Unsanitized: The Case of the Missing Bailout Oversight Panel Chair

Looks like nobody wanted any oversight to begin with. This is The COVID-19 Daily Report for June 11, 2020.

by

First Response

The CARES Act was signed into law 76 days ago, on March 27. It included the Congressional Oversight Commission, the only such panel established in the bill where Donald Trump didn’t handpick the members. We’ve seen how the coalitions of inspectors general, who Trump has been firing left and right, have been working out: a new member of one of those entities flat out said “I can’t speak negatively about the president” in an interview with ProPublica.

So if we’re going to get much oversight, particularly of the bailout aspects of the CARES Act it’s probably going to come from the Congressional Oversight Commission, which specifically was charged with monitoring the Federal Reserve’s $4.5 trillion money cannon. There are supposed to be five members on the commission; one chosen by each leader in the House and Senate, and a fifth, the chair, chosen by mutual agreement between Nancy Pelosi and Mitch McConnell.

Again, it’s been 76 days. There is still no chair of the Congressional Oversight Commission.

The remaining members have done some preliminary work, putting out one paper so far, But there have been no hearings, there have been no formal requests of the Fed or the Treasury Department, there’s been none of the kind of communications to the bailout architects or the general public that we saw the last time Congress created a panel to oversee a federal bailout, when the chair of that panel was Elizabeth Warren. In Warren’s hands, a relatively toothless commission was imbued with importance, because the chair used the meager tools given it creatively enough to capture public attention and put pressure on those undertaking the bailout. But today, convening a hearing or seeking data from a federal agency would require a vote of the commission, and you can’t have a vote without a chair.

For 76 days.

Read all of our Unsanitized reports

In a sense, this is the perfect failure of Congressional leadership because each side can blame the other. (So far they’ve chosen to remain silent; queries to Pelosi and McConnell’s office have not been returned.) Democrats can blame Republicans for the lack of a chair and vice-versa. But understand this: the original two-page term sheet McConnell put out had no oversight at all. Democrats boasted about adding these oversight measures as a big victory. Chuck Schumer highlighted the accountability provisions and said he worked closely with Elizabeth Warren on them. Pelosi savaged the initial bill specifically because “there would be a $500 billion slush fund for the Secretary of the Treasury with no accountability whatsoever. Are you kidding?”

So oversight was the key victory that Democrats touted in the bill, which puts this failure more on their shoulders. Pelosi presumably could claim that McConnell is slow-walking the appointment. That was a known event; she’s sent over hundreds of bills to McConnell’s legislative graveyard in the last year and a half. There could have been measures to legislate around the delay: a 30-day timeline for appointment of the chair, for example.

Nothing like that was included. And again, we have 76 days, and no chair. Democrats knew Mitch McConnell wasn’t interested in oversight, but designed a program to give him veto power over a full oversight panel. That’s on them.

It’s not like the Federal Reserve and Treasury have sat idle. Democrats like to stress that not much money has been spent out of the money cannon but readers of the Prospect know that the Fed successfully bailed out the investor class without spending a penny, and the provisions for the various programs have changed multiple times to benefit sectors of the economy without any commensurate benefit for workers. Just this week, the Fed loosened rules on the Main Street Lending program. A previous tweak to those rules was obviously done to bail out the oil and gas industry. The Fed authorized buying junk bonds, an unprecedented entry into risky markets that has just rescued distressed debt holders. A bailout oversight chair might have something to say on these moves, if they were in place.

Pelosi and McConnell began “talks” on the chair on April 10 according to Politico. That was over two months ago. The silence is finally starting to be broken here. Rep. Katie Porter (D-CA) and Sen. Kamala Harris (D-CA) wrote Pelosi and McConnell yesterday requesting an update to the selection process. “Until the commission has a chairperson, taxpayers are funding a bailout without the mandated accountability,” they wrote. There’s been no public response.

Porter continued to amp up the pressure in a Congressional Progressive Caucus hearing yesterday, calling the delay “unacceptable.” After 76 days, you have to conclude it’s completely acceptable to Nancy Pelosi and the House leadership. They designed a process that relied on cooperation from Mitch McConnell after an entire term in Congress marked by his lack of cooperation. The oversight provisions were a talking point, a useless chimera attached to a giveaway to the capital class and the largest corporations in America. It’s hard not to conclude that there was no desire to scrutinize the bailout, that it was easier and preferred for the Treasury and the Fed to accomplish their handouts in the dark.

At the hearing, Porter trotted out a line she’s used before: “Oversight should be breaking news, not The History Channel.” She meant that Congress needed to monitor what’s happening in real time rather than after the fact. But in the Democratic leadership’s hands, oversight isn’t breaking news or The History Channel. It’s a fairy tale.

Odds and Sods

I enjoyed the discussion at yesterday’s virtual event with the American Economic Liberties Project on Google and Facebook and how to diminish their monopoly power. You can watch a recording of it here.

I was also interviewed for a multi-part podcast series about Steven Mnuchin for the website Defiance. The first episode can be found here.

Here’s an update on Zoom, who I wrote about in Unsanitized over the weekend: the company closed the account of U.S.-based Chinese activists after they held an event on the anniversary of the Tiananmen Square Massacre. They said it was due to “local law” in China. Maybe I shouldn’t be concerned so much about Big Tech crushing them.

Over at the Prospect, here’s a great piece from Mike Elk showing how Major League Baseball owners have used the opportunity of the coronavirus crisis to diminish the wages and/or power of virtually everyone in their employ: players, broadcastes, operations personnel, & the minor leagues.

Connor Goodwin also had a nice piece for us on how meatpacking plants were reluctant to acknowledge the spread in their facilities, and now are using safety measures that could merely create “a bigger petri dish.”

You can read all of our coronavirus coverage at prospect.org/coronavirus. And email me tips, comments, and perspectives.

Today I Learned

Unlike many news organizations, the Prospect has remained staunchly committed to keeping our journalism free and accessible to all. We believe that independent journalism is crucial for a functioning democracy—but quality reporting comes at a cost.

This year, we’re aiming to raise $75,000 to continue delivering the hard-hitting investigative journalism you’ve come to expect from us. Your support helps us maintain our independence and dig deeper into the stories that matter most.

If you value our reporting, please consider making a contribution today. Any amount helps secure our future and ensure we can continue holding power to account.

Will you support independent journalism with a donation to the Prospect?