WASHINGTON ― Whether or not they realized it, lawmakers just passed a $2 trillion stimulus bill that lets Treasury Secretary Steven Mnuchin give $500 billion to corporations without any particularly meaningful oversight on how it gets spent, which sectors will be treated as a bigger priority for getting financial help, or when the money will be repaid.
Billions of those dollars could begin flowing within an hour of President Donald Trump signing the bill into law, which he did Friday evening.
This has been keeping Rep. Katie Porter (D-Calif.) up at night. That, and a nasty virus that seemed a lot like COVID-19, though she tested negative for it on Friday.
Porter knows a thing or two about strong oversight of taxpayer money: In 2012, then-California Attorney General Kamala Harris appointed her to oversee banks’ implementation of $9.5 billion in mortgage settlement reforms.
An attorney who studied under Sen. Elizabeth Warren (D-Mass.) at Harvard Law School, Porter has also drawn attention for her sharp questioning of bank executives in the House Financial Services Committee. In March 2019, she caught Wells Fargo CEO Tim Sloan contradicting what his corporate lawyers had argued in court, saying that statements he had previously made vowing transparency were “corporate puffery.” Porter made news again in April 2019 with her questioning of JPMorgan Chase CEO Jamie Dimon, pressing him on how a Chase bank teller should make up a $567 shortfall between her monthly budget and paycheck.
HuffPost caught up with Porter to get her take on this $500 billion Treasury Department fund. There are some oversight measures written into the bill ― it creates a special inspector general and a congressional oversight panel and requires Treasury to post its transactions on its website. But Porter said she’s “very unhappy” with the way the fund has been structured and fears that, without immediate and robust oversight, America could see a repeat of what happened when the government spent $700 billion bailing out banks under the 2008 Troubled Asset Relief Program: massive amounts of taxpayer money suddenly gone and nobody really sure where it went.
To connect a couple more dots, oversight of the Treasury fund is modeled after the TARP approach, and Warren led TARP’s congressional oversight panel. Porter said she and Warren have been talking this week about lessons learned ― good and bad ― from the way TARP was rolled out.
Here’s our Q&A with Porter, whom we spoke with over the phone on Thursday night. It has been edited for brevity.
HuffPost: Hi, Congresswoman. You’ve self-quarantined. How are you feeling?
Porter: I’m feeling a little better today. So that’s good. I haven’t heard yet [on the test results] but we’re hoping to hear soon.
HuffPost: Good to hear. What’s your take on the $2 trillion stimulus bill?
Porter: There’s a number of really terrific things in this bill. The $100 billion to hospitals and health care providers who are on the front line of this crisis is incredibly important. This bill has important resources for small businesses, including grants. They’re not loans. They don’t need to be repaid. Grants that would simply help businesses stay afloat and keep as many people on payroll as possible during this period. Disaster relief funding for FEMA will be really important in California. The increase in unemployment insurance money. Last, the direct cash payments, though I am very concerned about those payments being too small, taking too long to reach people and being unavailable and phased out for folks in higher-cost-of-living areas.
What really concerns me about the stimulus is the lack of robust oversight over the Treasury fund. As I understand it, we’re talking about roughly $500 billion. There’s no reason there can’t be stronger oversight here except that, frankly, clearly, we couldn’t get to an agreement with the Trump administration and with the Senate Republicans about it.
With TARP, the money was dispensed overnight. By the time we understood how much had gone out the door, we didn’t know where and how it was being used. In this situation, it obviously needs to be abbreviated, expedited and controlled so that we get decisions made. But there can and should be a public debate about how this $500 billion is going to be used. So, should we be using it for the airline industry? How about versus other transportation sector needs like Amtrak or the cruise ship industry? How does the cruise ship industry compare to the gaming and casino industry?
I understand a lot of it can be used to basically transmit to corporations. The corporations can then use that as a downpayment ― that is, they can leverage it to borrow even more. That’s why you’re hearing these numbers in the $4 to $6 trillion range.
But the public needs to understand which industries are getting this. What, if any, conditions are being put on it? What is the time frame for paying this back? And just like we had a robust debate in the last two weeks about “Should we pay for testing? Should we pay for treatment? What about people who have insurance?” ― we had a public debate around all of those things. There should be room to have public debate on this $500 billion fund.
“I do support this bill. I think we cannot wait longer. But I want to be clear, I’m very unhappy about the structure and the lack of oversight of this Treasury fund.”
HuffPost: The bill doesn’t give details on any of those points you just raised.
Porter: No. None of that is in the bill. There are very few conditions on where this money can go. There are a few general specifics. But they are very broad. They pertain primarily to not allowing stock buybacks or increases ― increases! ― in executive compensation during the term of this help. It doesn’t talk about how we should think about these priorities like how we weigh the relative needs of manufacturers versus retail versus hospitality versus technology. All of these sectors, all of that is left to the secretary of the treasury. And this is a secretary of the treasury who frankly was tangled up in the last financial crisis in his role with OneWest in a way that does not give the American public the confidence that it should have and the confidence that it needs.
My understanding is this bill will require the transactions to be posted to the Treasury Department website. I have a lot of questions about the level of detail we’re going to be getting and whether the public is going to be able to really understand what’s being done with their taxpayer money.
There is this congressional oversight panel and this inspector general. That structure is clearly based off of TARP. Again, I would just say, this is not fully analogous. There is more time here. Not that there is time to waste, but there is time to act.
As I understand it, right now the first report of this congressional oversight panel is not due until 30 days after the Treasury makes its first loan. I was thinking about this yesterday when I was lying in bed.
HuffPost: As one does when one is lying in bed.
Porter: Right. I was thinking about the word “oversight” because I keep hearing the speaker say, I keep hearing leadership say, “oversight, oversight, oversight.” Really, when you think about what overseeing something means, it means you are literally watching it in real time. You are seeing how it is done. Right? So when we conduct oversight of how our food is manufactured or processed, or we conduct oversight to clinical test results, those are very much real-time things.
This is all in the past. So this is not so much oversight as it is historical study. What happened 30 days ago. In the scheme of this pandemic, which may last two weeks, four weeks, it could be 60 or 90 days, the first report is not coming until 30 days after the Treasury first takes action. I think that’s too slow.
HuffPost: In the end, will you support this bill?
Porter: I’m not going to be voting because I can’t travel to Washington.
HuffPost: Right, but in public statements?
Porter: I do support this bill. I think we cannot wait longer. But I want to be clear, I’m very unhappy about the structure and the lack of oversight of this Treasury fund. I don’t see any meaningful justification for it other than we couldn’t politically get there.
HuffPost: This bill is going to pass. What’s the first thing Congress should do to make sure there is strong oversight of this $500 billion fund?
Porter: To really press for immediate, like day-after-the-bill-is-passed appointment of that special inspector general. It’s to get that congressional oversight commission appointed immediately, like within hours of the president signing this bill. Because we have to have them beginning to do this work. Like I said, it’s not transparency. It’s history. That is one of the concerns I have.
I disagree with Democratic leadership. I would not characterize this as ― and this is in the Senate talking points, but I’m sure the House’s are similar ― they’re characterizing this as robust transparency protections. I would respectfully say I think these are potentially weak transparency protections. They’re certainly shaky and they’re only going to be as good as how quickly we move and how strong of people we put into these roles of being special inspector general and being on the oversight panel.
HuffPost: Do you want to be on the congressional oversight panel?
Porter: I would love to continue to help to serve the government in any way that I can. I obviously watched very closely and testified before the TARP oversight panel―
HuffPost: Congresswoman, you are a perfect fit for this. This could be the Katie Porter oversight panel.
Porter: Look, I think it’s really important that whoever goes on this panel has the ability to get started immediately. This is not a situation where you can take smart, well-intentioned people who have no experience in the financial sector or doing oversight work. We just don’t have that kind of ramp-up here. So if you think about the difference it made to have someone like Elizabeth Warren be the chair of the TARP panel, it was how quickly she was able to get them all going. It was because she had the knowledge.
I think we have a few days if we’re going to get this panel assembled and active so it can be in partnership, in true oversight, with the treasury secretary from the get-go. Secretary Mnuchin could move this money out within hours of the president signing the law. It’s incredibly important that we move quickly.
“They’re characterizing this as robust transparency protections. I would respectfully say I think these are potentially weak transparency protections.”
With TARP, the chair of the panel was a vote of the members, and that’s how Elizabeth Warren became the chair. I think if you had not had Warren as chair, that would have been a toothless oversight panel. I think [TARP program] Special Inspector Neil Barofsky did great work, but a lot of it was really slow and came out buried in these reports. In Sen. Warren, then Professor Warren, you had somebody who was ready on day one and skilled on day one at communicating complex ideas to the American people. I think that’s something that I’ve worked really hard on in my time in Congress, in hearings, to be able to ask questions and do oversight in a way where it’s very clear to the American people what I’m doing, what I’m asking and whether we’re getting a real, meaningful answer or not.
HuffPost: So you would like to be on this committee.
HuffPost: Have you spoken to leadership about it?
Porter: No. I wanted to wait until we had a bill to really see what was provided in it. I was hopeful there would still be some opportunity to strengthen it. It appears that we’re just going to be voting on the exact thing the Senate passed. So I’m continuing to ask questions.
I was on a call this morning with about 100 members and I was asking questions and trying to get people thinking about what some of the lessons are from TARP. So regardless of who ends up serving in this role, I intend to be very involved from my role on Financial Services and my role on [the House Oversight and Reform Committee] hearing from folks who are doing this work. I think there are a lot of lessons for them from both what went well and what didn’t go well with regard to TARP.
HuffPost: Do you have any sense from leadership of how quickly they might be able to get this panel up and running?
Porter: I don’t. Timing is really really important, and I think the most important thing that I can do right now is to help the American people understand and help leadership understand how quickly Treasury will move. We’re talking right now about how long will it take Americans to get checks, or how long will it take people to get their unemployment claims, or about the processing of these SBA loans. I want to be crystal clear: The Treasury can move this money in an hour. So we really need this oversight panel up and running. The people need to be picked. They need to be ready to staff up and start working within an hour of the president signing the bill. Or we’ll be in a situation where we’re looking back 30 days later and $40-50 billion could be gone out the door.
HuffPost: I don’t think many people have really grasped this.
Porter: I don’t, either. I heard [American Prospect executive editor] David Dayen talking yesterday. He used a term that has sort of haunted me for the last 24 hours. He described this Treasury fund as “a money cannon” that Secretary Mnuchin could fire. I think that’s right. In other words, it’s like a cannonball. You drop it in there and it only takes a few seconds for the fuse to go off and the money’s gone.
That means you have to really point the cannon in the right place. We have to know who the enemy is here and what you’re hoping to accomplish. That was a helpful visual, I thought, to get people to understand.
The ways that consumers and businesses get help here are going to be much slower. Even if we can do direct deposit to a lot of those taxpayers who have direct deposit on account with the Treasury, that will still be a week, two weeks at the fastest. And it’s not 500. Billion. Dollars.
“When they figure out that so-and-so go bailed out 24 hours after President Trump signed the law and they’re going to be waiting 24 days at best to get a check or a small business loan ... the American public is going to be upset.”
HuffPost: I suspect some members of Congress don’t even realize how fast this money can go out.
Porter: We had five conference calls yesterday, the House Democrats did, with different committees. Five calls. Each lasted an hour and 10 minutes. So I was six hours on the phone. Zero questions were asked about this except by me.
HuffPost: So what does that tell you? Lawmakers don’t realize what they just agreed to do?
Porter: I think this is just not as accessible to the typical member. This is not what members of Congress do. They debate programs, right? They appropriate money. They think about the right policy trade-offs. That’s not this. This really is straight-up oversight work.
The other thing I’d say, from the foreclosure crisis, the national mortgage settlement, I 100% believe those attorneys general and President Obama, when he announced HAMP [Home Affordable Modification Program] and making homes affordable and all those programs, the intent to help was there. The execution was a disaster.
So I believe my colleagues are taking the word of our businesses and our industry that they need help. I don’t question that. I believe a lot of companies and businesses, big and small, need help. But the execution of it is incredibly important because the American public, who is going to continue to suffer, when they figure out that so-and-so go bailed out 24 hours after President Trump signed the law and they’re going to be waiting 24 days at best to get a check or a small business loan or even get acknowledged that the Small Business Administration got their paperwork, the American public is going to be upset.
The Treasury fund is not a bad policy idea, and I think that’s why my colleagues are not necessarily questioning it. That, plus just a lack of familiarity with some of these topics. But just because it’s a good idea does not mean it will be well-executed. If there’s anything we should have learned from the coronavirus pandemic response, it’s that it may not be well-executed.
HuffPost: OK. Is there anything else you want to say on this?
Porter: I did speak to Sen. Warren yesterday and asked her about some of her experiences with TARP and whether she thought there were lessons from that for this. One of them was the importance of speed and getting it moving quickly. And one of them was the importance of being able to communicate clearly to the American public. I think it’s something we need to be looking for as we think about who is going to be the inspector general, who is going to be on this panel.
When Democratic and Republican leaders and the president are all saying that there are robust transparency protections and there is strong oversight, then by God, that’s what there should be. I’m not confident that’s going to happen.
When you start characterizing things as strong, as robust, as transparent, those are adjectives. You have to do the work to make them come true. Nobody is saying, for instance, that the cash payments to workers are sufficient, right? Because we don’t know. We should be careful here on how we’re selling this. And we have to be prepared to really dig in and do the work.
I’m definitely fired up about it. I remember so distinctly waking up the morning after all that money went out in TARP. Where did it all go, I thought to myself. This could be that same feeling. I think that left a bad taste in people’s mouths. We should not replicate that experience.
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