An ethics report finding that House Ways and Means Committee chairman Charles Rangel violated congressional gift rules is the latest in a string of bad news for the embattled New York Democrat, but it remains unclear whether this friend of the muni market will eventually lose his powerful position.

The House Committee on Standards of Official Conduct publicly admonished the Harlem lawmaker Friday for violating congressional rules by accepting two corporate-sponsored trips to the Caribbean for conferences. The panel’s findings reignited calls from Republicans, and even some within his own party, that he resign as committee chair.

Rangel has spent the last several months defending himself against numerous allegations of ethics violations, including that he failed to report on his federal taxes $75,000 in rental income earned from a villa he owns in the Dominican Republic, and that he paid below-market prices for four rent-controlled apartments in New York City. Those issues are still being looked into by the ethics committee.

House Speaker Nancy Pelosi, D-Calif., defended Rangel Friday. She said he did not knowingly violate any rules and that any judgments should wait until the ethics committee finishes its examination of all the allegations.

The role Rangel has played in shaping the municipal market is not overlooked by market participants.

“Chairman Rangel has been an innovative and out-front supporter of the municipal bond market for a number of years.,” said Mike Nicholas, chief executive officer of the Regional Bond Dealers Association. “From [qualified zone academy bonds] to [Build America Bonds], the Chairman has actively sought and promoted cost-efficient financing solutions for municipal bond issuers and investors.”

“It is a tremendous benefit to state and local governments and charities that Charlie Rangel is the chairman,” said Charles Samuels, a lawyer with Mintz Levin Cohn Ferris Glovsky & Popeo PC, counsel to the National Association of Health and Educational Facilities Finance Authorities. “There’s no muni provision that would exist without him.”

Rangel played a major role in developing recent laws that have reshaped the municipal bond market, including effectively inventing tax-credit bonds with legislation creating QZABs in 1998.

Most recently, the tax portion of the American Recovery and Reinvestment Act, which Rangel played a key role in drafting, created the BAB program, enabled more issuers to market their tax-exempt bonds to banks, freed bonds of alternative minimum tax liability, and authorized billions of dollars in new tax-credit bonds.

The ethics committee’s most recent report concluded that members of Rangel’s staff were aware that corporations, including Citi, AT&T, and Pfizer, contributed funds to Carib News, which hosted the Carib News Foundation Multi-National Business conferences in 2007 and 2008. As a result, Rangel should not have accepted free trips to the conferences, which were held on the island of St. Maarten.

While the committee said it could not prove Rangel himself knew of the corporate sponsorship, he nonetheless “was responsible for the knowledge and actions of his staff.”

Four other congressional Democrats also attended the island conferences, but the committee concluded that none of them appeared to have knowingly violated congressional rules.

Instead, the report said those members inadvertently received impermissible gifts of travel due to false and misleading information provided by Carib News employees.

If Rangel were to step down, high-ranking Democrats Pete Stark, D-Calif., and Sander Levin, D-Mich, would be likely candidates to take the position, according to market sources.

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