Why Is Congressional Oversight Important, and How Can It Be Done Well? (with Elise Bean)

Understanding Congress

The topic of this episode is, “Why is congressional oversight important, and how can it be done well?”

To help us tackle this subject we have Elise Bean. She is the Director of the Washington Office of Wayne State University’s Levin Center. Elise spent 30 years in Congress working as an investigator for Sen. Carl Levin (D-MI) and for the Senate Permanent Subcommittee on Investigations. Elise handled investigations, hearings, and legislation on matters involving money laundering, offshore tax abuse, corruption, shell companies, and corporate misconduct. She is also the author of the book, Financial Exposure: Carl Levin's Senate Investigations into Finance and Tax Abuse (Palgrave Macmillan, 2018). So who better to have on the show to discuss the topic, “Why is congressional oversight important, and how can it be done well?”

Kevin Kosar:

Welcome to Understanding Congress, a podcast about the first branch of government. Congress is a notoriously complex institution and few Americans think well of it, but Congress is essential to our republic. It’s a place where our pluralistic society is supposed to work out its differences and come to agreement about what our laws should be, and that is why we are here to discuss our national legislature and to think about ways to upgrade it so it can better serve our nation. I’m your host, Kevin Kosar, and I’m a resident scholar at the American Enterprise Institute, a think tank in Washington, D.C.

Welcome to the program.

Elise Bean:

Thank you for inviting me, Kevin.

Kevin Kosar:

All right, let's begin with something very fundamental. What is Congressional oversight, and who in Congress can do it?

Elise Bean:

Well, Congressional oversight is when members of Congress, on a committee or individually, ask questions and try to find out: What are the facts? Is a program working? Is there really an abuse? If you want good government, you need good oversight because things change over time and what worked at one time doesn't work at another. That's what Congressional oversight is.

Kevin Kosar:

Yeah, we should dig into that a little bit. I think often Americans don't like to see politicians fighting amongst themselves, yet the legislative branch, last time I checked the Constitution, says that Congress makes the laws, Congress decides where the money is to be spent, but they're not the ones who actually do the execution of the law. They're not the ones actually spending the money. So does that seem to imply some sort of constitutional obligation to engage in oversight?

Elise Bean:

So the Supreme Court has said that that's exactly true, that if Congress can't do what it's supposed to do under the Constitution, unless it has some facts… I mean, wouldn't it make sense—if you're going to change your program or decide where money's going—that you have informed decision-making based on the facts? In fact, there's a 1946 law that requires all Congressional committees to do oversight within their areas of jurisdiction, and that's because they want you to find out what the facts are before you start to pass laws, give out money, and approve nominations.

Kevin Kosar:

Right. And as you hinted at earlier, when Congress says, "Hey, here's a new program we authorized and here's some new money for it, go out and do well, executive branch," sometimes the executive branch doesn't follow Congressional intent. Sometimes a program may not work as it was hoped. So Congressional oversight, we shouldn't just view it as kind of a response to some bad thing reported in the newspaper where Congress has to react, right? Rather, it sounds like it's something that they should be kind of engaged in as a matter of course.

Elise Bean:

Well, there are two kinds of oversight. One is what you were just talking about, routine oversight, where you look at the laws within your jurisdiction, see how they're working—and God knows a lot of times they don't work well—and what can you do to improve them. Other times there's a scandal, there's an earthquake, there's a hurricane, and Congress reacts to that scandal or to that event, tries to find out what's happening, and—maybe—how Congress can help.

Kevin Kosar:

Yeah, I mean, it seems inherent to the concept of representative and responsible government that you've got to have that oversight component there. Otherwise, you get money spent on things that don’t work, and the tap will never be turned off and taxpayers will be aggravated, to say nothing of scandals not being addressed and bad behavior being punished—or at least curbed so it doesn't repeat.

Now, some listeners of this podcast, when they hear the words Congressional oversight, they might flinch, in part because there's a tendency amongst the media to show oversight happening in the form of a hearing with a member of the dais whose face is getting red and they're getting all worked up—it's a political conflict, often a left and right conflict. That stuff happens, but that is certainly not the whole of Congressional oversight. There's bad oversight. There's good oversight. What does good oversight site look like?

Elise Bean:

Well, to me it's when there's a good-faith effort from both parties to try to find the facts. It's a complicated world out there and getting consensus on the facts is sometimes really hard. But when you do it, it creates a foundation for change. And when you think about it, Congressional oversight is all about affecting change. We want to improve laws. We want to address abuses. It's about fixing problems. But Congress isn't the executive branch. They can't prosecute anyone. They can't throw them in jail or fine them. It's all about policy changes. And we're talking about policy changes, good oversight—to me—involves people who have really fundamentally different worldviews. That way, they challenge each other. They look at the facts differently. They look at more facts, and the end result is something that is more thoughtful, more thorough, and certainly more credible if you have both parties involved.

Kevin Kosar:

Yeah, and that brings up the question of oversight and what it looks like. Again, it's forgivable that folks might think, oh, oversight, it's hearings. It's the guys on the dais asking the questions, the witnesses at the table, and that's oversight. But that's just part of a much bigger process. What does that overall process look like? What are the steps of that process?

Elise Bean:

You're absolutely right, Kevin. The hearing is sort of at the end of the process. When you start it, it's first fact-finding. What happened? Get documents, do interviews, maybe go visit some sites, visit victims, and find out what happened to them. That's the fact-finding phase. The second phase is you write it up because if you don't write it up, nobody knows what you ever found out. So that's often a report or a memo or a letter writing up what you found. Then you have the hearing. If it's important enough, you have a public hearing. But then there's a fourth stage which is as important or more important than the rest, which is doing something about the problems that you uncovered. So it's a very long process, four stages. That can take a year. It can even take two years.

Kevin Kosar:

Yeah. Going back to the beginning of the oversight process, how do you pick what to oversee? When I think of Congressional committees and the sheer breadth of their jurisdiction, they often have multiple agencies, and every agency has tons of programs and et cetera, et cetera. Where to begin? How do you choose amongst all these competing priorities for oversight? How do committees do that?

Elise Bean:

Well, that's the most important issue of all because you can't do a lot in a year. I mean, the most you could do is maybe once a month, and then you don't have any time to really investigate. The really best investigations, you usually do two or three a year. And to pick those, what usually happens is the staff makes some suggestions to the chairman of the committee or to the ranking member of the committee, and they decide out of that selection what they're going to do. So you think about, what promises has that member of Congress made to their constituents? What are some of the biggest problems in the subject area they have? Has there been a scandal or has there been some event that really needs to be addressed? And you have to just make some pretty hard choices about what your priorities are.

Kevin Kosar:

I can see that. It would have to be a negotiation amongst a number of competing goods with different criteria thrown into the mix. You mentioned the first stage of once you pick something, getting the facts. And you can do that through interviews and requests for documents. How easy is that, whether it's reaching out to the executive branch or the private sector? In your experience, how responsive do they tend to be when you say, "We want these documents from this file or this person, or we're insisting these guys come over and talk to us, not in a hearing, but just talk to us as staff." How tough is that?

Elise Bean:

It's not easy. I'll just tell you that. It's a very difficult process because you're investigating people quite often that don't want to disclose what they've been up to, and you have to try to approach it from a lot of different ways. You might talk to the victims, you might talk to their competitors, you might talk to law enforcement. Maybe somebody litigated against them, and you can find some files that way. A lot of people resist, and we just have to look at President Trump as probably an extreme example of saying, "I'm going to fight every subpoena. I'm not going to respond to any request for information." Most people don't go that far. Most people do cooperate with Congress because they understand they have an obligation to do so by law and that it's good for all of us for government to work better. But getting documents, getting interviews, it's a tough process.

Kevin Kosar:

I have to ask, I mean, especially with some of the big investigations you were involved in, the ones that were very long, very thorough, how do you manage all this information coming in? And that duty, I presume, falls almost entirely—if not entirely—upon the Congressional committee's staff. The paper, the recordings, the interviews you do—all this is data. How do you manage all that stuff?

Elise Bean:

Well, one thing you do is you get computers. I remember we had one bank that we were investigating. This was Goldman Sachs during the financial crisis. They actually gave us tens of millions of documents, and we actually had to get hard drives and set up an entire computer system just to take in all those documents. We called it “the ocean.” And every day for the next three months, we went swimming in “the ocean.” We had search terms, we had various people we wanted to look at, and we just went through those documents nonstop for three months. After that, we then did three months of interviews because once you identify the documents you want, you think you know what happened, but you don't know what happened. And you have to talk to people who are directly involved, and you just have to take it step by step. To be honest, it isn't rocket science. It's more persistence and just doing the job that needs to be done.

Kevin Kosar:

Yes, I have heard that there is a tactic by those who are being investigated, which is kind of the opposite of stonewalling. Instead, they'll just—

Elise Bean:

Right. Flood the zone.

Kevin Kosar:

Flood the zone with documents and materials. And when I think about the size of some Congressional offices, if they're sending them over in paper format, I could imagine that could be a real challenge.

Elise Bean:

Nobody sends in paper anymore. We used to have paper. I remember when we were investigating Enron, we had 800 boxes of documents, and we had to find rooms just to store them. And then our staff would get out with little dollies, put the box on the dolly, take it back to the office, and go through it. But these days it's almost all online, electronic documents.

Kevin Kosar:

All digital, that no doubt creates its own challenge.

You referenced the term “subpoena,” which I'm sure many if not all of the program's listeners have heard before, and maybe they even know that it's Latin for “under penalty.” Is the subpoena the real big tool for ultimately forcing compliance, whether it's agencies or private sector firms, to Congressional committees' inquiries, or is it just one amongst many tools?

Elise Bean:

It's a very important tool. That's because a lot of times in investigations you want to follow the money. That's the key. To follow the money you need to get bank documents. To get bank documents, they won't give them to you unless you give them a subpoena. But if you give them a subpoena, they'll turn over all of those documents you need to follow the money. To get an interview, you can try to do subpoenas. Sometimes people give you a hard time, you have to go to court. Then it all slows down. So subpoenas are important, but they're far from the only tool.

Kevin Kosar:

What other tools are there? I mean, I would imagine that if somebody was in trouble that maybe they would think, "Huh, I don't really want to talk about this, but maybe the guy who was really doing bad stuff, I can put him under the bus. So that gives me incentive to go in there and talk and have my say, and maybe they'll show me some mercy." But you tell me. What other tools have you got to get what you need?

Elise Bean:

Well, a lot of regulated entities like banks, securities firms, and financial firms, don't want to be seen as resisting Congress. They want to be seen as cooperative. And I think there is almost no case where a financial firm actually took Congress to court and tried to get out of a subpoena. It happens very, very, very rarely. So we had one case where an accounting firm, KPMG was really not turning over any documents, and somebody told the press. It was not us. We think it was somebody within KPMG. We didn't want people to know when they were cooperating or not cooperating. That's not a good message to give out. But somebody went to the press and disclosed that they had not been cooperating with Congress. There were a bunch of articles written about it. And then we heard from people inside KPMG, they had a big meeting with all the managing partners and all the people who were partners in the accounting firm. They got together and said, "We do not like this look. It's not a good look for us." And the very next day they started turning over documents to us.

Kevin Kosar:

Going public and damage to reputation and embarrassment and besmirchment of the name. Interesting, interesting. That makes perfect sense, especially for a private sector firm and one where it might be privately held.

Elise Bean:

And that have regulators. Their regulators don't want to hear that they're not cooperating either.

Kevin Kosar:

Ah, the regulators. Yep. Is there a possibility of bringing pressure to bear through appropriators? Do people who are investigating also happen to have seats on the Appropriations Committee and might be able to use the power of the purse?

Elise Bean:

That's true for federal agencies. They do have appropriations, and that is another tool that you can use. But the appropriations process is very strung out. It's very controversial. We never used that tool. We found it was just too difficult to try to go after somebody on an appropriations basis. And a lot of times because an agency isn't doing well or has problems, if you cut off their money, they just do worse. So that's a theoretical way that you can go about it, but it's not actually used very much, in my experience. But they might want something else. They might want cooperation on a program or something else they need, and you can certainly help them with it or hurt them getting whatever it is they want. So that's another tool.

Kevin Kosar:

We've talked a lot about how and why oversight should happen and what good oversight looks like. So I wonder if—for my closing question—you'd be game for drawing upon one oversight effort you were involved in during your lengthy career that really kind of illustrates how you do it, from snout to tail. How do you do good oversight?

Elise Bean:

Well, we did a lot of really fun things. But let me just choose one that had to do with offshore bank accounts. And this one started because we had two informants. They didn't know each other. But they came into the office about four months apart and told us about banks that had been opening up offshore bank accounts for US clients and hiding the money from the IRS. We ended up having a hearing about both banks. We got names from them of Americans. We looked into what the Americans were doing. We got documents and we had a hearing. At the hearing, one of the banks was UBS. They sent somebody from Switzerland, and he began his testimony by saying, "We want to apologize for our past acts, and we're never going to do it again." We had no idea they were going to say that. We were quite surprised. I think it wasn't really because of our investigation, but because they were also being investigated by the Department of Justice. Soon after the hearing, they had a deferred prosecution agreement. But regardless, they announced the fact, they admitted all of their wrongdoing at our hearing.

Had a very big impact on the offshore world because this was a very big, powerful Swiss bank, and it was sort of a big crack in Swiss secrecy. As a result of that, the House passed some legislation that applied to non-US banks, and essentially it said, non-US bank, if you open up an account for US person and you don't tell us, we're going to impose an excise tax on your earnings in the United States. And since most foreign financial institutions had either treasuries or bonds or stocks here in the US, it was a very credible threat. Somebody...