Index

12. Hunter v. FERC, 711 F.3d 155, 157 (D.C. Cir. 2013). 13. “Federal Court Orders Brian Hunter of Calgary, Alberta to Pay a $750,000

Civil Fine in CFTC Action Alleging Attempted Manipulation of Natural Gas

Futures Prices during the Expiry on Two Trading Days,” CFTC Press Release

No. pr7000-14 (9/15/2014), http://www.cftc.gov/PressRoom/PressReleases/ pr7000-14. 14. See 2008 farm bill, Public Law No. 110-234, Title XIII, Commodity Futures,

Section 13201 et seq. 15. See, for example, “Excessive Speculation in the Wheat Market,” S. Hrg. 111155 (7/21/2009), https://www.gpo.gov/fdsys/pkg/CHRG-111shrg53114/ pdf/CHRG-111shrg53114.pdf; Levin letter filed with the SEC (3/19/2012) in response to a concept release, “Use of Derivatives by Investment Companies under the Investment Company Act of 1940,” SEC Release No. IC 29776,

RIN: 3235-AL22 (8/31/2011), https://www.sec.gov/comments/s7-33-11/ s73311-54.pdf; “Compliance with Tax Limits on Mutual Fund Commodity

Speculation,” S. Hrg. 112-343 (1/26/2012), https://www.gpo.gov/fdsys/pkg/

CHRG-112shrg73671/pdf/CHRG-112shrg73671.pdf; “Excessive

Speculation and Compliance with the Dodd-Frank Act,” S. Hrg. 112-313 (11/3/2011), https://www.gpo.gov/fdsys/pkg/CHRG-112shrg72487/pdf/

CHRG-112shrg72487.pdf. 16. Public Law 111-203 (7/21/2010). 17. The information in this section is based on “Wall Street Bank Involvement with Physical Commodities,” S. Hrg. 113-501 (11/20–21/2014), Volumes 1–2 (hereinafter “2014 Senate Commodities Hearing”), https://www.gpo. gov/fdsys/pkg/CHRG-113shrg91522/pdf/CHRG-113shrg91522.pdf. 18. “The Merchants of Wall Street: Banking, Commerce, and Commodities,”

Minnesota Law Review, Professor Saule T. Omarova (11/24/2012), Volume 98, Issue 265 (2013), https://papers.ssrn.com/sol3/papers.cfm?abstract_ id=2180647. 19. 2014 Senate Commodities Hearing, “Physical Commodity Activities at

SIFIs,” Prepared by the Federal Reserve Bank of New York Commodities

Team (10/3/2012), FRB-PSI-200477-510 (sealed exhibit). 20. 2014 Senate Commodities Hearing, Hearing Exhibit 1h, at 823; discussed at 103–105. 21. S. 3013. 22. “Industrial and Commercial Metals,” Rule Promulgated by the OCC, 81 Fed.

Reg. 251, at 96353 (12/30/2016). 23. “Regulations Q and Y; Risk-Based Capital and Other Regulatory Requirements for Activities of Financial Holding Companies Related to Physical

Commodities and Risk-Based Capital Requirements for Merchant Banking

Investments,” Rule Proposed by the Federal Reserve, 81 Fed. Reg. 190, at 67220 (9/30/2016).

14

Pursuing Oversight

“Not everything that is faced can be changed; but nothing can be changed until it is faced.” James Baldwin, The Cross of Redemption: Uncollected Writings (Vintage International 2011) ©

In January 2015, Senator Levin hung up his public service hat. After 36 years in the Senate—Michigan’s longest serving Senator—he moved back home to Detroit. The Levin PSI crew disbursed. Some of us went to other Senate jobs, some to the executive branch, some to law firms, and some of us retired.

The Levin legacy at PSI lives on. New PSI leadership has taken up the subcommittee’s traditions of bipartisan, fact-based, in-depth investigations. In 2015, for example, PSI chair Rob Portman and then ranking minority member Claire McCaskill launched a bipartisan investigation into sex trafficking on the Internet, targeting a U.S. company called Backpage.com. A protracted battle to obtain documents from Backpage.com led to a 2016 court decision upholding PSI’s right to subpoena the information.1 Backpage.com eventually produced the documents, and PSI wrote up its investigative results. Backpage owners and officers were later indicted for profiting from prostitution, money laundering, and other crimes.2 In another example, in 2018, PSI chair Portman and then ranking minority member Tom Carper joined forces on an investigation to stop illegal opioids from being shipped into the United States.3

As important as inspiring a new generation of bipartisan PSI investigations, the Levin legacy furnishes proof of a series of propositions that might otherwise be discounted as improbable or even impossible. First, Senator Levin’s

15 years on PSI offer incontrovertible evidence that fact-based, bipartisan, in-depth oversight is not only possible in Congress, it can happen even when partisan gales are blowing. Effective bipartisan oversight is not a matter of piein-the-sky, wishful thinking, but a feasible undertaking by determined members of Congress. Second, the Levin years demonstrate that congressional investigators, when given resources and member backing, have the investigative tools needed to unravel complex issues and hidden misconduct. Finally, the Levin years prove that effective congressional oversight can lead to useful, even profound policy reforms. Congressional fact-finding can effect positive change.

Those are important messages for an American public wondering if Congress has the wherewithal to meet its Constitutional obligations: to act as a check on executive branch excesses and to champion the public interest against private sector wrongdoing. Conventional wisdom paints a dismal picture of Congress—riven by partisan warfare, seeped in unpleasantness, politically paralyzed. It says partisan politics have choked the life out of Congress, and we should all give up and go home.

But the Levin oversight record offers a powerful counterpoint to that gloomy assessment. It offers hope to those willing to take up the call of good government despite the dire analysis of Congress. Contrary to the conventional view of Washington, my days working for the Senate were filled with purpose, bipartisan teamwork, and the exhilaration of meeting the challenges inherent in that most favored of American political pursuits: to form a more perfect Union.

The truth is that oversight offers a satisfying avenue of work even when Congress as a whole is experiencing division and dysfunction. When legislation is elusive, oversight offers immediate opportunities to attack problems in a useful way. When partisanship is roaring, oversight staffs can disappear behind closed doors, cross party lines, and join forces on an investigative project. All they need is direction from their bosses. More, nothing about a congressional investigation is wasted effort when the objectives are to develop a bipartisan understanding of a problem, write it up so others can comprehend it, hold a public hearing to air concerns, and initiate a sustained effort to remedy the disorder.

What surprised me the most about congressional oversight was the power of simply bearing witness to the facts. In every investigation, one of our driving goals was to educate policymakers and the public about a complex problem. We started with what happened, then dove deeper to examine why and how, seeking the larger context needed to understand the significance and consequences of the events and issues. Conveying that complex web of

information in a fair and intelligible way was the key challenge behind every inquiry. And the pleasant surprise was how often conveying the facts with accuracy and sensitivity led to meaningful reforms.

Of course, it helped having a leader like Senator Levin and the power to issue Senate subpoenas, not to mention the bipartisan traditions that shielded us from so much of the rancor that reined outside the PSI realm.

Today, as I look back over the Levin years, I’ve concluded that our most important accomplishment was taking up the PSI mantle of bipartisanship and doggedly working with our Republican partners to complete every investigation. Together, from money laundering to offshore tax abuse to banks behaving badly to commodity speculation, we bridged our political divides, exposed wrongdoing, and sparked change. While colleagues in other offices bemoaned the deterioration of Congress and spent years circling the same mulberry bushes to no effect, PSI built a record of bipartisan trust and effective oversight—proving it could be done.

At the same time, our investigations weren’t quick or easy. Bipartisanship can’t be rushed. The necessary precursor was a joint decision by the PSI chair and ranking member to work together. Both sides then needed to join forces to seek the documents, interviews, and other evidence they viewed as relevant to the inquiry. After gathering the information, both sides needed to lower their guards, recognize their ideological biases, and marinate in the facts. Consensus on what happened had to be built slowly, using specific evidence and reasoned analysis. Reports took months to produce. Compromise was mandatory.

The consequence was that most of PSI’s investigations required a year or longer. That meant PSI had only a few hearings each year, instead of the weekly or monthly hearings that some in Congress viewed as an objective marker of effectiveness. We saw less as more—fewer investigations, in greater depth with more bipartisan interactions, led to more accurate fact-finding, greater consensus, better ideas for reforms, and stronger commitments to change. Our go-slow, go-deep approach stood in marked contrast to the goquick, go-wide approach taken by many other congressional committees, but we saw ourselves as equally or even more productive. We measured our success by the bipartisan nature of our hearings, the degree of consensus in our reports, and our progress in achieving reforms.

Congressional investigations aren’t rocket science. They are a matter of common-sense planning, persistence, patience, and commitment to the facts. They require the realization that the best fact-finding is done by parties who bring different perspectives to the task, ask different questions, and notice different details and connections. It is the interaction of disparate views that

leads an investigative team to a broader, deeper, and more accurate understanding of what happened and why. And when differing sides set aside their differences to work together in good faith to find the facts, it can be a deeply satisfying experience.

More than that, constructive congressional oversight lies at the heart of good government. It is all about identifying and solving problems to protect and strengthen our communities. When the target is problematic government programs or agencies, congressional oversight contributes to the system of checks and balances envisioned by our Constitution as vital to a wellfunctioning government. When the target is the private sector, congressional oversight can expose and address a wide range of abusive conduct, from financial wrongdoing to workplace dangers, environmental misdeeds, tax dodging, price gouging, and many of the other ills plaguing modern society. When done well, congressional oversight can not only identify and repair problems but also help restore public confidence in Congress.

Of course, many investigations fall short of what congressional oversight ought to be. Too many inquiries are marred by partisan distrust or incivility, disregard for facts, or unethical or ineffective investigative tactics. Some committees select investigative topics guaranteed to produce partisan dogfights, or design inquiries that attack individuals rather than policy problems. Others deliberately exclude or limit the participation of the minority party in the investigative work. Still others use hearings or reports to railroad an ideological viewpoint through committee instead of generating a bipartisan dialogue. Those failed efforts should be condemned, and pressure put on the participants to adopt the bipartisan, cooperative norms that mark successful congressional investigations.

History shows, of course, that those investigative norms don’t always prevail. Some members of Congress simply don’t value bipartisanship and view working with the opposing party—with all the negotiations and compromises required— as a betrayal of their values. Others value bipartisanship, but don’t engage in it, because of pressure from peers or congressional leaders. Some committee members have gone so far as to forbid their staffs to sign letters with the other party, conduct joint interviews, or share an investigative report before it goes public. I’ve seen that type of hyper-partisanship on both sides of the aisle.

When faced with that kind of partisan hostility, bipartisan congressional investigations can become virtually impossible. But that doesn’t mean the snubbed party ought to give up investigating or start conducting one-sided inquiries likely to make party relationships even worse. A better approach is to undertake fact-based, nonpartisan inquiries that raise issues of such importance to the public that the other party has to take notice.

If the party making the effort conducts a solid, fair-minded investigation with interesting results, it may even begin to break down the political divides. One example of how that can work involves Congressman Henry Waxman from California. He became known for conducting influential investigations, even when in the minority party and even when facing partisan hostility.4 For example, a Waxman-led investigation into the tobacco industry, conducted despite Republican opposition, uncovered such powerful facts that it helped alter the public perception of tobacco products, while helping spur changes in federal tobacco policy. Another Waxman investigation began as a solo effort, but garnered Republic support after discovering that, in response to Hurricane Katrina, FEMA provided hurricane victims with trailers contaminated by toxic chemicals. The facts were too powerful to ignore.

Single-party investigations can be effective, especially when an inquiry is fact-based, intellectually honest, and of interest to the public. At the same time, single-party investigations are inherently harder to conduct and less trusted by the public and policymakers. They have to jump hurdle after hurdle just to win respect. That’s why bipartisan inquiries remain the gold standard. They make it easier for Congress to get information and harder for opponents to stop an investigation. They are inherently more trustworthy. They produce better reforms. They are worth the hard work they require.

It is perhaps also worth noting that bipartisan, fact-based congressional investigations are an American innovation almost unique in the world. Few other countries enable their elected legislators to conduct the type of intensive investigations for which the U.S. Congress is world famous—from Watergate to the 9/11 Commission to the financial crisis. Some non-U.S. legislatures have begun to adopt the U.S. model. Legislatures in the United Kingdom, European Union, and Australia have increasingly held oversight hearings in the U.S. mold, exposing wrongdoing, identifying problems, and advocating policy reforms. Those oversight efforts should be acknowledged for promoting hallmark American principles, including the importance of checks and balances, effective self-government, and sustainable democracy.

Given U.S. world leadership and the need to solve our own political problems, it is more important than ever to strengthen congressional oversight. We need to build up the norms that favor bipartisan, fact-based investigations and reject efforts to portray partisan squabbles or sloppy research as equivalent to a congressional inquiry. We need to provide training for members of Congress and their staffs on how to conduct effective oversight, including how to find the facts, write up the results, conduct public hearings, and pursue policy reforms. We need to support the legislators who take the time needed to conduct bipartisan inquiries and the congressional leaders who encourage

bipartisan efforts. In addition, we need to encourage research into the factors that lead to effective investigations.

The Levin era on PSI provides a template for productive congressional oversight investigations. It demonstrates that bipartisan, effective congressional oversight is not only possible, but a tool within the reach of every member of Congress. It champions robust, bipartisan congressional investigations as a precious American heritage that should be respected, nurtured, and celebrated.

Notes

1. Senate Permanent Subcommittee on Investigations v. Ferrer, 199 F.Supp.3d 125 (D.D.C. 2016), appeal vacated as moot, 856 F.3d 1080 (D.C. Cir. 2017). 2. See, for example, “Justice Department Leads Effort to Seize Backpage.Com, the

Internet’s Leading Forum for Prostitution Ads, and Obtains 93-Count Federal

Indictment,” DOJ Press Release (4/9/2018), https://www.justice.gov/opa/pr/ justice-department-leads-effort-seize-backpagecom-internet-s-leading-forumprostitution-ads; “Attorney General Kamala D. Harris Announces Criminal

Charges Against Senior Corporate Officers of Backpage.com for Profiting from

Prostitution and Arrest of Carl Ferrer, CEO,” State of California Attorney

General Press Release (10/6/2016), https://oag.ca.gov/news/press-releases/ attorney-general-kamala-d-harris-announces-criminal-charges-against-senior. 3. “Combatting The Opioid Crisis: Exploiting Vulnerabilities In International

Mail,” Bipartisan Staff Report, U.S. Senate Permanent Subcommittee on

Investigations (1/24/2018), https://www.hsgac.senate.gov/imo/media/doc/

Combatting%20the%20Opioid%20Crisis%20-%20Exploiting%20

Vulnerabilities%20in%20International%20Mail1.pdf. 4. See, for example, The Waxman Report: How Congress Really Works, Henry

Waxman (Twelve 2009).

Index1

A

Abacha, Sani, 53, 63, 64 Abubakar, Atiku, 315, 316 Advertising malware, 227–229 Al Rajhi Bank, 324, 325 Amaranth, 414–422 Amerada Hess, 301 American University, 315, 316 Angola, 312–314, 316, 318 Antigua, 69, 74 Apple, 24, 333, 348–355, 357, 358, 362–364 Argentina, 76, 77 Arthur Andersen, 90, 92–97, 116 Australia, 162, 163, 168, 181, 261, 360, 443 Austria, 183

B

Bahamas, 58, 74, 76, 78, 167, 297 BAI, see Banco Africano de Investimentos Banco Africano de Investimentos (BAI), 313, 314 Bank of America, 74–76, 142, 147, 237, 239, 243, 248–250, 256, 303, 313, 314, 318 Belgium, 184, 312, 346 Bermuda, 167, 336, 343 Bhutto, Benazir, 53, 62, 63 Blankfein, Lloyd, 264, 265, 277–281, 354 Bongo, Omar, 52, 58–62, 309–312, 317 BP, see British Petroleum British Petroleum (BP), 404 British Trade and Commerce Bank (BTCB), 71, 72 British Virgin Islands, 166, 169, 336 Bryan Cave, 149 BTCB, see British Trade and Commerce Bank Bush, George, 16, 82, 119, 188, 252, 295, 411

1 Note: Page numbers followed by ‘n’ refer to notes.

C

Canada, 141, 163, 350, 404, 429 Capital One, 237, 250 Caterpillar, 333, 355–359, 361 Cayman, 56, 74–76, 139–141, 145, 323, 324, 336, 346 Chase Bank, 237, 243 Chase Manhattan, 74 ChevronTexaco, 404 Chile, 294, 297, 302–304, 316 Citibank, 24, 52, 53, 57, 59, 60, 63, 64, 237, 303, 309, 313, 314 Citicorp, 48, 54, 56, 243 Citigroup, 49–65, 73, 74, 76, 77, 80, 102, 104, 107–110, 113, 114, 244 Coburn, Tom, 1, 40, 197, 217–222, 224–227, 260, 262, 264, 270, 271, 273–275, 279, 281, 285, 286, 307, 316, 321, 326, 327, 334, 348, 371, 373, 424 Cohen, Bill, 7, 8 Coleman, Norm, 1, 40, 123, 127, 128, 132, 135–138, 146, 147, 149, 152, 155, 156, 162–164, 171, 174, 176, 178, 197, 208–214, 216, 217, 236, 238, 239, 245, 250, 251, 292, 295, 300, 302, 304, 319, 412–414, 420 Collins, Susan, 1, 8, 35, 38, 40, 48, 50, 52, 56, 64, 65, 71, 75, 77, 85, 87, 89, 92, 93, 98, 106, 111, 114, 119, 123, 124, 135, 197, 205–208, 227, 273, 280, 295, 404, 405, 410, 412, 413, 436–437n5 Commerce Bank, 71–72, 310, 311 Conn, Eric, 218–223, 225 Cook, Tim, 351–354 Corbet, Kathleen, 274 Cravath, Swain, 149 Credit Suisse, 142, 163, 186–190, 205

D

Deloitte, 343 Dimon, Jamie, 372, 376–377, 381, 385, 387–392, 394–396 Disability programs, 7, 217–227, 371 Discover, 237, 247, 248, 250 Dodd, Chris, 245, 252–254, 260, 281, 282, 286, 372, 396, 422, 423, 435 Dominica, 71, 72 Dougan, Brady, 189

E

Equatorial Guinea, 292–294, 296, 299, 301, 305, 307, 309, 316 Ernst & Young, 125, 126, 128, 129, 133, 135, 136, 345–347, 349 Euram, 150–152 Exxon, 403 ExxonMobil, 301, 404

F

Fannie Mae, 270 FATCA, see Foreign Account Tax Compliance Act Federal Bank, 76, 77 First Union, 74 Fitzgerald, Pete, 108, 110, 111, 300 Foreign Account Tax Compliance Act (FATCA), 184–186, 191 France, 53, 58–62, 162, 163, 183, 210, 211, 311–313, 375, 395 Frank, Barney, 4, 180, 246, 252–254, 260, 281, 282, 286, 372, 396, 422, 423, 435 Freddie Mac, 270

G

Gabon, 53, 58–61, 309, 310, 312, 316, 317 Germany, 162–164, 183, 316

Glenn, John, 28, 35, 38, 48 Goldman Sachs, 24, 262, 264–267, 269, 275–281, 283, 286, 352, 354, 424, 426–428, 431, 432, 435 Google, 229, 230, 360 Gramm, Phil, 65, 66, 79, 80, 82, 98, 414 Grassley, Chuck, 78, 80, 320

H

Hanover Bank, 69–71 Hewlett-Packard, 333, 342, 345–346, 361 Hokuriku Bank, 325 Hong Kong, 17, 166, 167, 321 Hong Kong Shanghai Banking Corporation (HSBC), 149, 151, 152, 154, 292, 310, 313, 314, 318, 320–327 HSBC, see Hong Kong Shanghai Banking Corporation

I

Ireland, 71, 336, 343, 344, 349–354, 362, 363 Isle of Man, 139–142, 144, 145, 150 Israel, 168, 170, 190 Italy, 162, 163, 176, 316

J

Jaime, Aguinaldo, 313, 314 Japan, 325 Jersey, 58, 70, 71, 102 JPMorgan Chase, 75, 76, 102–104, 107–110, 113, 114, 310, 311, 371–376, 378, 379, 381–384, 386–390, 392–397, 424, 426, 429, 430, 432, 435

K

Kaufman, Ted, 273–275 Kennedy, John F., 337 Kennedy, Robert, 31–34 Kennedy, Ted, 246 Killinger, Kerry, 273 KPMG, 124–137, 149, 151, 155, 156, 162

L

Lehman Brothers, 142 LGT, 162–171, 174–178, 180, 183, 187 Liechtenstein, 162–168, 170–172, 174, 176–178, 180, 181, 183 Luxembourg, 58, 184, 297, 336, 362, 363

M

M.A. Bank, 76, 77 Maloney, Carolyn, 246, 252–255 Manhattans, x, 1, 203–204, 231n1, 254 Marathon, 301, 404 McCain, John, 1, 17, 40, 187, 189, 197, 227–230, 348, 352, 353, 355, 357–359, 373, 378, 379, 381, 384, 387–391, 393, 431, 434 McCarthy, Joseph, 4, 23, 30–33, 90, 203 McCaskill, Claire, 245, 250, 251, 254, 439 McDaniel, Raymond, 274 Merkley, Jeff, 396 Merrill Lynch, 102, 104, 105, 107, 110, 111 Mexico, 48, 53, 56–58, 64, 66, 292, 323, 350 Microsoft, 333, 342–348, 353, 355, 357, 360, 361, 416

Mobil, 403 Moody’s, 108, 262, 266, 274, 275, 286 Morgan Stanley, 424, 426, 428, 429, 432, 435

N

Netherlands, 362, 364 Nigeria, 53, 63, 72, 73, 104, 110, 111, 315, 316 North Korea, 212–214, 324

O

Obama, Barack, 137, 156, 188, 252, 253, 255, 319, 363, 397, 423 Oberhelman, Doug, 355 Obiang, Teodoro, 292, 293, 296, 297, 300, 301, 305, 307–310, 317, 318 OECD, see Organization for Economic Cooperation and Development Oil-For-Food Program, 208, 211 Organization for Economic Cooperation and Development (OECD), 183, 184, 186, 191, 364 OTS, 262, 264, 266, 269, 273–274, 281, 286 Owens, Meadows, 144 Oxley, Michael, 86, 118

P

Pakistan, 53, 62, 63 Panama, 316 Paul, Rand, 191, 352, 353 Pinochet, Augusto, 294, 297–300, 302–305 POINT, 138, 149–156 PricewaterhouseCoopers (PwC), 129, 133, 135, 136, 356–359, 361 Puerto Rico, 343, 344

Q

Queensgate Bank, 140, 145, 146 Quellos, 149–152, 154, 155

R

Reed, John, 54, 55, 62–65 Riggs Bank, 291–305, 307, 326, 425 Russia, 66, 172, 210, 325

S

Salinas, Raul, 48, 49, 51, 52, 54, 56–58, 64 Sarbanes, Paul, 78–82, 86, 118, 291 Saudi Arabia, 293–295, 312, 324, 325 Security Capital, 140, 145, 146 Shelby, Richard, 247, 253, 254 Shell Oil, 404 Singapore, 343, 344 Slapshot, 112–116 Spain, 294, 297, 395 Standard and Poor’s (S&P), 108, 262, 266, 274, 275, 286 Strategic Petroleum Reserve, 411–413 Sweepstakes, 35, 205–208 Switzerland, 54, 56–58, 61, 62, 163, 170–172, 178, 179, 181–184, 187, 188, 191, 356–359, 398 Syria, 324

T

Tax Levy Program, 214–216 Thompson, Fred, 15, 27, 89, 107, 123 Truman, Harry, 23, 28–30, 33, 203

U

UBS, see Union Bank of Switzerland Union Bank of Switzerland (UBS), 163, 164, 171–174, 176, 178, 179, 181–184, 187, 188, 190

United Kingdom, 56–58, 63, 69, 162, 163, 210, 211, 298, 313, 319–321, 327, 360, 375, 393–395, 443

V

Vincent & Elkins, 99

W

Washington Mutual, 262, 265, 266, 269, 270, 272–274, 277, 286 Wyly, Charles, 138, 139, 142, 147 Wyly, Sam, 139–149, 152, 154–156

Y

Yahoo, 228–230

Z

Zardari, Asif Ali, 53, 62–64