Late last Friday, the House Intelligence Committee’s report on Benghazi, the seventh such investigation, cleared the White House of wrongdoing and shot down virtually every conspiracy theory associated with the attack on the U.S. consulate. Despite this, an eighth investigation from a House select committee remains active.
The Benghazi fiasco would understandably lead you to think that Congress’ oversight power has devolved into just another tool for partisan grandstanding. That would be a shame, because the ability to call attention to issues inside and outside of government, and extract real accountability as a result, is one of the most important duties of Congress, especially given how the Capitol has become a legislation-free zone.
Related: Sen. Graham Calls GOP Benghazi Report ‘Full of Crap’
In fact, the Democrats’ loss of the Senate, and one key retirement, will hollow out Congress’ investigatory appetite, which is good news for corporations who routinely break the law, and the regulators who let them. Even the Obama administration will benefit from having one of Congress’ most important powers de-fanged from within.
With a Republican-led Senate Banking Committee, for example, you would probably not see the grilling that New York Federal Reserve President William Dudley took last week over the regional bank’s woeful supervision record, disturbing revelations of sharing confidential information with banks, and recent tapes showing supervisors backing away from questioning financial titan Goldman Sachs. Not one Republican showed up for the subcommittee hearing.
Democrats on the Senate Intelligence Committee have been fighting to release their report on America’s shameful history of torture after 9/11. Republican Richard Burr of North Carolina, who will take over the chairmanship in January, has said that he wouldn’t even hold public Intelligence Committee hearings, let alone release a sensitive report. It’s pretty clear that the administration has decided to slow-walk signing off on the release until Republicans take over and subsequently stick it in a drawer.
These represent real and not just rhetorical steps backward. The torture report’s release would force a reckoning with acts committed in our name, and make it that much more difficult to ever revisit those tactics. The Federal Reserve tried to pre-empt the Banking subcommittee hearing by announcing a review of its supervision practices. Indeed, any improvement in captured financial regulators’ conduct must be attributed in large measure to pressure from the likes of Sens. Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) looking over their shoulders. In other words, lawmakers have the power to alter policy, even without legislation.
Related: Warren Clearly Favored Over Hillary by Liberal Dems
That was certainly true of retiring Sen. Carl Levin’s (D-MI) tenure as head of the Senate Permanent Subcommittee on Investigations from 2007 to today. Over the past several years, the subcommittee has practically elevated itself into an outside white-collar law enforcement office, detailing corporate crimes and illicit practices with far more precision than those empowered to do the job. Armed with subpoena power and an experienced, talented staff under the direction of chief counsel Elise Bean, the subcommittee stood out as one of the few bright spots in this era of Congress. Reports meticulously documented corporate tax evasion, Wall Street malfeasance, and federal contractor corruption.
Most important, the subcommittee’s work did not merely give politicians an opportunity to scream at people in suits — often the sole output of many Congressional investigations. Levin’s team actually influenced policy.
For example, the Levin report on the credit card industry’s abusive practices formed the basis of consumer protection legislation called the CARD Act. And the committee’s 2011 case studies of the financial crisis ended up more detailed and damning than the official report on the collapse. This unquestionably influenced the rule-writing of Dodd-Frank.
Related: Democrats Have Forgotten What Made Them Great
Levin’s report on JPMorgan Chase’s London Whale trade came at a sensitive moment for the Dodd-Frank provision he co-authored prohibiting banks from making risky proprietary trades for their own profit, known as the Volcker rule. The report provided evidence that the rule needed to be strengthened to prevent dangerous derivative gambling masquerading as hedges of risk. Eventually, the Volcker rule closed the loophole and banned London Whale-type trades, a rare instance of bank regulations getting tougher through the implementation process.
Often, Levin’s investigations ended up well ahead of law enforcement, effectively handing over cases to the Justice Department on a silver platter. The subcommittee exposed HSBC’s decade of shamelessly facilitating money laundering for terrorist groups and Mexican drug cartels. Sadly, the Justice Department ended up letting HSBC go with a minor fine and a deferred prosecution agreement.
Levin’s subcommittee report on Credit Suisse’s efforts to help wealthy Americans avoid taxes did lead to criminal charges. But without Levin’s team, law enforcement may never have made the attempt. In the previously mentioned Banking subcommittee hearing, New York Fed President William Dudley highlighted the Credit Suisse case as an example of how banks are no longer “too big to jail.” But Sen. Jeff Merkley (D-OR) pointed out that Levin uncovered the revelations first. “Shouldn’t a regulator discover these facts,” Merkley asked at the hearing. “Why did it take a U.S. Senate committee? Doesn’t that indicate that you’re asleep at the switch?”
Levin’s swan song, a two-day hearing and report on market manipulation in Wall Street’s purchase of physical commodities, displayed why the subcommittee was so critical. Building on earlier media reports, the subcommittee detailed a variety of pitfalls from bank intervention in commodities, particularly Goldman Sachs’ ownership of aluminum warehouses in Detroit. By controlling warehouse operations and creating artificial scarcity, Goldman influenced futures markets and raised prices for manufacturers. The report was clear enough that even skeptics recognized the potential consequences.
Related: Why Wall Street Breeds So Many Bad Apples
At the hearings, representatives from JPMorgan Chase and Morgan Stanley stressed that they planned to exit the commodities business, and Goldman Sachs announced it would wind down its uranium-trading unit. Moreover, the New York Fed’s Dudley said in his Congressional hearing that “we do have to be concerned about commodities activities that expose banks to very large losses.” So the final Subcommittee on Permanent Investigations hearing yielded results, just like the previous ones.
Carl Levin’s career includes plenty of legislative accomplishments. But these investigative accomplishments almost overshadow them. Politicians should not be judged merely by the laws they pass, but the difference they make. Late in his career, Levin showed that aggressive investigation and oversight can drive real policy improvements. Not only will he be sorely missed, but so will that spirit of following the evidence, questioning power and exposing the truth.
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