By Katalina M. Bianco, J.D.
Financial Services Committee Chairman Jeb Hensarling (R-Texas) has issued subpoenas to three federal agencies for failure to respond with requests for information and documents relating to active investigations. The subpoenas were issued to the Department of Justice, Treasury Department, and Federal Reserve Bank of New York. According to Hensarling, all three agencies were warned that failure to respond could lead to subpoenas.
Hensarling said that the three government agencies “chose to unlawfully obstruct, delay and withhold information that our Committee and the taxpayers have the right to know,” necessitating the subpoenas. “These agencies have failed to respond to repeated requests—one of which dates back more than two years. In light of this extraordinary stonewalling, the Committee is left with no reasonable alternative but to subpoena long-overdue information.”
In addition to his statement, Hensarling attached background information that details the Committee’s efforts to obtain records and information from the agencies.
Department of Justice. The Committee said that the DOJ withheld information that would help it determine whether the Dodd-Frank Act put an end to “too big to fail” or whether further legislation is necessary. On March 8, 2013, former Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC) and Hensarling requested that the DOJ provide the Committee with records pertaining to the DOJ’s decisions not to prosecute large financial institutions based on the potential impact that such a prosecution may have on the national economy. Hensarling said that the Committee has not yet received any records responsive to the Committee’s request with the exception of “a small sampling of documents” relating to the HSBC investigation.
The Committee Chair alleges that the DOJ also failed to provide records that the Committee seeks in order to determine if the DOJ brought a case against McGraw-Hill Companies, Inc. and Standard & Poor’s Financial Services LLC (S&P) in retaliation against S&P for its 2011 decision to downgrade the government’s credit rating.
New York Fed. Hensarling said that the New York Fed has failed to respond to requests for records related to the Obama administration’s contingency planning regarding the debt ceiling. The inquiry was directly related to the Committee’s “efforts to understand what effect, if any, a default on sovereign debt would have on capital markets.”
Treasury Department. Hensarling charges that the Treasury Department has not fully cooperated with the Committee’s efforts to assess the debt ceiling contingency planning, nor has it complied with the Committee’s request for records related to a money laundering investigation of HSBC.
Waters speaks out. Prior to issuing the subpoenas, Hensarling wrote to Rep. Maxine Waters (D-Calif), Ranking Member of the Committee, informing her of his upcoming action and outlining the details leading to the subpoenas. Waters issued a statement in response to the issuance of the subpoenas, voicing her “strong objections to the process by which the subpoenas were issued.” She included in her statement a letter she wrote to Hensarling in answer to his correspondence.
In her letter to the Chair, Waters wrote, “It is characteristically undemocratic to now use your newly-vested unilateral authority to authorize and issue subpoenas in order to eliminate the ability of Members of this Committee—both Democrat and Republican—to openly debate the merit and necessity of such subpoenas.”
Waters said she was unconvinced that issuing subpoenas was Hensarling’s “only reasonable alternative” to get the information sought by the Committee. She admitted that some of the requests were months, if not years, old, but said she was aware that the agencies had made “reasonable and significant efforts to provide documentation and comply with the original requests.”
New York Fed statement. The New York Fed issued a statement that it “treats its responsibilities as fiscal agent to the Department of the Treasury and its accountability to the U.S. Congress with the utmost seriousness.” The bank said it is reviewing the Committee’s subpoena. In addition to the statement, the New York Fed attached previous correspondence sent to the Committee in response to the document requests.
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