My homepage piece today is on the larger lessons of the Maxine Waters ethics case, and in particular what that case says about the wisdom of creating a $30 billion TARP-like investment program for community banks:

It is perhaps because so many community banks witnessed the way in which [Maxine Waters and Barney Frank intervened to save OneUnited] that they are eager for Congress to create the Small Business Lending Fund. They see participation in the fund as a get-out-of-jail-free card. Increasing lending to start-ups in a risky political and economic environment — one in which banks are lending precious little of their own capital — may not be the wisest financial decision, but if they go broke, it would be better to be partners with the government. These banks can just take the Frank line: The government “put them into the dumper” by encouraging them to take on the risk.

Chances that Republicans can stop the ill-advised fund are dimming: Senate majority leader Harry Reid says there is a deal in the offing that should secure passage of the legislation to which it is attached, and the Democrats have already snagged two Republican defectors who support the fund: Voinovich and LeMieux.