The Ethics Committee’s probe of the California congresswoman’s dealings with a minority-owned bank in which her husband held stock dragged on 38 months and consumed probably millions in legal fees — far more than the roughly $350,000 investment that Waters’s husband, Sidney Williams, was in danger of losing if OneUnited Bank collapsed during the 2008 U.S. financial crisis.

In the end, Waters emerged unscathed. The only person found to have committed any wrongdoing was her top aide.

On Tuesday, the House Ethics Committee issued its final report in the case. Waters will not be charged with any violations of House ethics rules. That decision is a big win for the California Democrat and clears the way for her to seek the ranking member post on the Financial Services Committee next year.

Her chief of staff, Mikael Moore, was issued a letter of reproval from the Ethics Committee. The committee ruled that Moore knew “or should have known” of Waters’s financial ties to OneUnited, and should have followed his boss’s direction not to help the bank even after top OneUnited officials turned to Waters — a political ally — for help.

Moore was charged with three ethics violations, but since the letter of reproval is the lightest sanction that can be imposed by the Ethics Committee, it has no immediate impact on his position in Waters’s office.

“Your actions on behalf of OneUnited Bank’s private efforts to obtain assistance and avoid collapse created dramatic appearances of conflict with your employing Member’s personal financial interests,” Reps. Bob Goodlatte (R-Va.) and John Yarmuth (D-Ky.), the acting chairman and ranking member of the Ethics Committee, wrote in their letter to Moore. “Your actions blurred an already difficult and close line of permissible conduct due to OneUnited’s prominent role in responding to a significant crisis affecting unknown number of banks.”

Waters declined to comment on the Ethics Committee report or the letter of reproval against Moore.

But Goodlatte and Yarmuth also issued a surprising number of recommendations for both lawmakers and the Ethics Committee going forward, stemming directly from the problems that arose during the Waters probe.

Goodlatte and Yarmuth were brought in to handle the case after six members of the secretive panel, including all five Republicans, recused themselves — an unprecedented move in the 45-year history of the Ethics Committee. They urged members to ensure they act in a nonpartisan manner when selected for the unpopular ethics duty. Committee staff should do the same, they said.

Goodlatte and Yarmuth also asked House leaders to pass new rules spelling out what constitutes a personal conflict of interest for lawmakers and aides when dealing with issues that affect a member’s own finances.

In addition, they said House rules should be revised so lawmakers cannot hire their grandchildren. Moore is Waters’s grandson.

Booth Moore and Waters denied wrongdoing throughout the seemingly endless probe. In an extraordinary appearance before Ethics Committee members Friday, Moore noted that the outside counsel hired to get the panel out of its Waters-related quagmire did not find “clear and convincing evidence” that he had broken any rules.

However, the 10-member panel ignored Moore’s arguments and voted unanimously to issue the letter of reproval.

The 137-page report by the outside counsel hired in July 2011, Billy Martin, included other surprises:

• The case could have ended in May 2010 with no charges against Waters or Moore. But Blake Chisam, then chief counsel at the committee, intervened to keep it going.

The special investigative subcommittee first appointed by the Ethics Committee to review the Waters matter initially found no violations against her, but it still wanted to issue a report critical of the congresswoman. However, Chisam said the investigative subcommittee had to either find violations by Waters and/or Moore or drop the case. So the subcommittee charged both with three violations.

Chisam also thought Waters would not contest the allegations against her, a monumental misreading of the California Democrat.

Chisam was traveling out of the country and could not be reached for comment Tuesday.

• Bitter infighting between Chisam and other Ethics Committee investigators — some of whom thought he and then-Ethics Chairwoman Rep. Zoe Lofgren (D-Calif.), were trying to “undermine” the case against Waters — went on for months. Eventually the tensions boiled over, causing a crisis within the panel.

Chisam, for his part, thought the two lead investigators in the Waters case — Morgan Kim and Stacey Sovereign — were secretly feeding information to Republicans on the panel, including Reps. Jo Bonner of Alabama and Mike McCaul of Texas. Bonner was then the ranking member of Ethics; he serves as chairman now.

Lofgren and Chisam eventually fired Kim and Sovereign in December 2010, as first reported by POLITICO. Bonner and the Republicans forced a showdown over the action. It ended only when Republicans won control of the House and Lofgren left the Ethics Committee at the start of the 112th Congress.

“During the Committee’s investigation of this matter in the 111th Congress, suspicions arose between all Members on one side of the Committee and the Committee leader from the other side, along with both partisan designees and certain nonpartisan staff who became seen as aligned with one party or the other,” Martin noted.

“The mutual suspicions were the same: that Members and staff were acting in partisan political ways. Some of those suspicions were based on the belief that, for partisan reasons, certain staff were communicating with Members of only one party. There were also suspicions that Committee members, while caucusing with members of their own party, were making decisions regarding the matter along party lines.”

Martin also said he found “no evidence” that Lofgren and Chisam were trying to derail the Waters case.

• Chisam initially refused to cooperate with a subpoena from the Ethics Committee over questions about his interactions with Kim and Sovereign, or who leaked internal documents to POLITICO regarding their suspension. Chisam asserted his Fifth Amendment right not to incriminate himself, Martin reported. Chisam was later interviewed, but the delay set back the case for months.

Chisam is alleged to have been reading Kim and Sovereign’s email accounts “for some time” before they were fired, according to Martin. When questioned about it, Chisam again asserted his Fifth Amendment right against self-incrimination.

• Phone calls from then-Speaker Nancy Pelosi’s (D-Calif.) office were coming in to the Ethics Committee for Chisam, although it is not clear who made the calls or why. Party leaders are not allowed to intervene in the activities of the Ethics Committee.

• One female staff member on Ethics had such a bad relationship with Kim that she was overheard saying, “that bitch is going down.”

• Martin found that at least one Ethics Committee staffer “made racially insensitive and inappropriate comments” about Waters and the case against her, although he said it did not impact the final verdict.