Since I haven’t put together a detailed timeline, I run the risk of having the sequence wrong and therefore being at risk of putting foot in mouth and chewing too.
But from where I sit, the only person in the US who seems to be doing anything meaningful to try to contain the looting of the taxpayer is Andrew Cuomo. And that is a pretty sad commentary on Congress.
Yes, we’ve had Congressional hearings galore on various controversies du jour. They’ve made for the occasional worthy You Tube clip, little more. The format of these hearing is designed for them to be mere theater. Too short, too superficial, strict time constraints on the time allotted to each questioner.
And worst of all, too much tolerance for intransigence by witnesses. For instance, John invoked the Fifth Amendment in refusing to answer certain questions about Bank of America’s bonus payments. But the issue was not self incrimination, but that he deemed the information to be confidential. Thain got a lecture, but was not threatened with contempt of Congress charges. In fairness, Thain may not have been testifying pursuant to a subpoena, so that option may not have been available. However, contempt of Congress is a criminal offense.
Although the lack of contempt of Congress sabre-rattling is what has caught my attention, it symbolizes how toothless Congress has become. Lyndon Johnson would be spinning in his grave if he could see the shenanigans now. When witnesses start ducking questions, they are seldom pinned with the Senator or Representative acting as if they are in charge.
Readers can probably suggest more gername clips, but this one shows a representative who knows the terrain and more important, keeps the witness on a tight leash (for instance, cutting off irrelevant responses). Perhaps there are some inquiries on the financial crisis where the Congressman has been this crisp and in charge of the exchange (and apologize in advance if I missed them, reader pointers here encouraged), but much of what I have seen is too much deference to witnesses who don’t deserve it, or cheap point scoring by Congressmen while only landing glancing blows on the big issues.
When I was in Caracas for a couple of days of meetings, the president of the local subsidiary invoked a turn of phrase that I suspect is a local saying: “They are getting in front of a mob and trying to pretend it is a parade.” I sense a bit more of that than is desirable. For instance, the New York Times tonight depicts both Congress and Cuomo as trying to get to the bottom of whether the AIG collateral payments were warranted, particularly at the scale they were made. But if the reports are correct, it is Cuomo who is issuing subpoenas, which is the real investigative work. Am I wrong in seeing Congress as merely riding on his coattails?
And that raises another issue. One or two day hearings are grossly inadequate venues to get to the bottom of anything. The US needs a full bore major investigation, ideally on the scale of the Pecora Commission. Those took nearly a full two years of hearings, including testimony of pretty much everyone who counted in the world of high finance. These half way measures instead create the illusion that Something Has Been Done at the expense of making real inroads.
From the New York Times:
Members of Congress and the New York State attorney general demanded detailed information Thursday on how tens of billions of taxpayer dollars flowed through the American International Group during its crisis last fall and ended up in the coffers of several dozen big banks, shielding them from losses.
The new inquiries shine a spotlight on a question that is exponentially bigger, in dollars, than the $165 million in bonuses that A.I.G. paid out this month, but which has been overshadowed until now by the uproar over the bonuses.
“We would like to know if the A.I.G. counterparty payments, as made, were in the best interests of the taxpayers who provided the funding,” said Representative Elijah E. Cummings, Democrat of Maryland, in a letter to Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program. The letter was also signed by 26 other members of the House, all of them Democrats.
The representatives asked Mr. Barofsky to find out who had made the decision to shield A.I.G.’s trading partners from any losses during last fall’s crisis, and what factors had shaped the decision.
Their letter mentioned that Mr. Barofsky’s office had been created to investigate the uses of TARP money, and that A.I.G., the biggest recipient of government aid in recent months, was among the largest recipients of money from the TARP.
Yves here. Note setting the TARP inspector general onto the matter is an alternative route to Congress having its own investigation. However, Cuomo announced his subpoenas on the question of whether AIG counterparties were improperly compensated on Thursday. While a full court press is welcome, Congress has been exercised about AIG much longer than Cuomo has been on the case. Why weren’t tougher questions asked earlier?