RDP Newsletter 4
At a memorial service today, Washington will mark the passing of the United States’ longest-serving Congressman, John Dingell. He will surely be remembered for his legislative accomplishments, including his tireless efforts to expand access to affordable healthcare. We hope, however, that as lawmakers work to honor his legacy they will not overlook his considerable contributions to congressional oversight.
Dingell was a fervent believer in the importance of oversight as a check on corporate misdeeds and the executive’s authority. As chair of the Energy and Commerce Committee he repeatedly held powerful individuals to account, both in the government and outside of it--anywhere on earth, in fact. Dingell was unequivocal about Congress’s continued responsibility to do the same. As the Washington Post’s James Hohmann writes, “Dingell believed the new Democratic-led Congress should use its subpoena power and all the other tools in its toolbox to hold Trump administration officials accountable in 2019.”
Congressional Democrats should heed Dingell’s example.
Housekeeping: RDP finally has an official twitter account! Follow us @revolvingdoorDC
2020 (and Potentially 2021)
With polling making it increasingly clear that the American people are fed up with special interests’ influence in Washington, Democratic presidential candidates are seeking to prove their independence by pledging not to take corporate PAC money.
While the move makes for potent messaging, it is important to note that corporate PAC money has traditionally played a very small role in presidential campaign financing, so candidates are not actually turning their backs on a large source of funding. It is possible, for example, to disavow corporate PAC money and still staff your executive branch with corporate insiders (see none other than President Obama, who pioneered the corporate PAC disavowal trend while still nominating financial industry insiders like Antonio Weiss, Mary Jo White, and Michael Froman).
That’s why we continue to monitor candidates who disavow corporate PAC money yet reach out to Wall Street executives for support. For example, we raised alarm bells about former VP Joe Biden cultivating BlackRock CEO Larry Fink’s support if he decides to run (admittedly Biden has made no commitments regarding corporate PAC money in 2020, but Obama-Biden’s rejection of such funding in 2008 and 2012 suggests Biden would do so again).
In recent years, BlackRock has masterfully operationalized the revolving door in order to achieve its political goals. All signs indicate that Larry Fink was planning a full-scale invasion of a potential Hillary Clinton Administration had she won in 2016. He has made no secret of his ambitions to be Treasury Secretary, and in 2016 he had assembled a government-in-waiting made up of former government officials and Clinton advisors. With recent hires like former National Security Advisor Tom Donilon and Fed Vice Chairman Stanley Fischer, he appears to be cultivating his ambitions anew. As we lay out in the Daily Beast, however, BlackRock is not a selfless center-left think tank. BlackRock is a profit seeking corporation and it should not be allowed to formulate executive branch economic policy.
A meaningful commitment to stamping out the influence of special interests in Washington requires a disavowal of government by and for Wall Street.
Executive Branch Personnel
We have previously called your attention to the dangers associated with Trump’s reliance on “acting” officials. This week a Politico article on the staffing crisis at the Treasury Department shines further light on this phenomenon. According to data from the Partnership for Public Service, only 57% of the senate-confirmed positions in the Treasury department are currently filled. That number is about to fall with three individuals moving on to positions in different Executive Branch departments. Politico reports that Treasury could soon have as few as 6 top officials in the core of the department.
As former deputy Treasury secretary under President Obama, Sarah Bloom-Raskin, observes, “the departure of political appointees...means there are fewer perspectives and less expertise involved in policy making.” Trump’s Treasury department, however, does not see a problem. Mnuchin has stated that he prefers a “lean staff.”The administration’s decision not to fill top political roles has offered yet another avenue through which former corporate insiders have been able to exert their influence.
Take, for example, former BlackRock employee, Craig Phillips. Phillips was brought into the Treasury Department as a counselor to the Secretary, which means that he was not senate-confirmed and had to undergo no independent vetting process. Since no one has been confirmed (or is even nominated) to fill the role of undersecretary of domestic finance, Phillips is running the show. For instance, he has been instrumental in the Trump administration’s rollback of countless prudential financial regulatory policies and is their leading voice on housing policy.
As in so many situations, while the Trump administration’s efforts to skirt the Senate’s advice and consent role have been unprecedented in scale, they are not unique. In fact, as Politico rightly notes, the use of unconfirmed counselors to fill top roles was actually pioneered by the Obama administration -- for example, aforementioned Lazard alum Antonio Weiss was incredibly influential in the Obama Treasury Department after Obama had to withdraw his nomination to serve as Under Secretary for Domestic Finance at the Treasury Department. No matter the administration, however, this practice is a violation of our constitutional system of checks and balances that should be the subject of vigilant oversight. This oversight is all the more important given the relationships that we are already seeing blossoming between certain 2020 candidates and corporate titans like BlackRock, Phillips’ erstwhile (and future??) employer.
Meanwhile, the Revolving Door Project continues to keep a close eye on Joseph Otting, head of the OCC and acting Director at the FHFA. Following reports that bank mergers are proceeding faster under Trump, we believe that representatives should investigate whether Otting’s OCC is subjecting these deals to sufficient scrutiny.
We, in conjunction with Public Citizen, have also requested that the Inspectors General of the FHFA and the Treasury Department investigate the source and intent behind recent leaks of confidential information regarding GSE reform. See the content of our complaint here.
Congressional Oversight
House Democrats wrapped up their first round of hearings yesterday prior to the President’s Day Recess. While these convenings produced a few viral clips and notable statements, it is clear that the new majority is still getting the hang of oversight. Efforts to bring in Trump administration officials, for example, have met with mixed success. Many have flat out refused to appear, while others appeared but did their best to be useless. So far, Democrats have mostly let them get away with it.
Despite these early difficulties, however, there is reason to believe that these were just the first tentative steps of a soon-to-be more powerful oversight machine. After a slow start, Committees are finally staffing up and bringing in the big guns to deliver accountability. The House Financial Services Committee announced late last week that it had hired Bob Roach, a senate lawyer with decades of experience investigating banks, to lead its Deutsche Bank investigation. The House Judiciary committee announced that it would retain the services of Norm Eisen, the founder and Chairman of Citizens for Responsibility and Ethics in Washington, as well as well-regarded attorney Barry Berke to help guide the committee’s oversight strategy. Finally, the Committee on Education and Labor hired Jordan Barab, OSHA’s number two during the Obama administration and a dedicated expert in the field of workplace safety. These hires suggest that House Democrats are getting serious about investigations.
As hearings for HR1 wrap up, we would note that oversight offers Democrats the chance to demonstrate their continued commitment to HR1’s anti-corruption spirit. By engaging in vigilant oversight, House Democrats can keep the promises of HR1 at the forefront of voters’ minds, even as the actual legislation likely stalls with Senate Republicans.
Independent Agencies
Senate Minority Leader Chuck Schumer and his caucus have yet to create a cost for a White House that is rejecting decades of precedent and refusing to put forward nominees to fill Democratic positions at key agencies like the FDIC and the SEC. Revolving Door Project and allies have been trying to elevate this issue for a long time. Finally, the extent of the administration’s (expected) obstructionism and Schumer’s failure to counter it meaningfully has slowly begun to generate more interest.
An article released this Wednesday offered one potential explanation for the delay; Chuck Schumer’s chief counsel and former Goldman Sachs lobbyist, Mark Patterson, has been recused from “vetting appointments to federal commissions.” As we told The Intercept, sidelining the staffer who ought to be advocating for these nominations may explain why Schumer’s office has been operating conspicuously slowly on these nominations since last spring. The recusal was necessary for Patterson--but was appointing someone like Patterson who required recusal necessary?
We will continue to track this situation closely and work 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.
Want more?
Check out some of the pieces that we have published or contributed research or thoughts to this month:
‘Middle Class Joe’ Biden Courts Wall Street Oligarch, BlackRock’s Larry Fink
How the Real Estate Industry Masks Its Campaign Donations Through the Internet
Senate Democrats Are Still Figuring Out This Whole Resistance Thing
Goldman Lobbyist Turned Schumer General Counsel is Hiding Most Former Clients Names
T-Mobile pays Democratic former FCC commissioner to advise on Sprint merger
Politico Morning Money February 5, 2019
Former board member of audit regulator to join EY advisory board, raising conflict questions
T-Mobile pays Democratic former FCC commissioner to advise on Sprint merger