This recent move by House Speaker Nancy Pelos regarding Congressional oversight of the bailout makes no sense whatsoever (boldface mine):
The pick to watch was the House Democratic seat. There was no obligation to choose a sitting member of Congress, but Katie Porter (D-CA) was actively seeking the job, and really was the only member actively seeking the job. With deep experience in financial services and demonstrated aptitude with oversight, there was really no better person for the job.
House Speaker Nancy Pelosi chose her friend, freshman Congresswoman Donna Shalala (D-FL).
This is a stunning selection. Shalala, according to sources, had no interest in the job. She has no expertise in the financial industry or the Fed. The two committees that would prepare you for this position are Financial Services and Oversight (Porter sits on both). Shalala sits on Education and Labor and Rules. She’s on the early childhood education subcommittee, so if that ever comes up in discussing the Fed’s corporate bond or high-yield ETF purchases we’re in good shape.
Yes, Shalala was Health and Human Services Secretary. In her public statement, Pelosi highlights that, saying Shalala will “ensure that this historic coronavirus relief package is being used wisely and efficiently to protect the lives and livelihoods of the American people, and not be exploited by profiteers and price-gougers.”
But the oversight panel has nothing to do with public health or the pandemic. It’s supposed to examine Federal Reserve lending programs and whether they are assisting the public in economic stabilization and job recovery. These are deliberately complex programs that require for oversight someone with a passing familiarity with the financial system and corporate America. The only expertise Shalala has in all that comes from all the stocks she owns.
In Shalala’s most recent financial disclosure, dated May 2019, she lists share ownership in an array of companies that will be at the front of the line for a bailout. She holds shares in Boeing, as well as Alaska Airlines and Spirit Aerosystems, which builds a lot of pieces of Boeing aircraft. She owns Chevron, ConocoPhillips, Royal Dutch Shell, and Occidental Petroleum at a time of a historic crash in oil prices. She owns entertainment stock in Paramount, Live Nation, and AMC Theaters, the latter almost certainly headed to bankruptcy. She owns Choice Hotels; nobody’s staying in hotels. She owns TripAdvisor; nobody’s taking trips. She owns retailers and retail producers Ralph Lauren, L Brands, Burlington Stores, and Five Below; retail’s in trouble (she’s also got Walmart, so she’s OK there). She owns big banks JPMorgan Chase, Wells Fargo, Bank of New York Mellon, BBVA Compass, and HSBC.
She owns between $301,000 and $615,000 in UnitedHealth, where she served on the board from 2001-2007, including during part of the time detailed in a 2017 Justice Department complaint accusing the insurer of overbilling Medicare for over $1 billion. That would reflect the very profiteering and price-gouging Pelosi said it was important for Shalala to scrutinize. I guess she has experience after all.
This list of stocks is very partial; the holdings go on for 26 pages. Sources tell me that Pelosi informed House Democrats that Shalala was chosen because she was “someone who reflected the beautiful diversity of our caucus.” I mean, her portfolio is diversified. Is the idea that Shalala will have to recuse herself from discussing any company receiving a bailout in which she has a financial interest?
Two of her holdings are particularly troubling on that front. Shalala owns direct stock in Moelis, one of three banks the Treasury Department has retained to handle aviation-related bailouts (for “no big fees,” Treasury Secretary Mnuchin has assured us). Part of the oversight panel’s job would be determining how Treasury is managing advisory services. This is a direct conflict of interest.
The holding in Moelis is small, no more than $15,000. But Shalala has between $202,000 and $555,000 in a number of iShares exchange-traded funds. Those are part of BlackRock, who is handling numerous bond-buying programs for the Federal Reserve, as an investment adviser and asset manager. One of the Fed’s programs will buy exchange-traded funds, including potentially funds in which Shalala owns shares.
These conflicts don’t even take into account that Shalala ran the Clinton Foundation for two years, giving her access to power at the highest levels. Or that she was the only non-financial member of the Municipal Assistance Corporation, the board that reworked New York City’s finances after the 1975 fiscal crisis, forcing numerous concessions on city unions. Or that she mismanaged the medical school at the University of Miami while serving as president, leading to hundreds of layoffs. Or that she sat on the board of homebuilder Lennar throughout the entire subprime mortgage crisis; Lennar owned a subprime lender.
One only can conclude two things. First, Pelosi wants someone whom she can count on if donors are threatened. Second, she doesn’t want meaningful oversight by someone like Porter. Pelosi wants a mediocre performance.
Personnel is policy, and this is very bad policy.
YASS KWEEN red coat something something…