Banking and Finance Law Daily Democratic leaders urge Mnuchin and Powell to ensure CARES oversight
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Wednesday, April 1, 2020

Democratic leaders urge Mnuchin and Powell to ensure CARES oversight

By Donielle Tigay Stutland, J.D.

House and Senate Democrats urge Mnuchin and Powell to protect the oversight authority under the CARES Act, in light of President Trump’s signing statement, which they believe undermines the enactment of the CARES Act to protect American workers.

Following President Trump’s Signing Statement issued on March 27, 2020 after the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), prominent House and Senate democrats believe President Trump seeks to undermine the oversight afforded under the CARES Act and took action to ensure that U.S. agency leaders help enforce its oversight authority. Senators Sherrod Brown (D-Ohio), Ron Wyden (D-Ore), and Charles Schumer (D-NY) sent a letter to Treasury Secretary Steve Mnuchin calling on him to defend the creation of the Special Inspector General For Pandemic Recovery (SIGPR). Senator Elizabeth Warren (D-Mass) sent a letter to Mnuchin and Federal Reserve Board Chairman Jerome Powell to protect US workers and ensure that the enactment of the CARES Act protects against corporate greed. Finally, Representative Maxine Waters (D-Calif) issued a statement condemning the President’s signing statement as, "outrageous and unacceptable."

Brown, Wyden & Schumer Letter. On March 31, 2020, a group of Senate Democrats, including Ranking Member of the U.S. Senate Committee on Banking, Housing, Urban Affairs Brown, Ranking Member of the U.S. Senate Committee on Finance Wyden, and Democratic Leader Charles Schumer (D-NY) sent a letter to Mnuchin, calling on him to defend provisions of the CARES Act that call for the creation of the SIGPR. The Senators described the President’s Signing Statement as a troubling and unacceptable use "to undermine the ability of Inspectors General to provide Congress statutorily-required information." The letter requests that not only Secretary Mnuchin provide congress with a plan, but also a timeline, for the SIGPR’s creation and implementation.

"Provision of these funds was conditioned on the SIGPR’s creation. As such, the SIGPR’s unfettered operation is not only a legal necessity, but also a condition you personally agreed to – SIGPR’s structure is your structure, and it imperative that you defend it."

Warren Letter. Sen. Elizabeth Warren also sent a letter to Mnuchin and Powell urging them to use their broad authority, "to ensure that bailout funds (1) are used to protect workers and not to reward corporate misbehavior; and (2) are protected by strong anti-corruption and transparency rules."

"Any bailout funds should come with strict conditions to ensure that the funds are used to protect workers and the economy rather than just benefitting wealthy senior executives," the senator wrote. "I will be watching carefully as you hand out these funds."

Additionally, Sen. Warren requested that Mnuchin and Powell, "use their legal authority over the funds and adhere to the following principles when deciding which big corporations will benefit from the bailout and under what terms. Two main concerns expressed in the letter are to 1) to protect workers and not reward any corporate misbehavior, and 2) to establish strong ethics and transparency rules.

To meet the first principle, Warren suggested that the Treasury and the Fed should require that any company receiving backing under the CARES Act:

  • Uses federal funds to keep workers on the job, including maintaining at least 95 percent of payrolls;
  • Provide a $15 an hour minimum wage by year's end;
  • Does not use taxpayer funds to personally enrich CEOs or senior executives through any form of executive compensation;
  • Does not shovel money out the door through stock buybacks, dividends, or any other direct or indirect form of shareholder distribution;
  • Provide at least one seat to workers on their board of directors;
  • End union-busting efforts and maintain collective bargaining agreements;
  • Require that CEOs make personal, annual certifications to Treasury and the Federal Reserve that their companies are complying with the rules, ensuring that these CEOs would face civil and criminal penalties for violating these terms; and
  • Is liable to the federal government for all assistance received if the company violates any of the terms of their agreements with taxpayers.

In meeting the second principle, Warren urged Mnuchin and Powell to do the following as they administer the bailout fund:

  • Put in place strong conflict-of-interest protections so that no federal official, financial agent, contractor, or adviser has any say or influence over decisions that may affect their own portfolio, or that may affect a current or former employer, and include strong post-employment restrictions to close the revolving door and prevent conflicts-of-interest;
  • Develop clear public rules and guidelines regarding how and why you are choosing bailout recipients and how and why you are establishing the terms and conditions of any bailouts;
  • Provide immediate and complete transparency beyond the requirements in the CARES Act regarding which companies successfully or unsuccessfully seek bailout funds, and what commitments they make in order to obtain these funds;
  • Bar companies receiving funding from political spending or lobbying expenditures for the duration of the assistance; and
  • Comply with all document and information requests and requests that you or other federal government officials appear as witnesses before the new Special Inspector General, the Congressional Oversight Panel, or the Pandemic Response Accountability Committee.

Waters’ Statement. On March 31, 2020, Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, released a statement condemning President Trump’s signing statement. She described the President’s actions as undermining the oversight of the newly created watchdog office, SIGPR, "by declaring that he will ignore provisions in the law requiring this Inspector General to report to the Congress if his Administration refuses to provide the watchdog with information."

"The President also states that he does not feel bound to consult with Congress on how the money in the $2.2 trillion relief package will be spent. It is a slap in the face of every one of my colleagues who strove to create a bipartisan package to have the President further undermine Congress’s power of the purse, and is not the way in which this country will get through this crisis," Waters continued. Her statement made clear that she believes that the President wants to keep the public in the dark about, "how his Administration will use $500 billion of taxpayer funds that Congress allocated, and that he will ignore the law to avoid transparency." Waters closed her statement by indicating that she would be closely following the President’s actions with respect to the enforcement of the CARES Act, and she encouraged her colleagues to do the same.

MainStory: TopStory Covid19 FinancialStability OversightInvestigations

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