decision to make the identities of all of those involved public and "let the chips fall where they may." Jim Nussle

Jim Nussle

James Allen "Jim" Nussle is an American politician and was the director of the Office of Management and Budget. Nussle was a Republican member of the United States House of Representatives from 1991 to 2007...

, one of the Gang of Seven, came to national attention when he made a speech from the well of the House while wearing a paper bag over his head to protest the "shameful" ethical behavior involved in the scandal.

Gingrich pressured the then Speaker of the House

Speaker of the United States House of Representatives

The Speaker of the United States House of Representatives, or Speaker of the House, is the presiding officer of the United States House of Representatives...

 Tom Foley

Tom Foley

Thomas Stephen Foley was the 57th Speaker of the United States House of Representatives, serving from 1989 to 1995. He represented Washington's 5th congressional district for 30 years as a Democratic member from 1965 to 1995....

to ensure that the special counsel appointed to investigate the matter informed the voting public of the overdrafts and the identities of all of the Congressmen responsible.

External links

• House Banking Scandal CongressionalBadBoys.com. List of the 22 worst, as identified by the House Ethics Committee