The announcement Wednesday follows months of conflict in the committee over handling of the case.
Waters wanted her ethics committee case dismissed. An attorney for the /*California*/ Democrat claimed it was impossible to conduct a fair proceeding because of a close relationship between two former committee lawyers in the case and Republican committee members.
The lawyer, Stanley Brand, said a fair trial is now impossible.
The case focuses on allegations Waters tried to obtain federal bailout money for a bank her husband invested in. Her husband, Sidney Williams, owns stock in OneUnited, and his investment was in danger of becoming worthless during the near-financial collapse of late 2008.
OneUnited received $12 million in bailout money in December 2008.
Waters has repeatedly denied wrongdoing. She contends she had supported legislation to help all troubled, minority-owned banks like OneUnited.
The committee had charged Waters with violating House rules and was ready to begin a proceeding on her conduct late last year, but the case was sent back for further investigation after the controversy erupted over the conduct of the two lawyers.
The Associated Press contributed to this report.
