Within minutes of Rep. Barney Frank's surprise announcement that he planned to retire next year, industry insiders and political analysts were focused on who would take his place as lead Democrat on the House Financial Services Committee.

So far, Rep. Maxine Waters, an outspoken African-American liberal from Los Angeles, appears to be the frontrunner, due to her position as the next most senior Democrat on the panel and her political ties to fellow Californian Nancy Pelosi.

"Number one, she's the most senior," said former Rep. John LaFalce, who preceded Frank as lead Democrat on the Financial Services panel. "Number two, she is a minority, and I think it would be very difficult not to appoint somebody who is both senior and a minority."

But Waters is no shoo-in, largely because she remains under an ethics investigation. If she does not get the top job, other contenders would include New York Rep. Carolyn Maloney, Illinois Rep. Luis Gutierrez and North Carolina Rep. Melvin Watt.

Waters' potential succession was already raising concerns among the financial services industry. While many bankers and mortgage firms criticize Frank for the financial reform law he helped pass last year, he was a pragmatist known for his willingness to work with the industry on key issues to try and avoid unintended consequences.

By contrast, Waters is seen as more ideological, and has publicly criticized Frank for not being liberal enough — a position many bankers would view as ridiculous.

Waters wasted no time on Monday throwing her hat in the ring, releasing a statement that seemed designed both to stake her claim as Frank's successor while also assuaging financial services industry fears about her candidacy.

"As the next most senior member of the committee, the current ranking member on the Capital Markets subcommittee and the former chair of the Housing and Community Opportunity subcommittee, I hope to use my experience to continue and expand his work in the committee," Waters said in a press release, in reference to Frank. "I will continue to champion practical regulations, while making sure they work for consumers and the financial sector, a sector which has the right to be profitable but the obligation to be fair, two concepts which are not mutually exclusive."

Waters' chief obstacle to winning the position is likely to be an ongoing ethics investigation. Near the height of the financial crisis, Waters helped arrange a meeting between executives at OneUnited Bank, a minority-owned bank with which her husband had financial ties, and Treasury Department officials. Treasury later gave the bank $12 million in federal bailout funds.

Waters has repeatedly denied any impropriety, but the House Ethics Committee charged her in June 2010 with violating House rules and the ethics code for government employees.

Her trial was delayed, however, after questions emerged about the conduct of committee staff during the investigation. In July 2011, the committee hired an outside lawyer to investigate the committee's conduct and the case against Waters.

The outside counsel, Washington lawyer Billy Martin, has a contract with the House Ethics Committee until Jan. 2, 2012, but that contract could be extended.

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