WATCHDOGS struggle on virus cash.

Spending on 2008 financial crisis got much more oversight

To date, more than $5 trillion in government spending has been appropriated to respond to the pandemic and the ensuing economic calamity. Yet over the past year, oversight from three watchdog entities has been either undermined by partisan disagreements, slowed by bureaucratic hurdles or constrained by funding, according to interviews with those tasked with carrying out oversight, outside experts and advocates.

Compared with the last time the United States faced a catastrophic recession, in the aftermath of the 2008 financial crisis, the contrasts are stark.

By April 2009, five months into his tenure, the special inspector general investigating the bank bailouts, Neil Barofsky, had already testified before Congress six times. Barofsky’s equivalent for responding to the latest efforts, Special Inspector General for Pandemic Recovery Brian Miller, has not testified before Congress since taking office in June. His spokeswoman said he has received no requests from Congress to do so.

The congressional panel set up in 2008 to oversee $700 billion in government spending to strengthen the financial sector held 15 hearings in its first year, including sessions outside of Washington to highlight the importance of its work to Americans – in Nevada, Michigan, Pennsylvania and Georgia. Its current analogue, a congressional panel created to oversee the U.S. Treasury’s actions in the midst of the coronavirus, never received a chair and has held three Washington-based hearings.

The dangers of the pandemic itself have undoubtedly played a role in dampening accountability measures by limiting the ability of members of Congress and other overseers to meet in person to collaborate, while also slowing down hiring.

The different causes of the two crises also contributed to the differences in accountability: One is a diffuse, public health pandemic-induced economic shutdown, and the other was a specific set of financial institutions engaging in irresponsible behavior.

Yet open government advocates say there is a risk that Democrats in Congress, who hold the majority in both chambers, may take their focus off policing of government relief spending now that there is a Democratic administration in power.

Two months into the Biden era and more than a year after the pandemic began, the House subcommittee created by the $2.2 trillion CARES Act — short for the Coronavirus Aid, Relief, and Economic Security Act passed in March 2020 — to undertake coronavirus oversight has continued to focus on the Trump administration’s failed pandemic response, while heaping praise on President Joe Biden’s team. The panel held 10 hearings between June and October, then no more until March.

In March, Rep. Steve Scalise of Louisiana, the highest-ranking Republican on the subcommittee, criticized Democrats for the five-month hiatus “during some of the most impactful months of the pandemic.”

The committee chair, Rep. James Clyburn, D-S.C., replied that the pause in hearings was due to Republicans’ refusal to name members to the panel.

Russell Anello, deputy staff director for the House Oversight select subcommittee on the coronavirus crisis, said the subcommittee has been active despite the delay in hearings, including releasing documents resulting from committee probes. “We’re continuing to do vigorous oversight,” he said.

A spokesperson for the select subcommittee also said they “will not hesitate to investigate” the Biden administration, and that the body has already pressed the administration on worker protections and small business loan fraud.

FEWER REPORTS

Congress also tasked a different panel, the Congressional Oversight Commission, modeled on a similar watchdog created during the financial crisis, with overseeing a specific $500 billion appropriated to the Treasury Department and Federal Reserve. Its predecessor, launched in 2008, gave its chair, then little-known university professor Elizabeth Warren, a high-profile national stage.

Those recession-era hearings produced widely shared clips of Warren questioning Treasury Secretary Tim Geithner, and the panel was credited by some observers with forcing changes to Treasury policy that saved taxpayers $1 billion. That panel published 15 of its 30 reports during its first year while holding 15 hearings.

Its CARES Act equivalent has published 11 reports so far detailing the scope and impact of that relief, particularly that of Fed emergency lending facilities, while holding three hearings. It also drew attention to a $700 million loan by the Treasury Department to a troubled trucking company backed by a private equity company with ties to the Trump administration.

But the panel never received the leadership it was supposed to because House Speaker Nancy Pelosi, D-Calif., and then-Senate Majority Leader Mitch McConnell, R-Ky., failed to agree on and appoint a chair for the commission, which has two Democratic and two Republican appointees.

The lack of a chair has made decision-making among the four members more complicated and dependent on bipartisan consensus. A former Democratic-appointed member, Bharat Ramamurti, left late last year to serve in the Biden administration and has yet to be replaced. Another member, former Democratic Rep. Donna Shalala of Florida, lost her reelection bid but remains on the committee.

“We need a chair and we need another Democratic representative on the Senate side,” Shalala said in an interview. “The commission itself is continuing its work. But we need a bigger analytical capacity and we need … centralized staff.”

An aide to Sen. Patrick Toomey, R-Pa., who sits on the commission, said a major obstacle to naming a chair was the difficulty in finding people who did not have perceived or potential conflicts of interest in their financial holdings or would have been able to make the necessary divestitures.

“You’ve got to find somebody who Nancy Pelosi and Mitch McConnell both agree on, but also someone who will say yes,” said Rep. French Hill, R-Ark., who also sits on the commission. But he said the lack of a chair did not hamper the commission’s work, because it did not prevent the members from hiring the staff they needed.

The Toomey aide, who spoke on condition of anonymity, also emphasized that even without a chair, the commission fulfilled its required role under the CARES Act by producing monthly reports and holding hearings. And he disputed the comparison with the financial crisis-era predecessor.

Shalala and Hill both defended the work of the commission as having provided robust analysis and questioning of the lending programs.

However, the programs under the scope of the commission have largely wound down, though the panel could still conduct retrospective oversight delving into unexamined details, like the presence of foreign investors benefiting from Fed loans or the use of the programs to purchase securities backed by private student loans.

The commission said in an emailed statement that it “remains operational and is committed to executing its responsibilities and completing reports regarding outstanding loan obligations, per its statutory mandate. However, with the closure of the Fed’s Cares Act lending facilities, there is no new lending or related activity happening, limiting the need for additional public hearings at this time.”

FEWER RESOURCES

A separate CARES Act oversight body, the Special Inspector General for Pandemic Recovery, has much in common with the 2008 Special Inspector General for the Troubled Asset Relief Program, which was charged with overseeing $700 billion in government aid, and eventually built a team of 140 fulltime employees. Its work led to 389 criminal convictions, including dozens of bankers and scammers.

By comparison, the pandemic inspector general is also charged with overseeing at least $700 billion in funding provided in the CARES Act. Yet the office had hired 34 fulltime employees by the end of January, it said in its most recent report, and plans to hire 66 by September.

The inspector general’s first report detailed challenges in hiring staff and procuring basic equipment. Additionally, the pandemic inspector general’s office has been constrained by its budget — $25 million in the CARES Act, or half of what the Troubled Asset Relief Program inspector general received, said Sarah Breen, a spokeswoman for the pandemic inspector general’s office. The agency is “striving to get into the annual budget cycle,” she added.

For its part, the Biden administration has tapped Gene Sperling, a former top White House economic official in the Clinton and Obama administrations, to oversee Biden’s coronavirus relief spending package. Sperling’s role will be focused on making sure aid gets out to states and individuals quickly and communicating with local officials. A spokesman for the White House did not respond to a request for comment.