RDP Newsletter 3
Introduction:
From Wall Street whining to hedge funds maneuvering, it’s been a busy two weeks across the four primary buckets of Revolving Door Project work. Here are the key developments from our extremely skeptical and wonky vantage place--indeed, so skeptical and wonky a vantage that we do not venture even a single Starbucks themed pun….
Congressional Oversight of Executive Branch
The pace of oversight has quickened; Ways and Means, Oversight, Financial Services, Energy and Commerce, and Education and Labor have all announced at least one hearing for the upcoming month, with many announcing intentions to schedule many more in the near future. We are cautiously more optimistic this week, although we still believe that committees should be moving more aggressively. Now that the shutdown drama has ended (we hope), we will be watching to see if House Democrats accelerate their efforts to fulfill their commitment to bring accountability to Trump, his administration, and its corporate beneficiaries.
Besides just calling hearings, however, House Democrats will need to make sure that witnesses feel compelled to appear. So far, IRS commissioner Charles Rettig, Treasury Secretary Steven Mnuchin, Health and Human Services Secretary Alex Azar, and Homeland Security Secretary Kirstjen Nielsen have all either cancelled appointments with House Committees or refused to attend. As we argue here, it is important that Committee Chairs demonstrate their willingness to subpoena non-compliant Trump administration officials if they are to make forward progress on oversight. Since congressional subpoenas are powerful but judicial enforcement can be slow, it is concerning to us that House Democrats have still yet to issue a single subpoena, despite promises that they would use that ultimate oversight tool freely.
Aside from the clear disrespect for Congressional authority that these officials demonstrated by refusing to make themselves available for questioning, they are also successfully evading serious questions about their conduct. As just one example, Rettig and Mnuchin avoided appearing before the Ways and Means committee earlier this month to answer questions about the shutdown’s impacts on the IRS. Neither official should be allowed to escape accountability.
Hall of shame: Now, almost a month after becoming chair of the House Committee on Ways and Means, Richard Neal still has not followed through on promises to request Trump’s tax returns. Despite new polling suggesting that 60% of Americans want Democrats to get the President’s tax returns and mounting pressure from progressive groups to send in the request, Neal has dug into his indefensible position. This weakness has made clear to senior officials in the Trump administration that they need not comply with Neal’s requests. Neal’s obstinance on Trump’s tax returns is threatening his ability conduct oversight of anyone in the administration. As we have been arguing at length in multiple forums, Neal should demonstrate his commitment to investigations by requesting the President’s tax returns and issuing subpoenas to both Rettig and Mnuchin. And then the Committee should move on to the manifold opportunities it has to scrutinize the overly close relationship between America’s worst corporations and plutocrats and the Trump Administration.
Highlight: Maxine Waters is already taking steps to achieve the bold vision that she laid out in a speech at the Center for American Progress just over two weeks ago. She has announced plans to hold hearings on consumer credit with Equifax and Experian and to question CEOs of some of the nation’s largest banks, demonstrating that she will be unafraid to take on powerful special interests who have traditionally held sway with members of House Financial Services. An influx of freshman firebrands to the committee will likely help Waters to hold the course moving forward. We were particularly impressed with freshman Rep. Ayanna Pressley’s early commitment to keeping a close eye on Secretary of Housing and Urban Development Ben Carson. (HUD could certainly use the oversight)
Meanwhile, the Oversight Committee held their first hearing on Tuesday, focusing on drug pricing. Representatives such as John Sarbanes (D-MD) were not shy about drawing the connections between special interests’ influence in Washington, corporate misbehavior, and Congressional inaction. This frank appraisal of the situation was encouraging. As David Dayen notes, “Cummings’s Oversight Committee is taking on the [pharmaceutical] industry in a systematic fashion.”
We hope other committees follow Cummings lead on issues within their jurisdiction.
Looking forward: We will be watching to see if any committee chairs issue subpoenas to those administration officials who are attempting to evade accountability. Demonstrating that the threat of a subpoena is credible is necessary to the success of oversight in the 116th Congress -- and acting like congressional subpoenas are problematic tools (they are not, either legally or historically) undermines Congressional pursuit of its Constitutional responsibilities.
Executive Branch Personnel
Far from acting as an understated caretaker at the Federal Housing Finance Agency (FHFA) while awaiting a Senate confirmed Director, Joseph Otting has been capitalizing on his temporary appointment to make big changes. In the last two weeks, a report and a leaked video indicated that Otting and the administration intended to bypass Congress and set out a plan in the coming weeks for ending government control of Fannie Mae and Freddie Mac. Otting, along with Secretary Mnuchin, is closely connected to hedge fund manager John Paulson who previously held a 24.9% stake in OneWest bank where Otting was CEO. Paulson is one of a group of investors who hold large stakes in Fannie and Freddie stocks and are actively working to get both entities out of conservatorship in order to realize an unimaginably large return on their investment. This is just the latest chapter in a longer story that we outline in this blog post.
Otting’s alarming statements and past conflicts of interest appear to have sparked the interest of House Financial Services Chairwoman Maxine Waters and ranking member of the Senate Banking Committee Sherrod Brown, who sent a joint letter to Otting last week asking the Acting Director to explain his recent comments. This hint that lawmakers were tuned into developments at the FHFA has seemingly inspired a reversal -- and also underscored the power of energetic congressional oversight! On Tuesday, the White House announced that it would work with Congress to reform Fannie Mae and Freddie Mac. Nonetheless, we will be keeping a close eye on Otting moving forward for the reasons we laid out here -- and many others!
Independent Agencies
Demand Progress and the Revolving Door Project coordinated a letter signed by a diverse array of 20 organizations asking Senate Minority Leader Chuck Schumer (D-NY) to begin to fight visibly and aggressively in pursuit of the strong independent agencies our country needs.
From the Equal Employment Opportunity Commission to the Securities and Exchange Commission (SEC), Federal Deposit Insurance Corporation (FDIC), and beyond, independent agencies have been undermined by Trump and McConnell without any evident reaction by Senate Democrats. The situation is bleak. For instance, this devastating piece on how “the Merit Systems Protection Board, a quasi-judicial federal body designed to determine whether civil servants have been mistreated by their employers” has been totally crippled provides a sense of what happens when these agencies are neglected.
Attention must be paid! In future months the Revolving Door Project will be doing more to elevate the importance of these agencies -- please feel free to ping us with any questions about them! And if you’re wondering just what these agencies are and who runs them, our Independent Federal Agency Monitor is a unique resource we hope you will find valuable.
2020 (and Potentially 2021)
More and more candidates are entering the field and beginning to unveil their banner policy proposals. As Democratic hopefuls flesh out their platforms we will be watching to see if they discuss their plans for executive branch appointments. The successful realization of big policy goals, like universal healthcare or the Green New Deal, for which a growing number of candidates are already expressing support, will require infusing the executive branch with committed public servants. This includes the people in top roles like Cabinet Secretaries for the Treasury or Health and Human Services, but also in less obvious positions, like Administrator of the Office of Information and Regulatory Affairs or the Comptroller of the Currency. Candidates who promise major reforms but fail to articulate an executive branch strategy for achieving them should elicit skepticism.
If corporate executives are awarded top positions, as they have frequently been in the past, they could have the power to weaken or reverse legislative victories. For this reason, it is interesting to note attitudes towards and from corporate America in these campaigns’ earliest stages. For instance, this Politico piece demonstrates that Wall Street Democrats are already expressing fear of Bernie and Warren, undoubtedly in large part because of the type of people they would appoint as financial regulators. It will be interesting to observe whether other Democrats try to make themselves similarly unacceptable to bankers, or instead ingratiate themselves to the financial services industry.
Toward that end, it was great to read this Eric Levitz article in New York Magazine explaining how progressives should pressure presidential candidates to make tangible commitments on executive branch personnel and policy.
And while this newsletter is focused on investigating potential appointees, it is worth taking note of Howard Schultz’s presidential ambitions. It is a defining ethos of the Revolving Door Project that business experience alone does not qualify you for senior executive branch appointments. So it is interesting that even more than, say, Larry Fink or Antonio Weiss, Schultz joins Trump in representing the apotheosis of “no public service background yet wants a very senior job in DC.”
Want more?
Check out some of the pieces that we have published or contributed research or thoughts to this month:
Progressives push Schumer to fight for Democratic nominees
Feckless Chairman Neal allows Trump team to avoid testifying
Episode 471: Prosecuting Trump to Save Democracy
Richard Neal Doth Protest Too Much
How the Trump Team Might Make Some Hedge Funds Solvent Again
Kamala Harris Didn’t Just Flip-Flop on Medicare for All
Maxine Waters’ Financial Services Committee Pledges to Hold Banks, Trump Accountable
How the Trump presidency ranks against prior administrations in links to lobbyists — in one chart
Oversight of Congressional Oversight: Assessing the House Ways and Means Committee
Mnuchin Disputes Democrats’ Claims of Russian Sanctions Conflicts