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Darrell Issa Steps in It, Inadvertantly Reveals Improper Use of Congressional Funds to Serve AEI

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United States House of Representatives Seal

United States House of Representatives Seal by DonkeyHotey

Republicans are big fans of projection. When they’re neck-deep in conflicts of interest, they like to hide it by accusing Democrats of such conflicts. When they leak stuff, they accuse Democrats. When they mismanage stuff, they accuse Democrats.

And yesterday, Darrell Issa got caught doing just that.

A year ago, on July 27, 2010, Issa accused the Financial Crisis Inquiry Commission of partisanship, largely because Democrats passed the Dodd-Frank financial reform bill before the FCIC reported its conclusions. Of particular note, Issa claimed Democrats on the FCIC were letting partisan ties direct their work.

Yet, as a report released by Elijah Cummings yesterday makes clear, the Republicans were the ones being directed by outside influences–both by their own partisan considerations, as well as two possible lobbyists. The report found that:

  • Immediately after Republicans took the House last November, some Republicans on the Committee started tailoring their contributions to make sure they would serve the goal of setting up a repeal of Dodd-Frank. Of particular note, Commissioner Peter Wallison started sending emails warning, “It’s very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank.”
  • Wallison (who is a fellow of AEI) also tailored his contributions–including his separate statement–largely to parrot the discredited theories of AEI fellow (and former Fannie Mae official) Edward Pinto. Pinto argued that the entire crash was caused by HUD’s affordable housing policy. Wallison’s mindless insistence on advancing Pinto’s theory got so bad that the special assistant to Republican FCIC Vice Chairman, Bill Thomas, suggested, “I can’t tell re: who is the leader and who is the follower. If Peter is really a parrot for Pinto, he’s putting a lot of faith in the guy.” Not only did Wallison serve Parrot’s propaganda, though: he also shared confidential documents made available to the FCIC, violating its ethics standards.
  • Thomas himself consulted with–and shared confidential information with–someone outside the Commission: the CEO of a political consulting firm, Alex Brill (he’s also a fellow at AEI). At one level, Brill seems to have been offering Thomas political advice. But it also appears Brill may have been trying to cushion the damage done by the FCIC to Citibank’s reputation.

Now, Cummings released this report partly because Issa refused to call Thomas and Wallison as witnesses in his inquiry into problems with the FCIC. And the release of the report seems to have convinced Issa to indefinitely postpone the investigation into the FCIC.

Good–this is precisely the kind of thing I was thinking of when I suggested we needed someone like Cummings to babysit Issa.

But it also seems like a good time to turn this into a much bigger attack.

As Cummings’ FCIC report makes clear, what Wallison and Thomas appear to have done is unethically misuse funds appropriated by Congress. While it’s not entirely clear who the ultimate beneficiaries of their ethical lapses are–aside from, vaguely, the banksters, both men were collaborating improperly with AEI fellows. More clearly, both men appear to have violated their ethical obligations–a set of rules–to try to make sure banksters didn’t have to follow any rules passed under Dodd-Frank.

Issa is teeing off today, again, against Elizabeth Warren. I do hope Cummings finds ample opportunity to remind Issa that it’s clear he’s doing the bidding not of transparency or oversight or the American people, but rather a number of corrupt banksters trying to avoid playing by the rules.

Darrell Issa Complains that Janet Napolitano Took a Whole Year to Change Michael Chertoff’s Inefficient FOIA Process

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Darrell Issa has no credibility when it comes to matters of transparency. We’ve seen Issa’s rank hypocrisy in the past. He dismissed concerns about Karl Rove doing business on RNC emails as a political stunt. And he suggested that apparently deliberate attempts to dismantle email archives at the White House was all about technology.

So I’m not surprised his loud complaints that Department of Homeland Security politicized the FOIA process turned out to be oversold.

As it happens, both Issa’s and Elijah Cummings’ reports on this seem to miss the forest for the trees.

At issue is the process by which top DHS officials review–and are alerted to–sensitive FOIA releases. The policy in place up until July 2010 was put in place in 2006. That is, under Michael Chertoff. As I understand it, when certain high level issues were due to be released, the Secretary’s office (whether it be Chertoff or Janet Napolitano) would be emailed the materials for review. In some cases, that review identified additional information that, for legal FOIA reasons, needed to be redacted. In other case, this review process simply alerted the Secretary to something he or she would be asked about in the press.

In other words, Darrell Issa is complaining about a process–and a burdensome email review process–inherited from Michael Chertoff. Since then, DHS has introduced an intranet system that has gotten the Secretarial review time to one day.

In addition, Issa appears to ignore how DHS has gotten rid of the largest FOIA backlog in history. In 2006, according to Mary Ellen Callahan’s testimony, DHS had a backlog of 98,000 requests. When Napolitano took over, that backlog was 74,000 requests. The backlog is now 11,000.

This is the kind of thing Darrell Issa is bitching about.

Now I do have certain questions about what sparked all of this. Issa first latched onto the issue after this AP report–the most serious allegations of which the AP subsequently admitted they could not confirm. Call me crazy, but given the centrality of bad blood between a few career staffers here, I’d suggest the original article came right out of that bad blood. (And perhaps not coincidentally, the article came out in the same month as DHS switched to the more efficient Intranet process.)

But it also sounds like the Napolitano was particularly concerned about being alerted to sensitive requests in the early years of the Administration.

Unless I missed it, no one mentioned this debacle, Napolitano’s embarrassment with the release of a Bush-initiated report on right wing domestic extremism. Mind you, witnesses admitted that part of the concern arose from the release of information that had been generated under the Bush Administration, so it’s possible that this report was the reason for the sensitivity.

But I wonder whether part of the problem here all stems from the fact that the Bush DHS initiated a study on right wing extremists that was subsequently spun as a Napolitano project.

Darrell Issa Needs a New Baby-Sitter

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If the Democratic Party wants to survive the next two years, it needs to find a new baby-sitter for Darrell Issa.

After all, no one was more gleefully prepared after the shellacking last Tuesday to take over and cause trouble for Democrats that Issa. He’s been planning a series of witch hunts for months. And since Tuesday, Issa has made it clear just how expansive he intends those witch hunts to be.

California Rep. Darrell Issa is already eyeing a massive expansion of oversight for next year, including hundreds of hearings; creating new subcommittees; and launching fresh investigations into the bank bailout, the stimulus and, potentially, health care reform.

Issa told POLITICO in an interview that he wants each of his seven subcommittees to hold “one or two hearings each week.”

“I want seven hearings a week, times 40 weeks,” Issa said.

Issa is also targeting some ambitious up-and-comers like Reps. Jason Chaffetz of Utah, Patrick McHenry of North Carolina and Jim Jordan of Ohio — all aggressive partisans — to chair some of his subcommittees.

[snip]

To give an idea of how expansive Issa’s oversight plans are, look at the record of Rep. Henry Waxman (D-Calif.) when he chaired the oversight committee during in the 110th Congress during George W. Bush’s presidency. Waxman held 203 oversight hearings in two years; Issa has signaled he’s prepared to hold about 280 in just one year.

The current Chair of Oversight, Ed Towns, is not up to the task of keeping Issa in check.

As I noted two years ago, Towns was never all that interested in Oversight; to him it was a gavel and nothing more. Plus, he’s funded by some of the industries–like Pharma–that need some oversight.

More importantly, the last two years have proven him unequal to the task of keeping Issa in line. Indeed, Issa has pushed Towns around to do things like focus on the Countrywide VIP program, even while Towns failed to do much positive with his gavel. Keeping Towns on as Ranking Member of Oversight will deprive us of any way of limiting the damage of Issa’s witch hunts.

We need someone with both the intestinal fortitude and the progressive stripes to encourage Issa where we could use more Oversight–such as on the Wall Street bailout, which Issa promises to investigate–while obstructing Issa’s efforts to shut down government or sniff through Obama’s panty drawer, as Issa’s predecessor, Dan Burton, did to Clinton.

We need someone like Elijah Cummings, who considered a run for Oversight Chair two years ago, and who has been one of the few people on Oversight demanding the Committee do what it is supposed to do. Cummings has been very good at using his spot on the Committee to expose the cronyism of government (particularly on the Wall Street bailout). And of critical importance, he speaks well enough to match a showboater like Issa. He has the ability to expose Issa’s more partisan stunts as such. Finally, replacing Towns with Cummings will limit the complaints of the CBC (particularly in case Clyburn loses to Steny in the Whip fight).

The focus since Tuesday has been on the leadership fight between Steny and others. But just as important as picking the right leader to keep the caucus as effective as possible in the minority, we need to pick a better baby-sitter for Issa–someone like Elijah Cummings.

Is AIG’s Reinsurance Side a House of Cards, Too?

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The other day, Atrios pointed to this passage, explaining that AIG was reinsuring some of its own insurance businesses.

Thomas Gober, a former Mississippi state insurance examiner who has tracked fraud in the industry for 23 years and served previously as a consultant to the FBI and the Department of Justice, says he believes AIG’s supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being "healthy," as state insurance regulators, ratings agencies and other experts have repeatedly described the insurance side, Gober calls it "a house of cards." Citing numerous documents he has obtained from state insurance regulators and obscure data buried in AIG’s own 300-page annual reports, Gober argues that AIG’s 71 interlocking domestic U.S. insurance subsidiaries are in hock to each other to an astonishing degree.

Most of this as-yet-undiscovered problem, Gober says, lies in the area of reinsurance, whereby one insurance company insures the liabilities of another so that the latter doesn’t have to carry all the risk on its books. Most major insurance companies use outside firms to reinsure, but the vast majority of AIG’s reinsurance contracts are negotiated internally among its affiliates, Gober says, and these internal balance sheets don’t add up. The annual report of one major AIG subsidiary, American Home Assurance, shows that it owes $25 billion to another AIG affiliate, National Union Fire, Gober maintains. But American has only $22 billion of total invested assets on its balance sheet, he says, and it has issued another $22 billion in guarantees to the other companies. "The American Home assets and liquidity raise serious questions about their ability to make good on their promise to National Union Fire," says Gober, who has a consulting business devoted to protecting policyholders. Gober says there are numerous other examples of "cooked books" between AIG subsidiaries. Based on the state insurance regulators’ own reports detailing unanswered questions, the tally in losses could be hundreds of billions of dollars more than AIG is now acknowledging. [my emphasis]

Masaccio pointed me to these two passages in AIG’s 10K, which sound like they may describe what Gober is talking about:

Various AIG profit centers, including DBG, AIU, AIG Reinsurance Advisors, Inc. and AIG Risk Finance, as well as certain Foreign Life subsidiaries, use AIRCO as a reinsurer for certain of their businesses, and AIRCO also receives premiums from offshore captives of AIG clients. In accordance with permitted accounting practices in Bermuda, AIRCO discounts reserves attributable to certain classes of business assumed from other AIG subsidiaries. (10)

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Kucinich or Cummings for Oversight

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I said most of what I’m going to say about the Waxman-Dingell fight in this post (though I will reiterate my concern that Waxman–who will now be in charge of shepherding healthcare through the House–has said almost nothing about it thus far).

Except that, now that Waxman has won, I think it crucially important that we find someone very effective to replace Waxman at Oversight. Waxman leaves some important unfinished business at oversight, including his investigation into the White House emails, the Bush Administration’s lackadaisical policy towards leakers (including Scooter Libby), and recent oversight into the financial crash. Furthermore, Darrell Issa is by most accounts set to take over as Ranking Member on Oversight. Oversight is one committee where the Ranking Member has the means to be a real pain in the arse, and Issa is a bigger pain in the arse–and more effective–than most Republicans. Finally, I don’t want to make the mistake the Republicans made; I want someone to exercise real oversight over the Obama Administration. For all these reasons, we need a real leader replacing Waxman at Oversight.

I recommend either Dennis Kucinich or Elijah Cummings.

The senior member on Oversight, after Waxman, is Edolphous Towns. I don’t know all that much about Towns–though I find it telling that, as someone who watches a great deal of Oversight’s hearings, I’ve almost never seen him contribute substantively (for that matter, I rarely see him, at all, at full committee hearings). That, plus he’s the recipient of some big love from the Pharma/Health Care and Finance industries–two industies that must remain targets of oversight.

Kucinich and Cummings are both relatively senior members of the Committee. And both have proven to be the kinds of effective 

Kucinich currently serves (opposite Issa) as Chair of the Domestic Policy Subcommittee (and many of the most critical oversight issues in the next Congress will be domestic ones). And his work on impeachment shows that his staffers have the ability to do great work and Kucinich has the ability to deliver them. Plus, he’s the perfect kind of gadfly to keep our new President honest. I suspect that Kucinich would have a tough time getting the votes in a straight fight, but if there are multiple candidates, he’d have a shot.

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